Vodafone Group PLC's (LSE:VOD) turnaround story has split the market. Deutsche Bank is doubling down on optimism, while Citi is keeping its hand firmly on the handbrake.
Deutsche’s Robert Grindle has lifted his target price from 135p to 140p and kept his “Buy” rating, pointing to a company that looks “distinctly un-Lemony”, in other words, fewer mishaps and a bit more sunshine.
The shares, last seen at 84.38p, have already risen 27% in sterling terms this year, outpacing European peers.
The German operation, long a drag on sentiment, is now showing signs of life, with organic service revenue growth “back to growth or close to it” in the second quarter.
Emerging markets, especially Africa, are improving in euro terms, and the integration of Three UK is underway. Deutsche sees £700 million of annual cost savings by year five from the merger.
Grindle highlights Vodafone’s “hidden assets”, including stakes in Zegona, Oak Holdings and VodafoneZiggo, that could be monetised to fund further share buybacks.
With the balance sheet strengthening and buyback accretion in play, the dividend could start rising again from 2026, he says.
Citi, by contrast, is not convinced the worst is behind the group. It has kept a 'neutral' rating and raised its price target only slightly, from 75p to 85p, while adding a “90-day negative catalyst watch”. The concern is that too many things remain outside Vodafone’s control.
The bank flags a still-tough German and UK telecoms market, the risk that Deutsche Telekom could accelerate its fibre build, and uncertainty around Germany’s mobile network consolidation.
It also notes a pattern investors know too well: heavy share price falls on the day of interim results in each of the past three years.
Both banks agree the shares look cheap and that synergies from the Three deal should eventually bolster free cash flow. The debate is whether Vodafone can finally stop dropping the call.