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“Since August, we’ve seen (a) MXN -6%, (b) AMX losing ground in the MSCI, and (c) worsening in macro sentiment in MX (IPC -7%). Thus, AMX stock fell 20% in the same period,” mentioned UBS.
According to the bank, the recent correction in the stock price has disconnected it from its fundamental factors, with potential for earnings improvement in Q3/23, a strong MXN YTD, and reduced capital expenditures in 2024-2025.
“At 2024E 4.2x EBITDA and 8% FCF yield, the stock is at its lowest since 2019 (20% below 3-yr avg). As icing on the cake, we also see a compelling dividend yield (with buybacks) of 7% in 2024E,” added UBS.
Furthermore, the bank believes the upcoming Q3 results will show improved operations, possibly leading to a re-rating of the stock or at least establishing stronger support levels.
