What Is The Market Missing On Vodafone?

While Vodafone Group Plc (ADR) VOD might be a difficult company for many investors to fully understand, Bernstein analyst Dhananjay Mirchandani believes this is what could drive upside.

Mirchandani maintains an Outperform rating on the stock with a price target of £265.

What Are Investors Not Seeing?

Vodafone, which currently trades in line with other stocks on the European exchange, should have a higher EBITDA multiple, according to Mirchandani. “Based upon our forecasts, Vodafone will outgrow sector EBITDA and that of our covered companies on a 3-year CAGR. These growth expectations are a function of 1.5 percent revenue growth in addition to cost reduction measures, something few large-cap European names can boast of,” said Mirchandani.

Further, Bernstein’s sum-of-the-parts valuation showed that nearly every single stock in the European market is incorrectly valued. “The renewed optimism (in Germany) in mobile on the back of both improved mobile network quality and the flow-through of cost reduction efforts deserves a premium to O2D,” Mirchandani said. Vodafone also trades in line with Telecom Italia, which has been de-rated by Bernstein.

Finally, if a deal materializes with Liberty Global plc - Class C Ordinary Shares LBTYK, this could provide an additional 20 percent appreciation opportunity for the stock price.

Vodafone was trading at £221.20 during Friday’s market session.

Related Links:

Argus Upgrades Vodafone After A Quarter That Delivered 6 Times The S&P 500's Performance

6 Biggest Foreign Acquisitions Of American Companies In History
Posted In: BernsteinDhananjay MirchandaniAnalyst ColorLong IdeasNewsEurozonePrice TargetReiterationM&AMarketsAnalyst RatingsTechTrading Ideas

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.