Morgan Stanley downgrades StarHub (CC3.SG) to Equalweight from Overweight and raises its price target to $2.70 from $2.50 on rollover to 2011 estimates.
The house notes, “with the exception of an attractive yield of 7.6%,” it sees “limited positive stock drivers” and recommends adding to positions in SingTel (Z74.SG), which has lagged both StarHub and M1 (B2F.SG).
The price target has been increased due to 1%-2% upward revisions in revenue estimates for 2011-12.
The house adds, it sees the rollout of the National Broadband Network and the government’s yet-to-be-finalized content cross-carriage decision as potential threats to StarHub’s current market share.
“Moreover, management has ruled out capital management for 2011, given several uncertainties in the business,” Morgan Stanley says.
StarHub down 0.4% to $2.60.