Broker snap: Cautious margin outlook at Vodafone

Nomura slightly reduces its target price for telecoms titan Vodafone as consensus aligns to a more cautious margin outlook.The group sold its 44% holding in French mobile phone group SRF to media firm Vivendi on Monday for €7.75bn (£6.8bn) in cash, which the broker believes was a good price.With the disposal now removed as positive catalyst, Nomura thinks that Vodafone faces more difficult newsflow, such as a new telecom policy draft in India and a tough outlook in Spain. "There is scope for the stock to fall back towards 170p in the near-term," warns the broker.Even though the group expects the rate of margin decline to reduce over the coming years, the Japanese broker notes that it will not stabilise and forecasts a margin decline of 40 basis points (bp) for 2012 (previously a 10bp decrease).Nevertheless, Nomura stays with a 'buy', but cuts its target price by 2% to 215p, from 220p previously.---bc