Orange posts strong operating FCF beat in Q4; Morgan Stanley expects 2-3% stock uptick

Orange S.A (FNCTF) reported much stronger-than-expected operating free cash flow (FCF) for the fiscal fourth quarter, sending its shares up 1% in Paris trading.

Adjusted EBITDA for the quarter was reported at €3.54 billion, slightly surpassing the consensus estimate of €3.51 billion. The company’s revenue matched the forecast at €11.58 billion.

Capital expenditures on telecom activities stood at €2.06 billion, missing the projected €2.15 billion.

The operating free cash flow for Q4 exceeded forecasts by 7.5%.

In the second half of the year, Orange managed to reduce its net debt to €27.00 billion, slightly less than the anticipated €27.07 billion.

Orange also declared a dividend per share of €0.72 for the whole of 2023, in line with expectations.

Looking forward to 2024, Orange is targeting low single-digit growth in EBITDA after leases and aims to achieve an organic cash flow of at least €3.8 billion.

Moreover, the company has set a minimum dividend of €0.75 per share for the 2025 fiscal year.

In addition to other parts of the report, Morgan Stanley analysts were most impressed with the telecom operator’s FCF beat.

“We expect shares to rise by +2% to +3%,” they wrote.