The Portugal Telecom, SGPS, S.A. (PT) common stock hit our target price on 29 June 2009, reflecting positive investor reaction to healthy fundamentals outlined in our most recent update report. However, we now feel that the stock's medium term upside potential has been exhausted. Therefore, we moderate the common stock from a BUY to a HOLD. We will reassess our 6-12 month fundamental rating in our next update report. We no longer expect to revert to a 6-24 month investment horizon to value the company in our next update report, as we now anticipate a significant positive currency impact on the ADR over the next 6- 12 months. However, as we believe that the company's fundamental upside potential has been exhausted, we moderate the ADR from a BUY to a HOLD.

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