Broker snap: Vodafone to get a fourth-quarter boost, says Nomura

18th Apr 2012 10:43

Nomura has maintained its buy recommendation for telecoms titan Vodafone, saying that the group's fourth quarter results should provide a little relief for investors.While Vodafone expects a 70-90 basis point (bp) boost to service revenue growth, Nomura is expecting a 100bp gain to 1.9% in the fourth quarter reflecting reduced MTR (mobile termination rate) pressure in Germany, Netherlands, Portugal and Greece and last year's accounting distortion in Spain.Meanwhile, Nomura predicts that Verizon Wireless (in which Vodafone owns a large stake) will report a rebound in profitability when it releases its first quarter results tomorrow. The broker estimates a 405bp service margin improvement to 46.3%, compared with the fourth quarter."Vodafone is the least exposed to Europe of its large cap peers and is outperforming peers in European mobile."After adjusting mid-term earnings estimates slightly to reflect tougher EC roaming cuts and weaker exchange rates, the broker cuts its target price from 230p to 225p.Shares were trading down 0.6% at 171.55p on Wednesday morning.BC