Jefferies analysts convey a cautiously optimistic outlook on Aussie Broadband (ASX:ABB), declaring the stock fully valued and lowering the rating to a ‘hold’ status.

The analysts applied a 3.5% terminal growth rate in the discounted cash flow, noting that with Aussie Broadband trading at A$4.15, this indicates a -10% downside, which results in a ‘hold’ rating.

Despite this, the brokerage identifies numerous areas where the telecom services provider could surpass their medium-term expectations, notably in the Wholesale sector.

Jefferies also hold the view that the uniform group gross profit margins could be elevated by an advantageous shift into the Business segment.

However, because a majority of Australian households are hooked up to the National Broadband Network, analysts suggest there might be less incentive to switch to a different carrier, potentially leading to the breakout of price competition.

As of the most recent closure, Aussie Broadband’s stock has ascended by 59.4% YTD.

Aussie Broadband is a telecom services company based in Australia.