Broker snap: UBS nudges up Vodafone forecasts

8th Apr 2010 12:58

The recent strength of the US dollar against sterling has prompted UBS to upgrade its earnings forecasts for mobile phone giant Vodafone.Its earnings per share forecast for fiscal 2010 has been increased by 1% and forecasts for subsequent years have been raised by 4-7%, while the price target has been lifted from 130p to 150p. The broker retains its neutral rating on the stock.UBS remains concerned by Vodafone's "exposure to markets with poor structure in Europe, falling market share, and the prospects of a US slowdown." All of these issues could drag down underlying earnings, UBS belives.On the upside, there is the prospect of Vodafone starting to receive a dividend from its stake in US mobile phone operator Verizon Wireless from fiscal 2012. "Vodafone's dividend yield could rise to more than 9% if Verizon Wireless were to upstream all its earnings,' UBS notes.