Broker snap: Jefferies sees Vodafone uncompelling post-Verizon

6th Sep 2013 15:03

Jefferies International said Vodafone's shares were an uncompelling investment after the telecoms company agreed to sell its stake in Verizon Wireless to Verizon Communications.The Jefferies analysts said if the rump of Vodafone traded in line with its sector that would imply a share price of 236p, or an increase of 12%. That prospect is "not comppelling", they said.Given risks before the deal such as the price of Verizon's shares - which make up part of the payment - and foreign exchange fluctuations, Vodafone needs likely share gains of 20-25% to be compelling, they said.The analysts questioned whether Vodafone would trade at a significant premium to the sector after the sale, valued at about $130bn ($84bn). On the bright side, buyers could be interested in Vodafone's European operations as a play on economic recovery. Less encouragingly, Vodafone's operating decline could continue and investors might be wary of Vodafone's "project spring" investment programme if it does not bear fruit. Investors may also be concerned about the company making acquisitions.Jefferies kept its hold recommendation and maintained its 216p price target.