Citi Upgrades America Movil SA de CV (AMX) to Hold

April 29, 2009 9:34 AM EDT

Citi upgrades America Movil SA de CV (NYSE: AMX) from Sell to Hold. Price target raised to $35.

Citi analyst says, "We were wrong: our fears in our April 13th downgrade over slowing Mexican usage hurting ARPUs did not appear at all in the Q109 results. As AMX has underperformed the Brazilian mobile names by 10% in Q209, we upgrade the stock back to Hold/High risk with no change in forecasts at this stage. Our target price returns to US$35 (from US$30)."

'There are four issues that we are currently balancing in the name: First, the stock's attractiveness on valuation and growth to Latam funds, but not to global telecom investors. Second, in the short term we see no more disappointments in estimates, but the FX trends are now becoming a headwind. Third, the 18-month squeeze on FCF from the push to post-paid against the fact that in the long-term this strategy should help the company gain share. Finally, we note the strong capital returns vs. the risk of M&A to recapture growth."

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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