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Orange Rose to Top of FEZ on Telecom Acquisition Announcement

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FEZ’s top performers

On Tuesday, January 12, 2016, the stocks at the top of the SPDR Euro STOXX 50 ETF (FEZ) were Orange (ORAN), LVMH Moet Hennessy Louis Vuitton (LVMUY), BMW, Danone (DANOY), and SAP (SAP). These stocks gained 4.1%, 3.1%, 2.8%, 2.6%, and 2.3%, respectively, on the day. Among all these stocks, Orange emerged as FEZ’s biggest gainer.

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Orange and Bharti Airtel’s business deal

  • Orange declared on Tuesday, January 12, 2016, that it is going to buy two telecom operations businesses from Airtel in Africa.
  • Orange will acquire 100% of the shares in these two companies. The consolidated revenue of these two telecom operations businesses is 275 million euros.
  • The acquisitions are expected to be implemented in 2016.
  • Orange CEO said that consolidation of the European telecom industry is necessary for investment. In the last 20 years, Europe’s (EZU) telecom industry has entered a fragile state.

Orange’s returns

Orange is currently trading at 15.82 euros. Its 52-week high is 16.98 euros while its 52-week low is 12.21 euros. The stock returned 15% in 2015. Its current price-to-earnings ratio is 42.68x, which is higher than its competitors Telefonica and Deutsche Telekom. Its price-to-book-value ratio is 1.39x.

The stock is currently trading at 6% above its 100-day moving average and 3% above its 20-day moving average. However, it is trading at par with its 50-day moving average. The stock is moving in an upward direction. Recently, the stock is trading near its 50-day moving average. Analyst estimates suggest an upside of 8% for Orange over the next-12-month period from the current levels as of January 12, 2016.

In the next part of this series, we will analyze the performance of UniCredit (UNCFF) on January 12, 2016.

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