America Movil Near Fair Value

We are maintaining our Hold recommendation for America Movil (AMX - Analyst Report), a leading provider of wireless service in Latin America. We believe the current valuation adequately reflects strong subscriber growth and the company's dominant market position.

Intense competition, political risk in Mexico, investment risks associated with emerging markets, and regulatory issues warrant conservatism in assigning a significantly higher valuation. We view that the recent rise in AMX's stock accounts for the progress the company has made over the previous two years. Key drivers for the stock continue to be related to subscriber growth and associated usage of service in Latin America.

The stock is trading at lower multiples than previous quarters, based on higher 2008 earnings estimates. This enables us to revise upward our valuation, as it reflects the company's above-average projected earnings growth. Strong earnings and improved EBITDA margins may provide slightly improved valuations over the next several quarters.

Although we are encouraged by the company's solid performance and future growth prospects, we believe there may be more attractive buying prices for the security. We raise our six-month target price to $65, based on 16 times our 2008 earnings estimate, closer to the S&P500 metric, although we believe a lower valuation level would make a more favorable investment entry point.

Read the full analyst report on AMX