By Lourdes O. Pilar, Researcher

PROFIT taking drove much of Globe Telecom, Inc.’s stock activity last week.

Globe was the 14th most actively traded stock last week with a total of 526,610 shares worth P1.14 billion having exchanged hands on the trading floor during the week from June 1 to 5, data from the Philippine Stock Exchange showed.

Shares in Globe closed at P2,170 apiece on Friday, down 5.4% on a week-on-week basis. Year to date, however, the stock is still up by around six percent.

“Start of [last] week, Globe Telecom was the third-best performing stock in the PSEi (Philippine Stock Exchange index) with a year-to-date gain of 13.6%. We believe the company was one of the most actively traded stocks as investors locked in their gains and perhaps rotated to some of the laggards,” said Philippine National Bank (PNB) Senior Equity Research Analyst Jonathan J. Latuja in an e-mail.

“Consequently, Globe Telecom was the second-worst performing stock in the PSEi last week,” he added.

In a regulatory filing earlier last month, the Ayala-led telecommunications company reported its core net income for the first quarter — which excludes the impact of non-recurring charges, one-time gain, foreign exchange gains and mark-to-market charges — stood at P6.6 billion, a 3% decline from P6.73 billion in the same period a year ago.

Earlier last month, the Ayala-led telecommunications company reported a three-percent decline in its first-quarter core net income — which excludes the impact of non-recurring charges, one-time gains, foreign exchange gains, and mark-to-market charges

“The implementation of the extended community quarantine partially affected Globe’s performance in the first quarter. We expect earnings to further decline in the second quarter as the stay-at-home measure resulted in a reduction in mobile data usage,” Mr. Latuja said.

“However, the surge in demand for home broadband will partially offset the weakness of the mobile segment. We expect that the company will continue to preserve its cash in favor of funding its monthly operating expenses and working capital. We expect full-year 2020 earnings to decline by four percent,” he added.

Globe said its capital expenditure guidance for the next quarter would likely be lower by at least P2 billion from the first quarter’s spending given the delays it is experiencing with its network rollout due to the community quarantine.

“Investors might continue to take profits on Globe as investors participating in [the stock market rally] might prefer to take advantage of stocks that have not yet significantly bounced from their lows,” Mr. Latuja said.

In a separate e-mail, Mercantile Securities Corp. Analyst Jeff Radley C. See noted Globe’s slight drop in net income, but said this was expected due to the adverse effects brought by the pandemic.

“The company has limited movement thus having a slight weakness in its financials. I am not afraid for Globe with their second-quarter income since they are not that affected by the pandemic as compared to other industries,” said Mr. See.

Mr. See placed the stock’s support and resistance levels at P2,080 and P2,300, respectively.

For his part, PNB’s Mr. Latuja provided a discounted-cash-flow target price of P2,330, or a 7.4% upside based on Friday’s closing price.