Vodafone is caught between disposals that should be positive over the longer term but that will dilute short-term cash flow, says Citigroup.
At the operating level, Germany might come under pressure as from January the impact of the housing association contract changes kicks in, while comps on broadband service revenues also get tougher from April.
“The B2B support could be material on the top line but perhaps less so on underlying profit [EBITDA], which we lower for Europe.
“Coupled with FX changes, we trim our estimates further and reduce our price target to £0.68/share. “
"There might be a rerating sometime, but not before 2026 when earnings momentum may shift, but in the meantime- despite an attractive valuation- we believe the risk-reward is to the downside."
'Neutral' is Citi’s view.