Goldman Sachs downgrades Vodafone to 'neutral'

15th Jul 2015 09:49

(ShareCast News) - Goldman Sachs has downgraded Vodafone to 'neutral' from 'buy' and cut the price target to 250p from 275p."Post recent outperformance around the announcement that it is in talks with Liberty Global about a potential asset swap, we believe risk-reward appears more binary," said the bank.It noted that since adding the stock to its buy list in December 2014, it's up 5.8% versus the FTSE World Europe up 2.1%.GS said it continues to see Vodafone as a leading beneficiary of ongoing consolidation of both mobile and fixed-mobile operators, which supports a gradual return to top-line growth in Europe."We see attractive operational gearing to this growth recovery given its low margins," said the bank.It also reckons Vodafone enjoys substantial M&A optionality and said recent acquisitions of mobile operators by BT/Liberty Global suggest the strategic value of mobile network ownership in a converging market is material, balancing the structural risk Vodafone currently faces as a mobile-centric fixed-line wholesaler."If management is willing to reconsider the structure of the group, we believe a number of other potential acquirers could take interest in its remaining assets," it added.At 0910 BST, Vodafone shares were down 0.8% at 235.90p.