U.S.-traded shares of Latin American telecommunications companies rose sharply on Thursday after Deutsche Bank upgraded America Movil SAB de CV to "Buy," saying shares are underpriced.
The Bank of New York Latin Telecom ADR Index _ a basket of Latin American telecommunications companies _ gained 5.48 points to 330.53 in afternoon trading.
Securities analysts Rizwan Ali and Miguel Garcia raised America Movil, Latin America's largest mobile phone service provider, from "Hold" in a note to investors Thursday, saying the stock trades at a discount following its first-quarter results.
Last month, the Mexico City company said its profit for the year's first three months fell 5.5 percent to $1.3 billion, or 74 cents per ADR, due in part to costs linked to the introduction of higher-speed 3G wireless networks in Latin America.
Furthermore, America Movil is well insulated from the broader world economic downturn brought on by higher oil prices, as the company's two major markets _ Mexico and Brazil _ are themselves oil producers, the analysts said.
"America Movil's operating environment remains challenging with slower economic growth in the region and increasing competition and regulatory pressure in Mexico. However, we believe these threats have been over priced into the stock," they said.
Their $68 price target implies a 22 percent rate of return on the stock from its closing price of $55.86 on Wednesday.
ADRs of American Movil rose $1.12, or 2 percent, to $56.98 Thursday afternoon. ADRs, or American Depositary Receipts, which is a security designed to allow U.S. investors to trade shares of companies based overseas.
Other Latin American telecom companies climbed Thursday. Argentina's Nortel Inversora SA gained 39 cents to $17.24. Brazil's Tele Norte Leste Participacoes SA added 63 cents, or 2.6 percent, to $25.15. Telefonos de Mexico SA de CV rose 57 cents to $38.98.
Brazilian mobile phone operator TIM Participacoes SA climbed 62 cents to $30.46. Telecom Argentina SA advanced 9 cents to $19.03. Brasil Telecom Participacoes SA increased 54 cents to $74.20.
Broader ADR markets were mixed. The Bank of New York Latin America ADR Index fell 5.25 points to 501.47.
The Bank of New York Composite ADR Index advanced 1.49 points to 185.59 as U.S. markets rose.
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