Analyst Note| Andreea Matysiak |
Narrow-moat Telefonica reported second-quarter results below expectations. First-half revenue declined by 4% organically, versus our low-growth assumption. Most of the difference is driven by Brazil and Latin America countries, which the pandemic strongly affected. We adjust downward our sales and earnings estimates for these regions and account for a slightly lower cost savings going forward, resulting in a fair value estimate cut to EUR 8.70 for the locally traded shares. ADR at our $10.20 fair value estimate is unchanged.