Vodafone (VOD) share price forecast: Telecommunication company’s CEO steps down amid disappointing earnings results
Vodafone (VOD) CEO Nick Read is stepping down from the role after four years. The departure follows a turbulent year for the telecoms giant after disappointing first half results and the VOD share price having fallen over the past few months. What does this mean for investors?
Vodafone (VOD) live chart
In this Vodafone share price forecast we explore what’s been happening in the company, examine why the stock price has dropped and ask analysts for their predictions.
What is Vodafone?
The UK-based company operates mobile and fixed-line networks in more than 20 countries, with its largest market in Germany. Vodafone, which launched in the mid-1980s, was originally part of Racal, a British radar and electronics firm founded in 1950.
On New Year’s Day in 1985, Vodafone made the first ever mobile phone call in the UK. It now has more than 300 million mobile customers in Europe and Africa.
Vodafone was listed as an independent company on the London Stock Exchange (LSE) and New York Stock Exchange (NYSE) following the demerger of Racal and Vodafone in 1991. It trades under the ticker ‘VOD’.
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Stock price analysis
Any Vodafone share price forecast must consider what has happened to the stock over various timeframes.
The VOD share price has fallen 31% over the past six months, from 124p ($1.52) to 86p in late trading on 8 December.
Over the last 12 months the price has dropped 24%. The year-to-date (YTD) fall is even higher at 25%. Over the past five years VOD has fallen 63% from 230p.
The all-time high Vodafone closing price was £44.96 on 9 March 2000.
Latest earnings report
In mid-November, Vodafone announced first half 2023 results, which saw earnings guidance revised down from €15bn-€15.5bn ($15.8bn-$16.3bn) to €15bn-€15.2bn ($15.8bn-$16bn). It attributed the move to a worsening global macroeconomic climate, with energy costs and broader inflation affecting its financial performance.
The results also showed group revenue rose 2% in the first half to €22.9bn from €22.49bn for the same period in full year 2022. Adjusted earnings declined by 2.6% due to a “material prior year legal settlement” and commercial underperformance in Germany.
Departure of Vodafone’s group chief executive
On 5 December, Vodafone announced Nick Read had “agreed with the Board” that he would step down from his role as group CEO and director at the end of 2022.
The statement noted that Margherita Della Valle had been appointed interim group CEO and would continue in her existing role as group chief financial officer. She has been tasked with accelerating the company’s strategy to improve operational performance and deliver shareholder value. The board has also started the process of finding a permanent replacement for Read.
Vodafone chairman Jean-François van Boxmeer noted how Read had led the company through the Covid-19 pandemic during his four years in the post:
Reaction of analysts
News of Read’s departure gave the stock price a lift on the day, according to Victoria Scholar, interactive investor’s head of investment.
Russ Mould, an investment director at AJ Bell, was in agreement, saying:
Mould also pointed out that activist investor Cevian Capital slashing its stake in the company back in October was a damning indictment. He believes fresh ideas are now needed at Vodafone in order for it to thrive in a highly competitive marketplace.
“Read’s final set of results last month did him absolutely no favours, as Vodafone downgraded full-year guidance. Perhaps more worrying was that the response to the pressures the company was facing was simply to cut more costs.
“The good news for whoever takes charge at Vodafone on a permanent basis is the share price is at rock bottom and they probably have licence to take bold steps, but equally patience could be in short supply.”
Vodafone share price forecast: Where will the price go next?
So, what are the Vodafone share price predictions of stock market analysts?
As of 8 December, Vodafone was rated a ‘moderate buy’, according to the views of 12 analysts compiled by TipRanks, although opinions were divided. Five analysts’ had ‘buy’ recommendations in place, six saw it as a ‘hold’ and one a ‘sell’. Their consensus 12 month price target was 129.83p.
The highest Vodafone share price forecast 2023 prediction was for the stock to hit 215p, while the lowest of 90p was still a premium over the current level.
Looking ahead, Vodafone was a “bad long-term (one year) investment”, according to the Vodafone stock forecast of Wallet Investor, the algorithmic forecaster. It predicted the price could slip to 81.5p over the coming year. Its Vodafone share price forecast 2025, meanwhile had the stock price down to 65p by December of that year.
Javier Correonero, equity analyst at Morningstar, has lowered his fair value estimate for Vodafone from 135p to 125p on the back of the weaker-than-expected first half results.
“Headwinds are mainly coming from Germany and Italy,” he wrote in his latest Vodafone share price forecast.
Looking ahead, Correonero noted how the company’s management intends to mitigate this weakness with price increases in most of its markets.
“While we have faith Vodafone can increase prices without losing market share in countries like the Netherlands, Greece, or the UK, we are less confident it can do it in Spain, Portugal, or Italy. These geographies remain very challenging, with lots of competition in the low end of the market.”
FAQs
Is Vodafone a good stock to buy?
Whether Vodafone is a good stock for you to buy depends on various factors. These should include your investment objectives, existing portfolio, and attitude to risk. You’ll also need to carry out your own research into Vodafone to see if you believe its prospects are attractive. Remember to never invest more money than you can afford to lose.
Will Vodafone stock go up or down?
No-one knows for sure. However, according to the consensus 12 month Vodafone share price forecast of analysts by TipRanks, VOD stock could hit 129.83p. This would represent an over-50% increase on the stock’s closing price of 85.93p on 8 December.
Note that analysts’ predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before trading. And never invest or trade money you cannot afford to lose.
Should I invest in Vodafone stock?
This needs to be your decision. The consensus Vodafone share price predictions of stock market analysts compiled by TipRanks put VOD stock as a ‘moderate buy’. However, you must remember that analysts can be wrong. Always conduct your own due diligence, looking at the latest stock news, a wide range of analyst commentary, technical and fundamental analysis.
Remember, past performance does not guarantee future returns. And never invest with money you cannot afford to lose.
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