Vodafone Misses Market Expectations with 1.2% Drop in Earnings

The company posted adjusted EBITDA (earnings before tax, interest, depreciation and amortisation) of 14.4 billion euros on revenue of 43.8 billion euros, down 2.6%.

Vodafone said it had delivered a resilient performance in a year that had shown the value of connectivity.

Chief Executive Nick Read said the company ended the period with accelerating service revenue growth across its business, with a particularly good performance in its largest market, Germany.

“The increased demand for our services supports our ambition to grow revenues and cash flow over the medium-term,” he said.

Vodafone’s free cash flow fell 11.9% to 5 billion euros, just about meeting its target, after it increased investment in its network during the pandemic.

Read has focused Vodafone on markets in Europe and Africa and spun off its mobile towers infrastructure into a separate business that it listed in Frankfurt in March.

He said the next phase of his strategy would focus on driving shareholder returns through deleveraging, improving the return on capital, and committing to its dividend.

Analysts had expected Vodafone to report EBITDA of 14.54 billion euros, according to a company-compiled consensus.

Vodafone said it expected EBITDA for the current year to rise to 15.0 – 15.4 billion euros, with adjusted free cash flow of at least 5.2 billion euros.

(Reporting by Paul Sandle; editing by Kate Holton, Kirsten Donovan)

Reopening Optimism Pushes European Stocks Closer to Record High

The pan-European STOXX 600 index rose 0.7% by 0716 GMT, trading just shy of its record high hit last week, with economy-linked cyclical sectors like miners and automakers leading the gains.

The German DAX rose 0.8% to hit a record high, while Italy’s FTSE MIB added 0.8% to fresh pre-pandemic highs.

Milan-listed shares of Stellantis gained 1.3% ahead of the announcement of ties with Foxconn.

The world’s biggest maker of hearing aids Sonova Holding surged 8.5% after predicting strong growth this year due to a market recovery and new products.

Meanwhile, Vodafone fell 7.2% after the UK mobile operator reported a 1.2% drop in full-year adjusted earnings as COVID-19 hit roaming revenue and handset sales.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)

Ford Motor Join Hands With Vodafone for 5G Network in The UK

Ford Motor Company, an American multinational automaker that has its main headquarters in Michigan, has signed a deal with Vodafone Group Plc to install a fifth-generation technology network at its electrified powertrain facility in Essex, both the companies said in a joint statement on Thursday.

This will be the part of a 65-million-pounds or around 80-million-dollar investment in the fifth-generation technology network (5G) supported by the British government. This deal will replace current Wi-Fi networks to quicken the production of electric vehicles.

Chris White, Ford’s 5GEM project lead said: “Connecting today’s shop floor requires significant time and investment. Present technology can be the limiting factor in reconfiguring and deploying next-gen manufacturing systems. 5G presents the opportunity to transform the speed of launch and flexibility of present manufacturing facilities, moving us towards tomorrow’s plants connected to remote expert support and artificial intelligence.”

Vinod Kumar, CEO of Vodafone Business, said: “5G mobile private networks act as a springboard for organisations, allowing them to rethink the way they do business. In this case, MPN technology makes the factory of the future possible. It allows machines and computing power to coordinate in real-time, improving precision, efficiency and safety. We’re excited to help Ford plan for the future of its business.”

Ford outlook and price target

Eleven analysts forecast the average price in 12 months at $6.19 with a high forecast of $8.00 and a low forecast of $3.50. The average price target represents a 4.03% increase from the last price of $5.95, according to Tipranks. From that eleven, three analysts rated ‘Buy’, six rated ‘Hold’ and two rated ‘Sell’.

Morgan Stanley raised price target to $8 from $7. Ford Motor was given a $7.50 price target by analysts at Jefferies Financial Group Inc. The firm currently has a buy rating on the stock. JP Morgan raises target price to $7 from $6. Goldman Sachs raises target price to $7. Evercore ISI raises price target to $5 from $3.5.

On the other hand, it is good to sell at the current level as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong selling opportunity.

Analysts’ comments

“We have marked-to-market our Ford earnings assumptions to account for what we expect to be a surprising level of pricing and mix for the remainder of 2020, driving an early EPS upgrade and our target to $8. Reiterate Overweight,” noted Adam Jonas, equity analyst at Morgan Stanley.

“Longer term, we remain extremely focused on the VW partnership, as we view this evolving relationship as arguably the #1 driver of Ford’s ability to improve efficiency, reduce waste and successfully pivot from ICE to EV. While investors may not see deep significance here, we believe these three areas are defining vectors of innovation and competitive strength as the industry transitions to Auto 2.0 and can make the difference between Ford having a cost of capital of greater than 20% or <10%,” he added.

John Butters, senior earnings analyst at FactSet in his June 19 note wrote, “despite the decline in expected earnings, this sector has witnessed the second-largest increase in price (+31.7%) of all eleven sectors since March 31.”

“However, Ford Motor (to -$1.25 from -$0.31), Amazon.com (to $1.39 from $6.14), General Motors, and Carnival have been the largest contributors to the decrease in expected earnings for this sector since March 31.”