The Portugal Telecom, SGPS, S.A. (PT) common stock hit our target price on 29 June 2009, reflecting positive investor reaction to healthy fundamentals outlined in our most recent update report. However, we now feel that the stock's medium term upside potential has been exhausted. Therefore, we moderate the common stock from a BUY to a HOLD. We will reassess our 6-12 month fundamental rating in our next update report....

PT has managed to sustain modest top-line growth despite witnessing intense competition in its overall market and lower Average Revenue Per User (ARPU) due to a decline in Mobile Termination Rates (MTR) in Portugal. Going forward, we expect the company to benefit from network-upgrades and expansion initiatives in Brazil and Portugal, positively impacting the company’s long term growth prospects. Through Vivo’s acquisition of Telemig and commencing operations…

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Portugal Telecom, SGPS, S.A.’s (PT) 3Q 08 reported modest y-o-y growth in operating revenues which was however, above our expectations. Growth was led by the contribution from Vivo and improved performance from the Wire-line segment. Income at operating and net levels was significantly higher than expectations due to lower than expected operating costs and curtailment costs at the net level. The company’s strong position in Brazil’s and…