On Wednesday, JPMorgan (NYSE:JPM) initiated coverage on Indosat Tbk PT (ISAT:IJ) (OTC: PTITF) stock, an Indonesian telecommunications company, with an Overweight rating and set a price target of IDR15,000.00. The firm highlighted its significant market share gain and robust earnings growth since its merger, projecting more than a 25% potential upside.
Indosat has experienced substantial growth following the merger with Hutch, capturing approximately 220 basis points in revenue market share and achieving a 49% increase in EBITDA over the two years since the merger.
These gains have been reflected in the company's stock performance, with shares rising over 80% since January 2022, outpacing both the Jakarta Composite Index (JCI) and the MSCI Emerging Markets Index.
JPMorgan's positive outlook for Indosat is driven by the mobile segment, which is expected to contribute to earnings upgrades, improved returns on invested capital (ROIC), and an expansion of valuation multiples. The firm also notes that the company's new growth initiatives, such as fixed broadband and GPU-as-a-Service, could present further upside risks to earnings.
The analyst from JPMorgan underscored the successful post-merger execution as a key factor for the bullish stance on Indosat, stating that it is their preferred Indonesian telecommunications stock.
Additionally, they mentioned a "blue sky" valuation scenario where, if all goes exceptionally well, the stock could potentially reach over IDR21,000, indicating more than an 80% upside from the current levels.
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