Shares in Vodafone (LON:VOD) have advanced in London in today’s session, outperforming a subdued broader market, as analysts at Citi turned bullish on the stock. Proactive Investors quoted the analysts as arguing that while the telco’s dividend was at risk of being cut, they still reckoned that the company was ‘worth a trade’
As of 14:30 BST, Vodafone’s share price had added 1.69 percent to 165.66p. The shares are outperforming the broader UK market, with the benchmark FTSE 100 index having slipped marginally lower and currently standing 0.23 percent in the red at 7,366.66 points.
Citi turns bullish on Vodafone
Citi lifted its rating on Vodafone to ‘buy’ today, with a price target of 190p on the shares. Proactive Investors quoted the broker’s analyst Georgios Ierodiaconou as acknowledging concerns over increased competition in some of the telecoms giant’s overseas markets, yet noting that the group’s “strengths should not be ignored”.
“Germany is a good and we believe improving market; Vod UK should show good growth. Smaller markets are on balance performing well,” he wrote in a note to clients, adding that in his opinion, the telco’s dividend was at risk of being chopped, but only if the company “is forced by the market” to do so.
Telco ‘worth a trade’
“Worth a trade […] we see upside risk for VOD shares in the near term unless the credit markets not just deteriorate but do so meaningfully,” Ierodiaconou concluded, as quoted by the newswire.
The comments came after Bernstein lifted its rating on Vodafone yesterday, arguing that the telco’s asset swap with Liberty Global, which will see the London-listed group acquire operations in Germany, the Czech Republic, Hungary and Romania, would provide improved operating cash flow and boost dividend cash cover.