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Tele2: UBS starts coverage with 'buy'

( - UBS analysts this morning began to cover the Swedish telecom operator Tele2 with a "buy" rating and 136 kronor target price, seeing a "buying opportunity" at current levels.

The broker notes that the shares have underperformed the STOXX Europe 600 telecommunications (SXKP) index by about 12% since the CEO's abrupt resignation in July 2020, due to execution risk and fears of mid-term guidance reset.

"We do not expect major surprises, however, and see Tele2 returning to organic end-user service revenue (...) growth in 2021, which will be crucial for the stock to start re-rating again," UBS wrote.

At 8.8%, UBS points out that Tele2 is the cheapest European telecom stock in terms of 2022 dividend yield in its coverage universe, which it deems unjustified given the company's likely top-line rebound.

The Tele2 shares were trading up over 1% on this upgrade.

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