Vodafone Group PLC (LSE:VOD) shares look 'expensive' after the teleco's recent rally, that's according to analysts at UBS, who repeat a 'sell' recommendation.
With a 95p target, the Swiss bank suggests more than 20% downside from the current Vodafone price, of around 114.45p. Including dividends, UBS expects a -17.8% total stock return over 12 months.
Vodafone’s fourth-quarter numbers landed broadly in line across Europe, but UBS said the operational picture was less convincing. In particular, analysts point to slowing momentum in Germany and a mixed set of European customer trends.
“Q4 Europe financials were in line, but KPIs in both Germany and UK were weak/mixed,” the UBS analysts said in the note.
Group service revenue rose 5.1% in the fourth quarter, ahead of consensus expectations for 4.0% growth. Europe grew 0.8%, also a touch above consensus, while Germany delivered 1.3% service revenue growth, helped by the final quarter of uplift from the 1&1 national roaming agreement and broadband price rises.
UBS predicts European trends continue to slow, while the Vodacom business is expected to suffer forex headwinds and tougher comparisons after earlier price increases in Egypt.