UPDATE: Morgan Stanley Upgrades Telefonica to Overweight on Spain Structural Change

Morgan Stanley upgraded Telefonica TEF from Equal-weight to Overweight. Morgan Stanley analyst Luis Prota commented, "Spain is becoming a more attractive market place for TEF, as it moves to a convergent, infrastructure-based market. Fusion's success has been the catalyst, in our view – peers may have matched TEF's tariffs but reselling part of the bundle only makes it profitable for integrated players. Jazztel, Vodafone and Orange all moved to deploy fibre, but are running well behind TEF. The focus on ROCE will reduce pricing pressure, while lower churn will drive higher margins. On 5x EBITDA, 10-11x PE and 12-14% FCFE yield, TEF looks cheap." Telefonica closed at $14.51 on Monday.