Vodafone shares have been drifting lower following the cash return to shareholders after the sale of its Verizon Wireless stake.
Hopes of a bid from AT&T have faded, while there are worries about outlook for future growth. But the mobile operator's shares have edged 0.35p higher to 217.95p after an upbeat note from JP Morgan Cazenove. The bank's analysts have put an overweight rating on the shares with a 270p price target, saying:
Vodafone shares have underperformed the FTSE by 10% over the last six weeks as regulatory and M&A hopes have begun to fade. Against this backdrop Vodafone's full year results should offer a floor. We expect the fourth quarter to highlight a 1 percentage point sequential improvement in organic service revenue growth underpinned by an easing mobile termination rates drag and modest underlying improvements across southern Europe. Furthermore we expect March 2015 guidance to support our EBITDA and free cashflow forecasts offering investors greater forecast visibility.
On an underlying basis, we anticipate a small trend deterioration in Italy (albeit recent price increases should see this prove short lived), a stable performance in Germany (it's too early for recent investments to bear fruit), and improvements across Egypt, Portugal, Spain.
