Broker snap: Vodafone's a must-have for telecoms investors, says Nomura

Date: Thursday 09 Feb 2012

Nomura has reiterated its buy recommendation and 230p target price for telecoms giant Vodafone despite the firm's second quarter organic revenue growth coming in below expectations.

The company reported this morning that group organic service revenue growth fell to 0.9% in the quarter ended December 31st, 0.2% below Nomura's and consensus forecasts, with the miss attributable to Italy and the UK. "Within Europe, there is a small positive in Spain where growth improved to -8.8%, a 50 basis point improvement from Q2," the broker notes.

Nomura says that Consumer revenues held up well across the group, with Vodafone being cautiously optimistic about having gained revenue share in the quarter.

Nevertheless, the group maintained its previous guidance for adjusted operating profits and free cash flow. "It may serve as some relief that operating profit guidance is reiterated following Verizon Wireless’ weaker margin result and the potential for heavy iPhone subsidies to have also affected European margins," Nomura said.

The broker does not expect any material revisions to consensus estimates and continues to see Vodafone as "a core holding for telecom investors, offering superior growth at attractive value".

BC

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