America Movil SAB, the mobile-phone company controlled by billionaire Carlos Slim, sank to a four-month low after Barclays Plc said the stock looks overvalued as Mexico prepares to implement pro-competition laws.
America Movil fell 2.1 percent to 13.35 pesos at 2:16 p.m. in Mexico City trading, helping push Mexico’s benchmark IPC index of 35 companies down 0.8 percent to a three-month low.
Barclays analysts led by Jonathan Dann wrote in a note to clients today that the Mexico City-based company is trading at 5.4 times estimated 2014 earnings, considered “expensive given the medium-term regulatory risks.” They estimated the rule changes would shave about 6 percent off of the company’s Mexico earnings before interest, taxes, depreciation and amortization. Barclays cut its recommendation on the stock to the equivalent of sell from hold.
“The bill will likely trigger mobile consolidation, the entry of mobile-virtual-network-operators and a national 4G wholesale operator,” Barclays wrote. Mexico is America Movil’s largest market, contributing about 35 percent of sales.
America Movil shares have lost 12.8 percent this year.
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