Numis thinks that Vodafone (LON:VOD) is unlikely to overpay for Liberty Global assets or trim its payout to shareholders, Proactive Investors reports. The comments came as the analysts reiterated their bullish stance on the telco, while lowering their price target on the shares.
Vodafone’s share price has advanced in London in today’s session, having added 1.50 percent to 209.75p as of 13:58 BST. The telco’s shares are outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.34 percent higher at 7,353.53.
Numis upbeat on Vodafone
Numis, which has a ‘buy’ rating on Vodafone, lowered its price target on the stock from 270p to 255p today. Proactive Investors quoted the analysts as saying in a note that the telco was in a good position to negotiate with Liberty Global because it now has some ‘sizeable’ assets of its own in Europe and ‘sensibly priced’ wholesale access to third-party fixed-line networks, while Liberty was showing ‘much more humility’ than it did a year ago.
“We believe Vodafone will not overpay for Liberty’s asset in Germany (we think more than 10 times EBITDA is fair) and Vodafone will not have to also buy Liberty out of the Dutch market,” the broker pointed out. “In turn, risks that Vodafone will issue new shares or cut its dividend per shares are very low.”
Numis, however, lowered its valuation on Vodafone due to “numerous individually small reasons” such as higher estimates for spectrum costs.
Other analysts on telco
Royal Bank of Canada, which sees Vodafone as a ‘buy,’ set a price target of 260p on the shares, while UBS, which also has a ‘buy’ rating on the telco, set a valuation of 270p on the stock. According to MarketBeat, the FTSE 100 group currently has a consensus ‘buy’ rating and an average price target of 249.32p.