On Thursday, BofA Securities increased the price target for PLDT (NYSE:PHI) Inc. (TEL:PM) (NYSE: PHI) shares to PHP1,750 from PHP1,700, while reiterating a Buy rating on the stock. The adjustment comes as the firm anticipates a modest acceleration in the company's mobile revenue growth.
The analyst from BofA Securities noted that the upward revision in the price target, which represents a 3% increase, is based on PLDT's mobile revenues, which have grown by 5% year-over-year. Despite facing higher interconnection and repair and maintenance costs, the company is expected to see its margins expand, although at a more subdued rate than previously estimated, with a 2024E margin forecast of 50.5% compared to the prior forecast of 52.2%.
Furthermore, PLDT's lower depreciation expenses, following a PHP13.9 billion write-off of assets in the fourth quarter of 2023, also contributed to the positive outlook. While the 2024E dividend per share forecast remains unchanged at PHP97 per share, yielding 7.1%, the 2025E dividend per share estimate has been increased by 4% to PHP101 per share.
The endorsement of the Buy rating for PLDT reflects the analyst's confidence in the company's fundamental growth drivers. These drivers include increased data usage and expanding profit margins. Additionally, PLDT is recognized for offering a superior dividend yield compared to its industry peers, which further supports the favorable rating.
InvestingPro Insights
PLDT Inc. (NYSE: PHI) has been demonstrating solid financial performance, a fact that aligns with BofA Securities' positive assessment. According to InvestingPro data, PLDT boasts an impressive gross profit margin of 73.56% over the last twelve months as of Q4 2023, underscoring the company's efficiency in managing its cost of goods sold and reinforcing the analyst's confidence in its profit expansion capabilities. Moreover, PLDT's commitment to shareholder returns is evident with a robust dividend yield of 4.96%, making it an attractive pick for income-focused investors.
With a P/E ratio of 10.93, PLDT is trading at a low earnings multiple, suggesting that the stock could be undervalued given its earnings capacity. This is particularly relevant as InvestingPro Tips highlight the company's trading at a low earnings multiple and its status as a prominent player in the Wireless Telecommunication Services industry. Additionally, PLDT has maintained dividend payments for 20 consecutive years, which speaks to its financial stability and reliability as an investment.
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