America Movil, Grupo Televisa upgraded to buy at BofA

Investment firm Bank of America upgraded America Movil (NYSE:AMX) and Grupo Televisa (NYSE:TV) on Thursday, noting that even though the firm has a "cautious" view on broadband, the stocks have good entry levels for investors.

A group of analysts, led by Fred Mendes, moved their ratings on America Movil (AMX) and Grupo Televisa (TV) to buy, noting that even though competition is likely to be fierce in the telecom and broadband spaces, both companies have exposure to other businesses and trade at discounted valuations, with America Movil at 4.5 times enterprise value to EBITDA and 3.2 times for Grupo Televisa.

Additionally, they have estimated free cash flow yields of 9.6% and 9.5%, respectively.

Delving deeper into America Movil (AMX), the analysts said that Mexico accounts for roughly 40% of the company's EBITDA via its stakes in Telcel and Telmex, with Telcel continuing to perform admirably. Telmex has the lowest price offerings amongst its peers and is likely to continue adding subscribers on a net basis thanks to this strategy, the analysts said.

They boosted their price target to $25 on America Movil, roughly 45% higher than where shares are currently trading.

For Grupo Televisa (TV), the analysts said that there is "value" behind TV+UNI, despite "soft" performance in both cable and Sky.

"Considering TV+UNI with a valuation in line with its US peers at 7x EV/EBITDA 24, it implies MXN9/sh for the business vs TV stock price of MXN10.5," the analysts wrote.

Analysts are largely bullish on America Movil (AMX). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates AMX a HOLD.