On Tuesday, Berenberg adjusted its outlook on United Internet (UTDI:GR), revising the price target to EUR42 from the previous EUR43 while maintaining a Buy rating on the stock. The revision follows the evaluation of the company’s second-quarter results from its listed components, 1&1 and IONOS.
The new price target is based on a discounted cash flow (DCF) analysis, which now incorporates the latest financial data from the two subsidiaries. The analysis suggests a minor reduction in the anticipated value of United Internet shares. Berenberg’s assessment includes an 80% conglomerate discount, which accounts for the complexity of United Internet’s group holding structure.
The firm notes that the holding structure’s complexity can be streamlined through strategic actions, such as acquiring the minority stakes in 1&1 and distributing the IONOS shareholding among United Internet shareholders. Despite the identified issues with the group’s structure, the management, led by founder CEO Ralph Dommermuth, who also helms 1&1, has recognized the need for improvement. The commitment to restructuring, however, appears to fluctuate with the progress of 1&1’s mobile network build-out.
The price target adjustment reflects Berenberg’s latest insights into United Internet’s financial performance and structural considerations.
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