Vodafone slipping ahead of first-half figures

Vodafone will report its first-half numbers on 10 November, and the share price has been sliding since the full-year results were posted in May.

Source: Bloomberg

Last year Vodafone eked out a 0.1% rise in service revenue in the final-quarter of the year, and that was the first rise in three years.

Despite the fractional increase in sales, the company still registered a drop in operating profit for the year. Telecoms customers are seeking a number of services packaged together in a bundle, and Vodafone’s 4G service is in demand. 

The company is still cash rich after selling its 45% stake in Verizon for $130 billion in 2013, and only a small proportion of the payout was spent on Kabel Deutschland. Vodafone sold off the goose that laid the golden egg and there has been talk of deals with Sky and Liberty Global but nothing has transpired.

The firm didn’t invest in its networks when its rivals did and now it must play catch up or else acquire a company that has a better network. Either way the money will be put to good use.

When Vodafone announces its first-half figures traders are expecting revenue of £20.1 billion and adjusted net income of £465 million, and that compares with the second-half revenue and adjusted net income from last year of £21.4 million and adjusted net income of £774 million.

Vodafone will announce its full-year figures in May 2016, and dealers are anticipating revenue and adjusted net income of £40.71 and £1.29 billion respectively, and these estimates equate to a 3.5% decline in revenue and a 12.2% fall in adjusted net income.

Investment banks are very bullish on Vodafone, and out of the 30 ratings, 17 are buys, 11 are holds, and two are sells. The average target price is 240p, which is 10% above the current price. Equity analysts are bullish on BT, and out of the 23 recommendations, 11 are buys, eight are holds, and four are sells. The average target price is £5.05, which is 8.1% above the current price.

As the stock has been rising since 2008 the long-term outlook is bullish and the resistance at 258p is the target. The stock has been declining since May, and if it fails to move back move 220p we could see further declines in the short-term, and that would bring the support at 200p and 179p into play. 

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