Vodafone Stocks at Rest

Vodafone, the world’s biggest mobile network operator, saw their stock value face a slight descent after recent trading in London. Despite its worldwide expansion, severe economic pressures in Europe, such as the increase in termination rates in Germany and the unexpected weakness in the Spanish market, led to investor caution about the company’s shares. Vodafone’s market shares are said to have fallen up to a total of 24.2% over the last year.

It is estimated that the market value for Vodafone dropped 2.5%, or 2.90 pence, to 112.10 pence in Tuesday’s trading. The UBS analysts put their recommendation on the stock from ‘buy’ to ‘neutral’ on Wednesday morning. Meanwhile, the analysts from Morgan Stanley pegged their price target to 170 pence from 175 pence. Also, UBS is anticipating the company to report a 5.5% sequential drop in the June quarter sales, whilst Morgan Stanley presumes a 4.7% decrease.

The UBS analysts predict that Vodafone could set a ‘classic value trap’ against a sluggish sales market. They recommend buying shares from other mobile network operators, such as the Dutch rival KPN, the Telefonica Company from Spain, or Swisscom instead.

Meanwhile, the financial analysts from Morgan Stanley were more positive. They believe that cyclical factors could improve later this year and that there will be an inflection point soon. They also said that the market anticipated ‘the worst’ from the upcoming sales update, yet the June quarter could be the low point of the current decline and ‘less negative’ quarters are on the way.