Buy Signal on Orange (ORA-FR)

Our System triggered an Enter Long Strategic signal on February 17, 2022, on Orange ORA-FR, the French Telecom Company.

Our system also triggered a Tactical Buy signal on January 11, 2022, that suggest a bullish acceleration. Orange has a weak track record, with a Behavioral score of 1/10, therefore the bullish signal is to be considered as Tactical.

Orange is a €29 Bn market cap, and the French leader of the telecommunications industry.The company’s revenue mainly consists on Telecommunication services for individuals (80%) including mobile telephone services (215 million clients, Orange name in France, the United Kingdom and Caribbean, FTP Espana in Spain and PTK Centertel in Poland), fixed telephone services and Internet access (22 million Clients). The group also offers services for telecommunication operators. The revenue is achieved in France (53%), Spain (14%), Europe (16%), Africa and the Middle East (17%). The telecommunication services to businesses represent 18% of group’s revenues, including mobile telephone, voice and data transmission services and integration and information management for communication applications. The remainining activity is telecommunication services to international telecommunication operators (3% of revenues).

Orange just reported its FY2021 results, showing revenue of € 42.5 Bn a +0.8% y/y growth coupled with a €12.57 Bn EBITDA, which looks in line with street expectations. However in Q4, the operating margin was a touch lower, mainly due to fierce competition in Spain. Orange expects its EBITDA to grow by 2.5 to 3% in 2022 and its organic cash flow to reach a miminum of €2.9 Bn. The dividend will be maintained at € 0.7, corresponding to a 6.6% dividend yield.

The Q4 operating performance is likely to trigger some profit taking on the stock, that could be an opportunity to jump in as the Telecom theme is currently gaining momentum due to its defensive profile coupled with usually high dividend yields.

Short term catalyst : Defensive profile, high dividend yield.

This signal looks consistent with the major bullish trend in the European Telecom Sector. There is currently 62% of European Telecom stocks in bullish Tactical signal and 42% in bullish Strategic signal.