VimpelCom Ltd., the wireless carrier controlled by Russian billionaire Mikhail Fridman, sank to a four-week low in New York as an unexpected decline in third-quarter revenue spurred concern the company will post its slowest sales growth on record this year.
VimpelCom fell 3.1 percent to $12.73 in New York yesterday, the lowest level since Oct. 15, trimming its gain this year to 30 percent. The stock is trading at 10.8 times estimated earnings, the lowest multiple in a week. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. slipped to the lowest level since Oct. 3 and RTS stock futures declined in U.S. hours.
Sales at VimpelCom, which replaced Dell Inc. on the Nasdaq-100 index last month, will rise 0.9 percent in 2013 after jumping 14 percent in 2012, according to the mean estimate of 16 analysts compiled by Bloomberg. The company reported an unexpected drop in third-quarter earnings on Nov. 6. Citigroup Inc., VTB Group, UFS Finance Investment Company and Raiffeisen Bank International cut their buy ratings this month.
“Third-quarter earnings disappointed, casting doubts over all-year performance,” Sergey Libin, analyst at Raiffeisenbank AG in Moscow, who cut his buy rating to hold yesterday, said by phone. “The market sentiment is deteriorating because of weak financials last quarter, and more analysts may still cut their recommendations on the stock.”
A total of 14 analysts of 25 covering VimpelCom have a hold recommendation on it, the highest total since May, data compiled by Bloomberg show. Two recommend selling it and nine have a buy rating. Otkritie Financial Corp. increased the stock to a buy on Nov. 11.
VimpelCom, with 219 million customers worldwide, has slid 11 percent since Nov. 6, when analysts started to lower their recommendations on the stock as third-quarter net income shrank by half to $275 million. It traded at a 13.7 percent premium to OAO Mobile TeleSystems, Russia’s biggest mobile phone company, known as MTS, yesterday. The premium had reached a record high of 14.2 percent on Nov. 5.
“VimpelCom trading at a premium to MTS doesn’t seem fair at all and the gap should be gone in about two months from now,” Anna Milostnova, analyst at UFS-Finance Investment Co. in Moscow, said by phone yesterday. She cut VimpelCom to hold from buy Nov. 8 and has a hold rating on MTS.
MTS fell 1.5 percent to a two-month low of $21.67 in New York yesterday, reducing its 2013 advance to 16 percent.
While VimpelCom’s adjusted net income is expected to increase 15 percent in 2013, according to the mean estimate of 16 analysts surveyed by Bloomberg, MTS’s profit is projected to surge 36 percent. MTS reports third-quarter results on Nov. 19.
A weaker ruble means lower profits when companies denominate earnings in dollars, said analysts, including UFS-Finance’s Milostnova. The ruble has depreciated 7.2 percent against the dollar this year, according to data compiled by Bloomberg.
The Market Vectors Russia ETF, the biggest U.S.-traded exchange-traded fund that holds Russian shares, slipped 0.1 percent to $28.34, the lowest level since Sept. 30. The RTS Volatility Index, which measures expected swings in the index futures, added 1 percent to 24.03 in U.S. hours. Futures on the dollar-denominated RTS Index slid 0.8 percent to 142,630.
The Bloomberg Russia-US gauge decreased 0.9 percent to 99.15. OAO RusHydro fell 3 percent to $1.61 yesterday, settling at a 4.1 percent discount to the company’s Moscow-listed shares, the deepest gap this month. OAO Sberbank, the country’s biggest lender, rose 1.8 percent to $12.61 in New York yesterday.
United Co. Rusal, a Moscow-based aluminum producer, dropped to a record low, losing 0.9 percent to HK$2.23 in Hong Kong trading as of 10:33 a.m. local time. The MSCI Asia Pacific Index fell 0.5 percent.