VimpelCom Ltd (ADR) (NASDAQ:VIP) is a mid-cap stock that’s making some global changes. Emerging markets telecommunications giant VimpelCom is creating buzz among investors as the result of a new re-branding initiative announced at the very end of February. The move will position the company (to be known as Veon) to benefit even more from rapid Internet growth in the world’s top emerging markets.
Shares of VIP are currently trading at $4.10, giving the company a market cap of $7.22B. Over the most recent 52-week period, shares of the company have traded as low as $3.12 and as high as $4.51.
VimpelCom Ltd (ADR) (NASDAQ:VIP) is headquartered in Amsterdam and currently serves 13 primary markets, including several in the post-Soviet Union (Russia, Ukraine, Kazakhstan, Uzbekistan, Tajikistan and Georgia). Globally, the company serves more than 200 million customers. Other key markets include Pakistan, Bangladesh, Laos, Zimbabwe and Algeria.
The real crown jewel of the company right now, however, is its Italian business unit. In Q4, it was Italy where VIP announced its Veon-branded Internet platform. VIP plans to roll out this Veon platform to every other market throughout 2017. As part of this rollout, the company has partnered with a number of top brands, including financial services giant MasterCard.
The goal of VIP is to offer a full suite of paid services on top of the Internet platform, including music and banking. And, since the company primarily is focused on emerging markets, it is building a core product around the “personal Internet revolution” that it plans to offer these customers — including the ability to stay connected for free, even when there is no credit available on the internet account.
In general, Wall Street analysts have taken a positive view of the company. Of the 14 analysts following the stock, 5 have a “Buy” rating, 7 have an “Outperform” rating, 1 has a “Hold” rating, 1 has an “Underperform” rating, and 0 have a “Sell” rating. The consensus 12-month price target for the stock is $5.17, with a high forecast of $6.40 and a low forecast of $4.00. Given the current stock price of $4.10, a price target of $5.17 represents a nearly 25% appreciation in value.
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The company recently reported improving financial results, and now hopes that the re-branding will propel the company to even better financial performance There’s a lot to like about the company – a stable portfolio of brands (including Beeline, Kyivstar and Mobilink), solid experience in the world’s most volatile emerging markets, and a world-class management team headquartered in Amsterdam.
In terms of things to watch out for in 2017, one factor is obviously geopolitical risk. Of the 13 markets served by the company, perhaps the only one that doesn’t represent a source of real risk is Italy. Given the current sentiment around Russia and Ukraine, it’s possible to see that the company’s core holdings in the post-Soviet space are obviously worth a closer look.
And, as one potentially troubling sign of what’s really happening behind the scenes at VIP, huge telecom provider Telenor is looking to offload a huge equity stake. At one time, Telenor owned a 33% stake in the company but is now looking to offload that stake through a secondary offering.
Going forward, it’s easy to see why investors are excited about the prospects for VIP. It’s a well-run company, with lots of emerging markets expertise and a strong new Internet growth initiative designed specifically for global markets. Plus, most importantly, the company has a 12-month price target that suggests a upside of 20-25% over the next year could be possible. For more news on VIP and other fast-moving penny stocks, please subscribe to OracleDispatch.com below.