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Goldman Sachs removes Vodafone from conviction buy list, repeats 235p targetJune 22 2012, 10:32am
Since Vodafone was added to Goldman’s conviction list on March 20, its share price has risen 4.2 percent compared with a 10.3 percent decline in the FTSE World Europe index for the same period.
Shares in Vodafone were driven by strong earnings at its Verizon Wireless joint venture with Verizon, solid 2012 results and guidance for the current year.
The investment bank continues to rate the stock as a ‘buy’ with an unchanged 12-month target price of 235 pence per share, a significant premium to Thursday’s closing price of 178 pence.
“Vodafone remains our top pick amongst developed-market exposed European incumbents given its superior growth profile and strong balance sheet,” said Boddy.
Analyst Tim Boddy said the group’s core operations are stabilising and raised his earnings estimate for Verizon Wireless by two percent, expecting the business to return to near-peak EBITDA in the second quarter with the help of its new handset upgrade policy.
He added that VZW could increase its income dividend to US$13 billion from US$10 billion as Verizon stands by its intention to avoid piling up cash.
Boddy said key risks to his price target include increased regulatory and competitive pressure in the US, challenging macroeconomic environment, changes in currency rates or an increased tax burden.