Vodafone share price: BofA Merrill Lynch lifts rating on telco

Bank of America Merrill Lynch has lifted its rating on Vodafone (LON:VOD), arguing that there is light at the end of the tunnel, WebFG News has reported. The analysts further reckon that headwinds are already ‘baked in’.

Vodafone’s share price has fallen deep into the red in today’s session, having given up 2.04 percent to 139.50p as of 13:50 GMT. The stocks are underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.44 percent lower at 7,141.37 points. The telco’s shares have lost more than a third of their value over the past year, as compared with about a 1.8-percent dip in the Footsie.

Merrill Lynch upbeat on Vodafone

BofA Merrill Lynch lifted its rating on Vodafone to ‘buy’ yesterday, with a price target of 200p on the shares. WebFG News quoted the analysts as saying that following a ‘torrid’ 12 months of Southern European competition trouble, high spectrum costs and Indian funding issues, these headwinds were “now passing and increasingly baked into forecasts”.

The broker further believes that a dividend cut  is already priced in, addressing one ‘sore point’ and ‘there is potential to revisit’ as the telco’s pending deal with Liberty Global “would add leverage and a possible credit downgrade, but also double-digit earnings and cash flow per share increases”.

Other analysts on FTSE 100 group

Citigroup reaffirmed Vodafone as a ‘buy’ this week, without specifying a price target on the shares, while Royal Bank of Canada, which is bearish on the group with a ‘sell’ rating, set a valuation of 125p on the stock last week. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average price target of 200.89p.

As of 14:14 GMT, Thursday, 07 February, Vodafone Group plc share price is 139.50p.