Markets still waiting for Vodafone move

Expectations have been high that following its separation from US firm Verizon, and the high cash windfall it received, Vodafone would impress the markets with grandiose plans – as yet, we are still waiting.

Source: Bloomberg

On 19 May, we expect to see Vodafone Group post its full-year figures and the markets are anticipating that the company’s adjusted earnings per share will be slashed from £0.106 down to £0.058.

Sales for the telecommunications firm should remain relatively robust at £42.175 billion, which is only slightly lower than last year’s £43.616 billion. The biggest change will be felt in the company’s full-year pre-tax profits. Having last year posted a loss of £5.27 billion, Vodafone is expected to be able to announce a pre-tax profit for the year of £1.968 billion.

Considering the depth of Vodafone’s pockets, it is no real surprise that markets have been speculating how the firm is going to put that to best use for some time. This has seen the company enjoy the benefit of an optimistic view from institutional analysts.

At the moment, 18 institutional analysts have a buy recommendation, 11 have a hold, and only six have sells. The average 12-month price target for the telecommunications giant is 240.15p offering only a minimal upside from the current market price of 233p.

One area where Vodafone has made its intentions known is the decision to upgrade its infrastructure. The last couple of years have seen the birth of operation ‘Project Spring,’ through which over £6 billion has been spent improving the company’s coverage across Europe. The biggest unknowns for Vodafone remain to be what will it do with the funds available, and how much more M&A activity in this region will it be involved in?

As lethargic as the shares rise has been, the stock is still just about to move into overbought territory. An encouraging management outlook, along with a solid set of figures, might be required to break above the year highs of 245p.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts