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Vodafone a business that would never exist now, suggests broker

Published 24/06/2024, 13:29
© Reuters.  Vodafone a business that would never exist now, suggests broker

Proactive Investors - Vodafone (LON:VOD) might have exited its most difficult markets in Italy and Spain, but that does not make the investment picture much more appealing, according to analysts at Berenberg.

What is left is a hotch-potch of interests that would never be drawn up on a blank piece of paper, says the broker, but instead one that is a product of its history.

Vodafone is cheap, but that is not a big differentiator in the telecoms sector.

“With several quarters of poor growth ahead of it, we feel there is no urgency to turn more positive right now. “

Hold with a 78p target price is the Berenberg view.

First quarter will 'not look great'

Looking forward, Vodafone’s first quarter will not look great adds the broker.

“We worry about consensus expectations for the UK: We expect the growth of Vodafone’s Q1 revenues on 25 July to slow down, due to: 1) German cable-TV unbundling; and 2) consumer price index (CPI)-linked pricing in many markets resulting in lower price increases in April 2024 than April 2023.

First-quarter organic service revenue growth is forecast at 4.0% (consensus: +4.0%; Q4: +7.1%), including European service revenue growth of -0.5% (consensus: +0.8%; Q4: +2.4%).

This European slowdown is due to the UK and other businesses both experiencing much lower pricing tailwinds from CPI-linked pricing, says Berenberg, while Germany will start to be affected by cable-TV unbundling this quarter.

Read more on Proactive Investors UK


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