Vodafone Group PLC (LSE:VOD) appears to be turning a corner, with Deutsche Bank raising its price target from 130p to 135p and maintaining a ‘buy’ rating on the shares.
The Deutsche new valuation represents a 65% premium to the current price of 81.64p (flat on the day).
After a run of missteps in recent years, Voda is showing clear signs of progress, having delivered a 22% total return to shareholders year to date.
A major UK deal promises more than £7 billion in long-term cost savings, while ongoing share buybacks totalling £1.7 billion (€2 billion) a year continue to support the share price.
There is renewed optimism at Vodacom, where management is targeting double-digit growth through to 2030.
Vodafone is also guiding to a 2% increase in underlying earnings and a 5% improvement in free cash flow in the coming financial year.
That said, near-term headwinds remain. The UK merger is initially expected to reduce free cash flow by £170 million before restructuring delivers benefits, while volatility in emerging market currencies and ongoing challenges in Germany are likely to weigh on results until 2027.
Nonetheless, Deutsche Bank argues that Vodafone’s valuation remains undemanding, suggesting that even a little good news could drive the shares higher from here.