Vodafone H1 preview: Where next for the Vodafone share price?
Joshua Warner November 12, 2021 8:29 AM
Vodafone is expected to report higher revenue and earnings in the first half. We explain what to expect and consider how Vodafone shares could react.
When will Vodafone release interim earnings?
Vodafone will release first half earnings on the morning of Tuesday November 16.
Vodafone H1 earnings preview: what to expect from the results
Vodafone delivered 3.3% service revenue growth in the first quarter, which came in ahead of the 1.9% pencilled in by analysts. That was thanks to a revival in roaming revenue, which soared over 56% as restrictions eased and people started to travel overseas again, although it remained less than half of pre-pandemic levels. Growth in business service revenue also contributed thanks to strong demand for IoT and digital services.
Service revenue growth is expected to have slowed to 2.2% in the second quarter due to less favourable comparisons from last year, which should equal out to around 5.3% growth for the first half.
Analysts forecast Vodafone’s overall revenue will rise 4.1% to EUR22.31 billion from EUR21.43 billion the year before, signalling slower growth in the second quarter compared to the 5.6% rise reported in the first, and for adjusted Ebitda to climb to EUR7.43 billion from EUR7.02 billion. Adjusted EPS is forecast to grow to 4.40 cents from 4.11 cents.
Vodafone raised its guidance when it released its first quarter update and is pursuing annual adjusted Ebitda of between EUR15.0 billion to EUR15.4 billion and adjusted free cashflow of at least EUR5.2 billion (from its original goal of earnings of EUR14.4-14.6 billion and cashflow of EUR5.0 billion). If delivered, that would improve from the EUR14.9 billion in adjusted Ebitda and adjusted free cashflow of EUR5.0 billion delivered in the last financial year.
Vodafone also outlined its medium-term ambitions for the first time back in May after spending the last three years carrying out its ongoing transformation. Vodafone is aiming to deliver ‘consistent revenue growth’ in Europe and Africa and to keep expanding margins and cashflow to deliver mid-single digit growth in both adjusted Ebitda and free cashflow. It has also said it is aiming to pay a minimum annual dividend of 9.0 cents per share, in-line with what it paid in the last financial year.
Where next for the Vodafone share price?
After refreshing the post pandemic high of 142p in May, the Vodafone share price has been trending lower, finding support at 106p the year to date low. The share prices trades below its multi-month falling trendline but more recently the price is extending a rebounded off 106p.
A move above the 50 sma and a bullish RSI point to further upside. Buyers are looking for a move over the falling trend line to expose the 200sma at 124p. It would take a move above here to negate the downtrend and for buyers to gain traction.
Rejection at the falling trendline could see the price fall back towards 106p and 100p, a level last seen in October 2020.
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