Davenport Upgrades America Movil (AMX) to Neutral

October 29, 2008 11:43 AM EDT

Davenport upgrades America Movil (NYSE: AMX) from Reduce/Sell to Neutral.

Davenport analyst says, "We lowered our fiscal 2008 GAAP EPS estimate from $3.40 to $2.97 and our 2009 estimate from $3.92 to $3.41, with $0.41 cents of our fiscal 2009 EPS reduction due to the recent weakness in the Mexican peso versus the U.S. dollar. We expect America Movil to increase its fiscal 2009 revenue and operating cash flow 8% and 9% year-over-year to 366.6 billion pesos and 151.4 billion pesos, respectively. Investors should assess the company’s growth rate based on the Mexican peso and not on the U.S. dollar. Due to the weakness of the Mexican peso, America Movil’s fiscal 2009 revenue (denominated in U.S. dollars) is down 2% year-over-year to $30.5 billion and its operating cash flow is flat at $12.6 billion. We are encouraged by the sequential improvement in AMX’s operating cash flow margin in Argentina, Colombia, and Mexico. In our view, America Movil’s current share price more than adequately reflects the potential risk that the company’s subscriber, revenue, and profit growth could be impacted by a potential recession in the U.S. and a global economic slow down. Given America Movil’s solid balance sheet (net debt of only $8.65 billion, with a debt to OCF ratio of only 0.7x), robust free cash flow, and attractive valuation."

America Movil S.A.B. DE C.V. (America Movil) is a provider of wireless communications services in Latin America. As of December 31, 2007, it had 153.4 million subscribers in 17 countries.

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