Vodafone PLC’s (LON:VOD) dividend is at risk of being cut, according to Citi analysts, but they still reckon the telecoms giant is worth a punt.
The FTSE 100 group has seen almost a third wiped from its value since the turn of the year, largely due to concerns over increased competition in some of its overseas markets – Italy, Spain and India, to be precise.
READ: Vodafone completes merger of India business
Citi number cruncher Georgios Ierodiaconou acknowledges these issues but argues that Vodafone’s “strengths should not be ignored”.
“Germany is a good and we believe improving market; Vod UK should show good growth. Smaller markets are on balance performing well,” wrote the analyst in a note to clients.
He adds that the dividend, in his opinion, is at risk of being chopped, but only if the company “is forced by the market” to do so.
Ierodiaconou concludes: “Worth a trade – upgrade to ‘buy’ — we see upside risk for VOD shares in the near term unless the credit markets not just deteriorate but do so meaningfully.”
Shares climbed almost 2% on Thursday morning to 166p.