Vodafone (VOD) PT Lowered to $37 at Goldman Sachs
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Rating Summary:
18 Buy, 4 Hold, 1 Sell
Rating Trend: Up
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 11
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Goldman Sachs maintained a Neutral rating on Vodafone (NASDAQ: VOD) and lowered its price target to $37.00 (from $40.00). 2015-18 EBITDA estimates were cut by 1%-6%, and FCF was lowered 2%-4%. Comments follow H2 results.
Analyst Tim Boddy said, "Vodafone reported 2H FY2014 results that were in-line with company-gathered consensus revenues but 2% below on EBITDA. Full-year FCF was in-line with guidance at £4.8 bn. Statutory year-end net debt was higher than expected at £13.7 bn (cons. £11.4 bn), partly reflecting earlier than expected payment of the VZW tax liability of $3.6 bn (lower than the $5 bn anticipated)."
"Key points to note: (1) KPIs were encouraging, with improved contract customer growth in Germany and continued momentum in fixed broadband. (2) Organic service revenue growth improved to -4% vs. -5%last quarter (adjusted for 100% consolidation of Italy), with deterioration in Italy offset by sharp improvement in Spain and several smaller markets. (3) The outlook for FY2015 EBITDA is weaker than anticipated at £11.4-11.9 bn (prior GSe £11.9 bn, cons. £12.1 bn). Compared to FY2014 EBITDA of £12.8 bn, and adjusting for FX (£-0.6 bn), M&A/JVs (+£0.3 bn) and Project Spring (-£0.5 bn), this implies an organic EBITDA decline of 1%-5%, driven by: Greater than expected cost as VOD invests in customer growth; European EBITDA fell 22% organically in 2H14, led by a 10% increase in commercial costs, which will continue in 1H15. (4) Revenue recovery is likely to resume only in 2HFY14/15 as MTR cuts in South Africa and slower growth in India (as Vodafone laps price rises a year ago) offset ongoing modest improvement in European markets. (5) VOD expects £19 bn capex across FY2015-FY2016, 13%-14% of sales thereafter (vs. GSe 14.4%)," he said.
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 $36.31 yesterday.
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