Transformation, Investment Help
In a research note published on Tuesday, the firm's analyst Stephen Biggar pondered on Vodafone's transformation to a provider of a broad mix of communications services from being a pure-play mobile operator. The analyst also noted the company has concluded a two-year capital investment program, helping it to expand its offerings and strengthen the capability of its network. According to the analyst, these two factors could accelerate earnings growth.
Valuation: Sore Point
Notwithstanding the fundamental strength, Argus believes the prospects are already priced into the shares. The stock, the firm pointed out, is trading at a premium valuation of 33.3 times its 2018 earnings per ADS forecast, above the 20.1 times for its peer group.
Currency To Hit Top Line Growth?
Argus expects 2017 revenues to get a shot in the arm from strong new customer additions and favorable reception to its higher-priced more for more offerings. However, the top line is expected to take a hit from negative currency movements. Nevertheless, the firm sees margin improvement from cost-savings initiatives and acquisition synergies.
At time of publication, Vodafone was up 0.82 percent on Tuesday, trading at $29.44.
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