Vodafone (LON:VOD) is scheduled to update investors on its full-year performance on May 15 and Proactive Investor reports that Morgan Stanley expects the telco to highlight strong earnings and free cash flow growth.
‘Overdone’ market concerns
Morgan Stanley recently repeated its ‘overweight’ rating on Vodafone, while trimming its price target on the shares from 280p to 270p, noting that the recent market concerns were ‘overdone’. Proactive Investors quoted the broker’s analyst Emmet Kelly as commenting that the tail-off in Vodafone’s share price was driven by the consensus miss for the third quarter, concerns over trends in the Indian business, a lack of visibility on a possible deal with Liberty Global and a higher outlay on network spectrum over the coming 24 months.
The analyst, however, expects strong earnings and free cash flow growth from the telco’s full-year results and has further pointed to the ongoing telecoms consolidation and potential monetisation of mobile towers as other possible catalysts for the shares.
Vodafone’s full-year results will follow the telco’s third-quarter update earlier this year when the company posted a drop in its total revenue. The blue-chip group, however, reiterated that it expects to deliver organic adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) growth of around 10 percent for the full year.
Investors will also be looking out for update on Vodafone’s merger in India after the company recently said that completion was expected in the first half of the current calendar year.
Ofcom auction update
Vodafone’s full-year results will come after the blue-chip telco emerged as one of the winners at Ofcom’s airwave spectrum auction, securing 50 MHz of 3.4 GHz spectrum for £378.24 million. Vodafone is planning to use the spectrum to deploy 5G services, enabling Gigabit speeds and lower latency to enhance applications including connected vehicles and robotics, industrial automated systems, and virtual and augmented reality.