Analyst Note| Michael Hodel, CFA |
Telefonica Brasil (Vivo) posted solid third-quarter results. We are maintaining our $12 fair value estimate per ADR, which we view as attractive, sitting near a five-year low. The political and economic situation in Brazil remains challenging, but the real has held up well against the U.S. dollar. We expect Vivo to generate around BRL 48 billion in revenue during 2022, or $9 billion, up from $8 billion in 2021. The firm is on pace to deliver about $1.4 billion of free cash flow this year, or nearly 11% of its current market capitalization. Vivo also possesses an extremely strong balance and a solid competitive position, in our view.