Tiscali upgraded to "outperform"

02/16/04 - BNP Paribas

LONDON, February 16 (New Ratings) - Analysts at BNP Paribas upgrade Tiscali (TIS.MI) from "neutral" to "outperform." The target price has been raised from €5.30 to €6.40.

Shares of Tiscali, an internet communication company that provides access, content and business applications, are currently trading at €5.33.

According to BNP Paribas' research note published on February 13, the current upgrade in rating is on account of the company’s robust FY03 performance and its positive future growth potential. Tiscali reported its FY03 revenues in-line with the estimates. The company's strong FY03 performance was driven by the robust performance of its Telephony and Business Services segments, the analysts say. The company's operating costs decreased to 42% of revenues in 2003, as compared to 48% in 2002, the analysts add.

According to BNP Paribas, the company's aggressive 2004 guidance is encouraging and achievable. Tiscali is currently focused on key profitable countries, local loop unbundling and bundling services. Tiscali's future earnings are expected to be boosted by the writing-off of all acquired goodwill as a one-off amortization charge before the end of 2005, the analysts mention. BNP Paribas believes that the company’s near term growth prospects are robust and it is poised to benefit further from a favorable regulatory environment.

The EPS estimates for 2004, 2005 and 2006 are -€0.38, €0.21 and €0.52, respectively. The P/E estimates for 2005 and 2006 are 25.5x and 10.2x, respectively.

BNP Paribas upgrades Tiscali from "neutral" to "outperform."