Vodafone share price: Barclays trims stance on blue-chip telco

on May 19, 2017
Updated: Mar 11, 2020

Barclays is no longer bullish on Vodafone (LON:VOD), arguing that the group’s valuation is ‘broadly up with events’. The comments come after the blue-chip telco updated investors on its full-year performance this week, posting a hefty loss but forecasting earnings growth going forward.

Vodafone’s share price has gained ground in today’s session, having added 0.43 percent to 221.10p as of 13:27 BST, largely in line with the broader London market, with the benchmark FTSE 100 index currently 0.36 percent better off at 7,462.95 points. The group’s shares have lost just under two percent of their value over the past year, but are up by some 10 percent in the year-to-date.
Barclays trimmed its rating on Vodafone from ‘overweight’ to ‘equal weight’ today. Proactive Investors quoted the analysts as explaining that the telco’s valuation looked ‘broadly up with events’, but that the group’s free cash flow growth beyond next year would likely be tempered by rising competitive intensity.

The comments came after Vodafone posted a hefty loss on the back of a net of tax impairment of €3.7 billion on its Indian business which has been facing significant competition. The company nevertheless expects to deliver organic adjusted EBITDA growth between four percent and eight percent in the new financial year, as well as free cash flow of around €5 billion. Analysts at Hargreaves Lansdown, however, were also unconvinced by the telco’s results, noting that the telco faced ‘perennial problems’ despite being in the black on an operating level.
BNP Paribas, which has a ‘neutral’ rating on Vodafone, boosted its price target on the shares from 225p to 235p yesterday. According to MarketBeat, the blue-chip telco currently has a consensus ‘hold’ rating and an average price target of 239.95p.
As of 13:52 BST, Friday, 19 May, Vodafone Group plc share price is 220.70p.