Will Vodafone Shares Reach 100p by Christmas?
Vodafone’s share price has shown notable improvement since April, rising by approximately one-third to 85p as of October 9. Although this increase is encouraging for investors, it is less than the performance of nearly 40 other FTSE 100 companies. Investors are keen to see if Vodafone can surpass the significant 100p mark by Christmas, which would be a welcome boost for shareholders. The last instance of the stock being above £1 was in March 2023.
Key Upcoming Events for Vodafone
A pivotal date for Vodafone is November 11, when the telecom company is set to release its half-year results for the period ending September 30. This announcement is especially critical; nearly a year ago, Vodafone’s share price fell by 8.2% following the release of its H1 25 figures, largely due to disappointing service revenue in Germany, its largest market.
The company faces ongoing challenges, particularly a law that took effect on July 1, 2024. This legislation prevents landlords from billing tenants for TV contracts as part of their rent. Investors will be looking for signs that Vodafone’s turnaround strategy is showing positive results during the upcoming earnings release.
Market Sentiment and Stock Performance
Following the recent merger of Vodafone and Three, shareholders anticipate an update on how this collaboration is performing. Positive news could lead to a surge in the share price. Nevertheless, the average target set by brokers indicates skepticism, suggesting that Vodafone shares may be valued about 8% lower than current levels.
The telecom industry faces inherent challenges, notably the need for continuous investment while dealing with fierce competition leading to reduced returns. To counter these issues, Vodafone has been divesting assets and has exited markets like Spain and Italy. Proceeds from these sales have been utilized to decrease significant debt and fund a share buyback initiative.
Financial Overview
Vodafone is forecasting earnings per share of 8.47 euro cents (7.35p) for FY26, resulting in a valuation of 11.5 times expected earnings. This ratio is anticipated to narrow to 7.7 by FY28. As of June 30, the company reported a book value of €53.9 billion (£46.8 billion), considerably less than its market capitalization of £20.2 billion.
Dividend Outlook
- Projected dividend for FY26: 4.5 euro cents (3.91p)
- Current dividend yield: 4.6%
- Previous dividend cut: 50% in FY25
Despite a decent dividend yield, shareholders remain cautious after experiencing substantial cuts in previous payouts. This uncertainty highlights the unpredictable nature of Vodafone’s financial commitments.
In summary, shareholders of Vodafone hope for a robust set of half-year results and potentially an earnings upgrade. A successful report could propel shares toward the 100p target by Christmas, reflecting the company’s true market potential.
