Vodafone Group PLC (LSE:VOD) shares rose 1.6% to 95.38p after Barclays upgraded the group to 'overweight' from 'equal weight' and lifted its price target to 120p from 100p, arguing the company is finally showing signs of regaining a “challenger mindset”.
The bank says 2026 could mark a shift after years of declining earnings, with improving trends in the UK, Germany and Africa.
Barclays highlights broad-based momentum heading into next year, with service revenue up 5.7% on an organic basis in the first half and earnings trending towards the upper end of guidance.
The UK is singled out as a key growth engine, helped by Vodafone’s merger with Three, which completed in May and is expected to unlock £700 million in cost and investment savings and speed up the rollout of 5G. Fixed broadband strategies are also gaining traction.
Germany remains the biggest swing factor. While headline numbers look cleaner after the unwinding of traffic from 1&1, underlying pressure on pricing and competition persists.
Barclays expects operational improvements, plus wholesale revenue from 1&1, to stabilise the business later in the year. Africa and Turkey continue to deliver double-digit earnings growth.
Risks remain, including German competitive pressure and exposure to emerging-market foreign exchange, but the bank argues Vodafone’s valuation looks undemanding, with a forecast equity free cash flow yield of more than 10% for 2027.