Shares of Chorus are overvalued because the telecommunications network operator's overall connections continue to decline, Morningstar analyst Brian Han wrote in a bearish note.
"We concede challenges facing no-moat Chorus (connections, UFB-building, execution with the cost-cut programme) pale in comparison to those facing retail-facing telecoms on both sides of the Tasman," Han wrote in the July 2 note.
"However, they are risks nevertheless and we believe not reflected in the current stock price, trading at an 8 per cent premium to our $3.90 (A$3.60) fair value estimate," Han noted.
Shares of Wellington-based Chorus, the biggest player in the nation's ultra-fast broadband rollout, traded 0.1 per cent weaker at $4.195 at 12.10pm. The stock has dropped 4 per cent in the past year.
Morningstar's note compares with more positive analyst positions compiled by Reuters; two have 'outperform' ratings, while three have 'hold' recommendations.