Elisa Oyj (ELI1V), Finland’s largest wireless carrier by subscribers, rose the most in two months as banks, including Nordea Bank AB, said easing price competition and cost cuts will improve second-quarter results.
Elisa rose as much as 2.8 percent, the most since Feb. 22. Shares in the Helsinki-based company gained 1 percent to trade at 13.58 euros by 12:10 p.m. in the Finnish capital. Trading volume exceeded 460,000 shares, more than half of the average daily figure during the past three months. The stock has lost 15.5 percent during the past 12 months.
“The situation is set to improve materially during the second quarter,” Sami Sarkamies, an analyst at Nordea, said in a note today. He raised his recommendation to buy from sell, increasing the price target to 15 euros from 14 euros.
Price competition, which eroded first-quarter profits, may be easing after rival TeliaSonera AB (TLSN) signaled its intention to raise prices, according to Sarkamies.
The recent promotional offers in Finland may have been “too aggressive” and TeliaSonera is seeking to increase fees especially for mobile data, the Stockholm-based company’s Chief Executive Officer Per-Arne Blomquist said last week.
Elisa’s first-quarter net income of 40.1 million euros ($52.3 million) missed the consensus estimate by 8 percent after promotions, including two-year mobile packages with the first year discounted by as much as 50 percent, weighed on profits.
The company seeks to offset the impact of competition by decreasing the number of products and cutting costs in administration, customer service and sales. These measures will improve profitability in the second half of the year and in 2014, Chief Financial Officer Jari Kinnunen said last week.
“The harsh reaction to the company’s weak first-quarter report offers a good opportunity to grasp a dividend yield of over 9 percent,” Mikael Rautanen and Timo Rahkonen, analysts at Helsinki-based Inderes Oy, said today in a note. They placed Elisa among Inderes’ list of top 3 Finnish stocks to buy.
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