Merrill Lynch has downgraded its rating on six European telecoms stocks, arguing that discrepancies in valuations had emerged among individual companies in the sector.
Analysts at the investment bank said it had downgraded heavyweights Deutsche Telekom and France Telecom to 'reduce' from 'accumulate'. It said it saw further downside of 20% to 25% in both.
Danish telecommunications group TDC, Swisscom and Dutch-US joint venture company KPNQwest were cut to 'reduce' from 'neutral', Merrill arguing that they remained 'aggressively priced'. Norway's Telenor was downgraded to 'neutral' from 'accumulate'.
Merrill maintained its 'buy' recommendation on Vodafone, calling it the pick of the European telecoms sector. But shares in the British company closed down nearly 5% at £1.43 sterling in London.
