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Telecoms giant Vodafone has seen its price surge since mid-August, but is this really the start of a turnaround?

VodafoneSource: Bloomberg

 Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Monday 18 September 2023 13:43

Telecoms giant Vodafone has seen its price surge since mid-August, but is this really the start of a turnaround?

The past year has indeed been a bumpy ride for shareholders of Vodafone. The company's share price has experienced a significant decline since late-February, resulting in a loss of over a quarter of its value in just five months. However, amidst this gloomy backdrop, there is a glimmer of hope.

On Monday, 24 July, Vodafone released its latest trading update, and for once, it contained some positive news. The telecoms giant reported decent organic/adjusted growth across its vast global operations. This is a welcome change from the downward trajectory that has plagued the company in recent months.

In the first quarter (Q1), Vodafone's total revenue increased by 4.8% compared to the previous year, with adjusted growth reaching 3.7%. These figures indicate that the company is making progress in its efforts to turn things around.

One market that particularly stood out as a star performer was the UK. With a growth rate of 5.7%, the UK market experienced a boost following inflation-plus price rises earlier this year. Additionally, revenue declines in Germany, Italy, and Spain were less severe than before, indicating some signs of stabilization in these markets.

Vodafone analyst ratings, price targets and sentiment

Vodafone analystsSource: Refinitiv

Refinitiv data shows a consensus analyst rating of ‘hold’ for Vodafone. Analysts show 3 strong buy, 5 buy, 10 hold, 2 sell and 1 strong sell - with the median of estimates suggesting a long-term price target of 99.86 pence for the share, roughly 25% higher than the current price (as of 18 September 2023).

IG Vodafone sentimentSource: IG

IG sentiment data shows that 98% of clients with open positions on the share (as of 18 September 2023) expect the price to rise over the near term, while only 2% of clients expect the price to fall. Trading activity over this week shows 61% of buys and this month 69% of sells.

Vodafone technical analysis

Last week the Vodafone’s share price gave a technical buy signal as it saw its first weekly chart close above its July peak at 78.33p. It indicates that the share is probably in the process of forming a medium- and perhaps even long-term bottom which could take it back to its February high at 103.24p.

Vodafone Weekly Candlestick Chart

Vodafone weekly candlestick chartSource: TradingView

The next technical upside target zone is made up of the December 2022 low at 83.24p, the April low at 87.20 and the 55-week simple moving average (SMA) at 88.12p.

Potential slips should find support between the July and August highs at 78.33p to 77.03p. Further support can be found between the early June low and the early-July high at 75.31p to 74.10p.

Vodafone Daily Candlestick Chart

Vodafone daily candlestick chartSource: TradingView

While the June-to-August lows at 70.06p to 69.90p underpin, a medium-term bottom remains in play with a bullish medium-to long-term reversal expected to ensue.



This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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