Vodafone upped to buy as Berenberg says portfolio simplification will improve valuation


Vodafone PLC (LON:VOD) has been upgraded to ‘buy’ from ‘hold’ by analysts at Berenberg, who said that as the telecoms firm progressed with a simplification of its portfolio its valuation discount relative to the rest of the sector will be reduced.

In a note on Wednesday, the broker also upped its target price for the FTSE 100 group to 155p from 148p, saying that Vodafone had scope for “significant market share gains” in its B2B and fixed-line businesses, as well as large exposure to the “attractive” German market.

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Berenberg added that from the 2021/22 financial year onwards they expected the company to report “consistent top-line growth, steadily reduce net debt/EBITDA towards the bottom end of its 2.5-3.0x target range, and make further progress in simplifying its portfolio”.

The broker also compared the firm to BT Group PLC (LON:BT.A), which it also rates at ‘buy’, saying that while BT has “more actionable catalysts over the next six to nine months to stimulate a re-rating”, Vodafone was the “higher growth story” that they would be “more comfortable holding for a multi-year period”.

Vodafone shares jumped 3.2% to 128.4p in mid-morning trading.


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