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(Sharecast News) - Berenberg has raised its target price for Vodafone from 123p to 140p and reiterated a 'buy' rating, saying the stock remains "relatively cheap" compared with the wider European telco sector.
The broker attributed the improved outlook to July's first-quarter results from the telecoms giant that came in at the upper end of guidance, driven by strong growth at Vodacom and in Germany.
Analysts said the company is at a free cash flow inflection point, and is expected to deliver sustainable FCF and dividend growth over the coming years, from the reported 2.62bn in FY26.
The company also has "substantial future capacity for value-creation opportunities", they said, with further share buybacks and small bolt-on M&A deals possible from FY28 onwards.
Berenberg said that Vodafone's UK capital markets day on 8 October could be a catalyst for the stock, saying: "Potential German telecom consolidation is one of the most likely 'in-market' sector deals."
"On 10 July 2026, Vega (owned by the Xavier Niel family) acquired a c16% share of the voting rights in Vodafone from Etisalat, and later raised its stake to c19%. We wonder if Mr Niel's involvement increases the likelihood of Vodafone looking to acquire 1&1, driving German consolidation," the broker said.
Vodafone shares were up 2.22% at 126.85p by 1338 BST.
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