Shares in Vodafone (LON:VOD) have fallen marginally into the red in today’s session as Credit Suisse lowered its valuation on the stock. The move came after the blue-chip telco updated investors on its full-year performance yesterday, trimming its payout to shareholders.
As of 14:52 BST, Vodafone’s share price had given up 0.39 percent to 126.34p. The shares are underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.32 percent higher at 7,264.46 points.
Credit Suisse trims valuation
Credit Suisse lowered its target on the Vodafone share price by roughly 10 percent to 190p, while maintaining their ‘outperform’ rating on the stock. Sharecast quoted the broker as commenting that the outlook for revenue growth was the main question hanging over the group after it cut its dividend. The broker elaborated that the company’s prospects for revenue revival are fragile with the UK and Spain uncertain, and that it further benefits from easier numbers a year earlier.
“The equity story from here hinges on the extent to which revenue growth can rebound and margin expansion accelerate,” Credit Suisse said in a note, as quoted by the newswire. “We are comfortable on the cost side, but the revenue outlook remains the main challenge for Vodafone.”
The analysts noted that while they believe that the next catalysts for the stock are likely to be positive, “with an uncertain revenue outlook the inflection looks less solid than we would have hoped for at this point”.
Other analysts on Vodafone
Citywire meanwhile quoted Richard Hunter at Interactive Investors as commenting that Vodafone’s dividend cut was an ‘unwelcome development’.
“Yet there are also grounds for optimism in terms of Vodafone’s ambitions,” the analyst commented, adding that the reduction in dividend was ‘prudent,’ given the enormous constraints on cashflow.