Vodafone Price Target Raised Despite Earnings Concerns

Vodafone shares (LON:VOD) have had a mixed note from Citi, as the analyst raised its price target on the stock, while simultaneously placing it on a “90-day negative catalyst watch.” This divergence reflects both potential upside and significant near-term challenges for the telecommunications giant.

Citi's revised price target of 85 GBp, up from 75 GBp, suggests a mild anticipated increase in value, with shares opening today at 83.40. However, the “90-day negative catalyst watch” indicates potential headwinds related to upcoming first-half results. The analyst is pointing to continued difficulties in the crucial German and UK markets.

Germany, Vodafone's largest market, continues to present significant operational challenges. Service revenue in Germany experienced a 5% decline, attributed to regulatory changes affecting cable TV contracts. The financial impact of these changes has been substantial, and while Vodafone has been investing to shore up its market position, the immediate outlook remains uncertain.

Strategic initiatives are underway to bolster Vodafone's financial standing. A €2 billion share buyback program, announced in May 2025, aimed to enhance shareholder value. Further moves included the sale of its Spanish and Italian businesses, and a planned merger in the UK to form “VodafoneThree”. This strategic repositioning is designed to create a market-leading entity in the UK.

Despite these efforts, Vodafone reported a net loss of €3.746 billion for the fiscal year ending March 2025. This loss was primarily driven by a €4.515 billion impairment in its German and Romanian operations. However, the company generated €13.3 billion in cash from asset sales, which helped reduce net debt from €33.242 billion to €22.4 billion. The company is maintaining its annual forecast, projecting adjusted EBITDA between €11.3 and €11.6 billion and free cash flow between €2.4 and €2.6 billion.

The revised price target, coupled with the catalyst watch, underscores the delicate balance between potential growth and existing risks. The near term price action will likely be dictated by the firms ability to successfully navigate the financial headwinds.