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IBERIAN DAILY 04 NOVEMBER + 3Q’25 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: TELEFÓNICA.

At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 3Q’25 results to be released over the coming days in Spain.

Initial gains reeled in yesterday with corrections today
November kicked off in Europe with gains that were reeled in as the session went on during a day in which all eyes continued to be on the results season. In the STOXX 600, the best-performing sectors were Travel & Leisure and Technology, with Basic Materials and Media suffering the biggest losses. On the macro side, in the euro zone October’s final manufacturing PMI confirmed the preliminary data of 50, whereas in Spain it rose more than expected to 52.1. In the US October’s manufacturing ISM fell unexpectedly. In China the government implemented fiscal incentive that will cut the energy bill by half for data centres. In US business results, On Semiconductor, Palantir and Pinnacle beat expectations and Realty Income’s figures were in line with expectations.
What we expect for today
European stock markets would open with losses of up to -0.9% due to China, with cyclical sectors (among them, Technology) suffering the most. Currently, S&P futures are down -0.90% (the S&P 500 ended +0.10% higher vs. the European closing bell). Asian markets are falling (China’s CSI 300 -0.9% and Japan’s Nikkei -1.4%).
Today in Brazil we will learn September’s industrial output. In US business results, Uber, Pfizer, Zoetis and Marriott, among others, will release their earnings.


COMPANY NEWS

TELEFÓNICA. 3Q’25 results in line with expectations, with weak FCF. Strategic Plan’28 at low end and -50% DPS’26. OVERWEIGHT
The company has just released its 3Q’25 results that were very much in line (in Spain as well),but with weak FCF (€ 123 M; -80% vs. consensus). As for the presentation of the CMD’25 today, we highlight: (i) the company expects +1.5%-2.5% CAGR’25-28 in EBITDA (vs. +2.5% BS(e) and +1.5% consensus); (ii) FCF of 1.5%-2.5% CAGR’25-28; (iii) in shareholder remuneration TEF confirmed the dividend of € 0.30/sh. (7% yield) against 2025 reserves and € 0.15/sh. in 2026 (-50%; 3.5% yield); going forward this will be linked to 40%/60% of FCF AL (near € 0.27/sh.). There are no specific indications on M&A or a capital increase. The reception today would be negative due to the FCF and dividend cut (TEF -30% vs. IBEX in 2025, -3% vs. sector).

3Q’25 Results highlights and rest of previews
Of the stocks releasing their results over the coming days we highlight on the positive side CAF (13/11), where we expect another solid quarter with strong commercial activity that would leave the backlog at € 15.79 Bn (~3.5x sales), and with a P&L statement that would show solid and attractive growth, with 3Q’25 sales up +10.6% and EBIT +37.7% (mainly from Solaris).