Amcom divides analyst opinions

Brokers are split over whether the fibre-optic network operator has run up too hard over the past 12 months.

Investors searching for clues to whether market darling Amcom Telecommunications (AMM) still represents value would not find comfort from the latest broker notes.

The fibre-optic network operator’s share price has surged 70% over the past year to $1.89 due to its relatively defensive earnings, growth potential from its cloud computing operations and good yield, but the stock is now pushing a one-year forward price-earnings of close to 20 times.

CIMB thinks enough is enough and has cut its recommendation on the stock to “neutral” with a price target of $1.83, but Amcom has replaced Mermaid Marine (MRM) as the “most preferred stock” over the next three months on Citigroup’s list.

Citigroup is still enamoured by Amcom as it believes the company is well placed to grow profit and revenues over the medium term. This expectation is based on the leverage Amcom has from its in-ground fibre network, the fact that it is only one of three Cisco enterprise equipment resellers and the ongoing convergence of IT and telco.

Citigroup has a “buy” rating and $1.96 price target on Amcom.

Amcom and Mermaid Marine are on the Uncapped 100.

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