Swisscom SCMWY has revised its full-year earnings outlook for 2024, following the acquisition of the telecom company Vodafone Italia. The revision is attributed to costs of up to €200 million ($207.20 million) that will be reflected in Swisscom's 2024 financial results. However, the company emphasized that this would have no impact on its free cash flow. 

The Swiss telecommunications company has lowered its expected EBITDA to CHF 4.3-4.4 billion from the earlier estimate of CHF 4.5-4.6 billion. Additionally, it has kept its guidance for revenues, capital expenditures (CAPEX) and dividends unchanged. More details about integration costs will be provided in the upcoming full-year report. 

The €8 billion acquisition was officially completed on Dec. 31, after securing all necessary regulatory approvals. Despite this revision, management anticipates that this deal will drive long-term value for the company. The transaction will likely allow Swisscom to leverage the Italian telecommunication company’s extensive network and customer base, expanding the its reach and service offerings in Italy. Moreover, combining Fastweb’s fiber-optic broadband services with Vodafone Italia’s 4G and 5G networks will likely enable Swisscom to deliver an improved, more comprehensive product portfolio for both business and consumer customers.

How Will SCMWY Stock be Impacted?

Swisscom may face short-term pressure following the revised earnings outlook due to the integration costs from the acquisition. The lowered EBITDA forecast is concerning, though the company's stable free cash flow and unchanged guidance for revenues, CAPEX and dividends may help mitigate the impact. In the long term, the acquisition’s potential to strengthen Swisscom’s position in Italy could boost the stock's performance.

SCMWY Stock’s Price Performance

Shares of Swisscom have plunged 8.5% over the past year compared with the industry’s 16% decline.

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SCMWY’s Zacks Rank and Stocks to Consider

Swisscom currently carries a Zacks Rank #4 (Sell).
 
Some better-ranked stocks in the broader industry have been discussed below:

Ubiquiti Inc. UI presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Its highly flexible global business model remains apt to adapt to the changing market dynamics to overcome challenges while maximizing growth. 

The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques. In the last reported quarter, Ubiquiti delivered an earnings surprise of 20.9%.
 
InterDigital, Inc. IDCC sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 17.44%.

IDCC pioneered advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops various advanced technology solutions for digital cellular, wireless 3G, 4G and IEEE 802-related products and networks.

Keysight Technologies, Inc. KEYS sports a Zacks Rank of 1 at present. In the last reported quarter, it delivered an earnings surprise of 5.10%. Keysight is expected to benefit from the growing proliferation of electronic content in vehicles, momentum in space and satellite applications and rising adoption of driver-assistance systems globally.

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