Goldman downgrades Vodafone, UBS cuts target price

15th May 2014 11:12

Vodafone's shares were under pressure on Thursday after a Goldman Sachs downgrade and a target price cut from UBS.Goldman has cut its recommendation for the stock from 'buy' to 'neutral' and reduced its target for the shares from 270p to 240p ahead of the company's fourth-quarter results due out next week.Meanwhile, UBS kept a 'buy' rating, but lowered its target from 275p to 255p.The Swiss bank said while consensus "remains in a state of flux given consolidation effects (Italy/Kabel Deutschland) and the impact of Project Spring", it has reduced its profit forecasts for 2015-2018. This was driven by lower than expected profitability in Germany and Italy and higher depreciation and amortisation costs.Nevertheless, it said that top-line trends appear to be "slowly improving" helped by emerging-markets growth, an improvement in Southern Europe and easing regulatory cuts.UBS expects Vodafone's revenues to fall to £43.9bn in the year ended March, down from £44.4m previously, while operating profits are predicted to slip to £12.9bn from £13.3bn.In regards to recent M&A speculation, the bank said: "News that AT&T is potentially moving on DirecTV may reduce hopes of a Vodafone take-out near-term, but something may be possible longer-term and there may be optionality from other suitors such as Softbank."Separately, Vodafone should be an indirect beneficiary of consolidation with the European Commission decision on Germany on June 26th likely to be a positive catalyst."Vodafone's shares were down 1.4% at 218.9p by 11:40.BC