Nomura Securities Maintains a 'Buy' on Vodafone (VOD); Q1 Preview

July 13, 2012 8:17 AM EDT
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Nomura Securities maintains a 'Buy' on Vodafone (NASDAQ: VOD).

Analyst, James Britton, said, "We expect Q1 organic growth of 0.7% which compares with 2.3% in Q4. Stripping out the leap year impact, the underlying decline is c. 60bp. In Europe, we expect growth of -1.7% (Q4 -0.2%, Q3 -1.7%) while in AMAP, we forecast 6.0% vs 7.6% in Q4. FX impacts are unhelpful, wiping 790bp off reported growth and dragging group EPS by c.1%. Headline estimate: service revenues £10,946m, -6% yoy; cash flow £1,240m, -1% yoy. Within the mix, we see Italy as most under pressure. We forecast Q1 organic growth of -7.6% (Q4 -4.1%) with the slowdown caused by both the economic environment and increased competition. Our US analyst Mike McCormack expects VZW to post postpaid adds of 765k, service revenue growth of 7.1% and service margin of 47.7%. US strength remains Vodafone’s key differentiation. VOD’s premium growth is not adequately reflected in valuation (5.3x 2012 EV/EBITDA) and underpins our Buy rating and 225p DCF-based target. FY13 EPS from 16.2p to 16.10p, FY14 EPS from 17.10p to 17.0p, FY15 EPS from 17.90 to 17.80."

For an analyst ratings summary and ratings history on Vodafone click here. For more ratings news on Vodafone click here.

Shares of Vodafone closed at $28.19 yesterday.

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