Telefonica Earnings: Maintains Guidance Despite Currency Headwinds; Fair Value Estimate Unchanged

No-moat Telefonica’s third-quarter results were hit by the depreciation of Latin American currencies, mainly the Brazilian real. Reported revenue growth was negative 2.9% and EBITDA declined by 2.5%, to EUR 10.02 billion and EUR 3.26 billion, respectively. Although management maintained all its guidance targets, we believe the revenue target might be difficult to achieve as Telefonica's revenue growth year to date is negative 0.3%, while guiding for 1% growth for the full year. This would imply a significant acceleration in the last quarter of the year and require appreciation in Latin American currencies, which is difficult to predict. Our 2024 revenue forecast is already more bearish than management’s revenue target. EBITDA and capital expenditure guidance seem within reach. We maintain our EUR 4.70 fair value estimate.