UBS maintained its 'sell' recommendation on Vodafone Group PLC (LSE:VOD) despite second-quarter results that impressed elsewhere, arguing the stock has little room for upside.
Group service revenue grew 5.8% in Q2, with earnings beating the City consensus by 2.2%, helped by a better-than-expected contribution from Europe.
Guidance was reiterated, but tightened to the top end of the range – a level already reflected in consensus, UBS said.
The Swiss bank welcomed signs of stabilisation in Germany, where service revenue returned to growth at +0.5%.
However, it warned that this was partly driven by timing and one-offs, while underlying trends remain weak. In the UK, broadband and wholesale offset B2B and Three brand declines.
UBS said the shares, now up 30% year-to-date, trade at a premium to the sector on reported free cash flow yield and may be underestimating risks tied to German fibre competition and mobile consolidation.