Vodafone share price: BofA Merrill Lynch lifts rating on telco

on Feb 7, 2019
Updated: Mar 11, 2020

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’.

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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

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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

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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.

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