J.P. Morgan Gives Overweight Rating to Vimpelcom (VIP)
J.P. Morgan (NYSE: JPM) has resumed its coverage of Vimpelcom Ltd (NYSE: VIP). VIP has largely been an underperformer compared to its peers due to various technical and legal risks associated with its merger. VIP has also been reporting lower VAS growth during the last two quarters. However, the report has stated the stock should benefit from a reacceleration in growth in the company’s key markets such as Russia and Ukraine. These markets are likely to experience a cyclical rebound. VIP is also strongly positioned to benefit from growth in wireline.
VIP stock is currently trading at a 7.4x multiple of 2010 estimated earnings. It is also at 4.5x of 2010 EV/EBITDA. The company is expected to have strong cash flows due to lower capex in CIS countries. J.P. Morgan has a medium term price target of $24.50 on the stock.
