Orange S.A. (EU:ORA) shares gained 2.5% on Tuesday after Goldman Sachs upgraded the stock to Buy from Neutral, assigning a 12-month price target of €21.60—suggesting about 22% upside from Monday’s close.
The upgrade reflects Goldman’s view that market attention has been overly focused on potential consolidation in France, overshadowing a separate growth opportunity driven by Orange’s own operations.
Consolidation Talks in Focus, but Not the Only Driver
Orange is currently part of a consortium alongside Bouygues Telecom and Iliad’s Free, which entered exclusive talks in April to acquire SFR, France’s second-largest mobile operator, for €20.4 billion. While this possible transaction has dominated investor sentiment, Goldman believes Orange’s upside case stands even without the deal.
Improving Returns and Lower Investment Needs
Goldman now expects Orange to deliver an improvement of around 3 percentage points in return on invested capital (ROIC) over the next five years, compared with just 1 percentage point previously assumed in January and significantly above the sector average.
The bank also anticipates a structural decline in capital expenditure intensity across the group, driven by the gradual completion of fibre network rollouts in key markets such as France and Spain.
With fibre coverage reaching roughly 95% in France and advertising for ADSL banned from January 2026, analysts argue that the most capital-intensive phase of fixed-network investment is largely complete.
Goldman projects French capex-to-sales to fall to 15.6% by 2028—slightly below both company guidance and market consensus—and to decline further to 13.8% by 2030. In Spain, it expects the ratio to reach 11%, also below consensus expectations of 12%.
Positive Outlook for MasOrange
The bank is also more optimistic than the market on MasOrange, Orange’s joint venture in Spain. It forecasts underlying EBITDA growth of around 3% annually, excluding synergies, supported by the venture’s strong competitive positioning in a more concentrated market environment.
Spain’s mobile market is effectively composed of around 3.25 players, compared with an average of roughly four across Europe. Goldman also sees the fixed infrastructure segment potentially moving toward a more consolidated, duopoly-like structure through joint ventures, including arrangements with Vodafone Spain.
“This has the potential to drive material efficiencies to both the JV and to MasOrange opex in the mid-term,” analysts led by Andrew Lee said in a note.
Valuation Still Attractive
The analysts added that even without factoring in any benefits from a potential French consolidation deal, Orange’s valuation “does not look stretched, even post recent share price outperformance on French consolidation news, and excluding the prospective growth and returns benefits of a finalised deal.”
“We expect beats and raises at 1H26 to act as a catalyst,” they concluded.
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