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Vodafone dialling all the right numbers for UBS

Vodafone dialling all the right numbers for UBS
The market just got a little easier in Germany.

Vodafone PLC (LON:VOD) is dialling the right numbers for the telecom analysts at UBS.

The influential Swiss house reckons Germany is back on the growth trail after 13 successive quarters of stuck in reverse gear.

As the country accounts for just under a quarter of group operating profits this augers well for Vod’s financial performance.

“We re-iterate our view that recovery and operational gearing at Vodafone has been underestimated and that growing mobile data usage should help drive more for more price increases across Europe,” said UBS in a note to clients.

Merger on the cards?

It also sees what it calls ‘M&A optionality’, which simply means it considers a merger with Liberty Global of the US is a possibility.

For income seekers Vodafone sits on a very healthy yield of 5.5%, UBS pointed. The shares, currently marking time at around 220p each, are worth 310p each, it added.

Elsewhere in Brokerland there were a lot of recommendations, but few real material changes.

Goldman upgrades 

Goldman Sachs went to ‘neutral’ from ‘sell’ on support services specialist Capita PLC (LON:CPI), while RBC Capital Markets moved from ‘underperform’ to ‘sector perform’ on the fashionistas at Burberry (LON:BRBY).

On the downgrade front, HSBC hopped to ‘hold’ from ‘buy’ on the property group Capital & Regional (LON:CAL), while Aberdeen Asset Management (LON:AND) was hit with a reiterated ‘sell’ from Citigroup.

While it tweaked up its price target for AA plc (LON:AA.) 10p a share to 200p, Jefferies still doesn’t rate the roadside recovery business and maintains an ‘underperform’ call on it.

Oiler has monster potential

Turning to the small-caps, San Leon Energy (LON:SLE) was given a boost by SP Angel, the resources boutique.

It reckons the acquisition of the OML 18 oil field in Nigeria’s Niger Delta is a game changer.

“[The] valuation contribution not only dwarfs the rest of its portfolio, but also provides it with near term opportunities for growth, in both production and reserves,” the broker said in a note initiating coverage of the oiler.

“Furthermore, the asset provides the company with access to further opportunities in country and regionally.”

It rates the shares, currently changing hands for 45p each, at £1 a pop.

That values the business at over £500mln.

Mining for value

Peel Hunt, meanwhile, is a fan of Atalaya Mining (LON:ATYM), which owns the Rio Tinto copper project in Andalucía, in Spain.

It calls an updated technical report “strongly positive”, while its 160p price target suggests investors are missing a trick given the stock is currently bumping around at 85p. 


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