Shares in France Telecom (Other OTC: FNCTF - news) rise 5 percent, the top gainers on France's CAC 40 (Paris: ^FCHI - news) , as traders cite a rating upgrade from Morgan Stanley (Xetra: 885836 - news) .
Morgan Stanley analysts raise their rating on the stock to "overweight" from "underweight", citing a low valuation, better cost control and possible state fibre network subsidies.
The analysts increase their price target for the stock to 9.60 euros from 8.90 euros.
Costs will be at least flat after rising in 2012, and the drop in earnings next year resulting from the mobile price war in the French market is already priced into the shares, the analysts write, adding that the company could receive 6.5 billion euros in fibre subsidies over 10 years.
Morgan Stanley says it sees 20 percent upside potential in the near term but a possible 50 percent in their bull case.
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