JPMorgan downgrades Millicom stock rating on valuation concerns

JPMorgan has revised its rating for Millicom International Cellular SA (NASDAQ:TIGO) to Neutral from Overweight due to valuation concerns. The investment firm has raised its price target for the stock to $105.00 from $100.00, as Millicom continues to execute well operationally. However, market expectations have risen, and much of the anticipated consolidation benefits from the Colombian market have likely been factored in by investors.

JPMorgan believes incremental upside may arise from improved performance in Chilean operations, potential consolidations in Peru and Venezuela, or possible acquisitions in these markets. The company's Fair Value analysis suggests the stock is trading at fair value levels currently. JPMorgan increased its estimates as it expects faster growth in Colombian synergies, with service revenue for 2026 and 2027 rising by 1.5% and 0.3%, and EBITDA up by 3.3% and 2.9%, respectively.

Despite a revenue beat in the second quarter (reaching $2.18 billion), Millicom's earnings per share missed expectations, falling to $0.65 from the estimated $0.94. The company also raised its full-year equity free cash flow guidance and approved a larger interim dividend, which received positive feedback from investors.