Oddo BHF has lowered its recommendation on Orange shares from 'outperform' to 'neutral', with a price target reduced from 12 to 11.5 euros.

According to the analyst, Orange's Q1 performance bears witness to the current imbalance in the market, with Iliad and Bouygues capturing 80% of growth (vs. Orange ~20%, excluding the declining wholesale business).

While the decline in Orange's customer base appears to be limited to 1% per year, "the risk seems greater to us in the medium term", says Oddo BHF.

Consequently, the broker is lowering its sales/EBITDA forecasts from 2024 by an average of 8-10% (and EPS by 3-4%).

For 2024, we forecast ~2% pro forma EBITDAaL growth (in line with the 'low single digit growth' objective) and 2-3% FCF growth (vs. 4% guidance)', adds Oddo BHF.

Among the various factors that could restore the share's potential, Oddo BHF encourages management to find ways of creating value over the next 5 years, 'through an MVNO-type entry into an uncompetitive market or the purchase of discounted assets'.

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