Shares in heavyweight Vodafone rise 2 percent in heavy volume andadd 7 points to the FTSE 100, as analysts say they expect the firm tododge earnings forecast cuts despite weak quarterly sales, and that the firm'sVerizon Wireless stake remains an a attractive lure for yield-hungry investors.
After 1 1-2 hours of trade, volume in the stock is 40 percent of its 90-daydaily average, against 15 percent for the broader index.
Trading at Vodafone worsened in the third quarter as fierce competition innorthern Europe compounded the weak economies of Spain and Italy to push organicservice revenue down 2.6 percent.
"Some of the negative impacts on revenues in the markets where there weredisappointments have been offset by positive margin developments. We thereforedon't expect EBITDA forecasts to change despite the slight miss," LiberumCapital says in a note.
Vodafone's revenues are down 11 percent on their historical average, whilethe share trades on a 5-year earnings per share compound annual growth rate ofminus 5.8 percent, which suggests the market has already priced in a certainamount of scepticism.
"We expect the short term (share price) reaction to be modestly positive andwe reiterate our 'buy' case, which is predicated on anticipating VerizonWireless developments and the view that the shares offer considerable value," itsays.
Vodafone's shares are up more than 10 percent in 2013 with speculation rifethat Verizon will, at some point, make a move for Vodafone's stake in theVerizon Wireless joint venture.
"Even without the distraction of what the company aims to do with its USVerizon stake, the increase in revenues of 9 percent is further vindication ofVodafone's decision up until now to retain the stake," Richard Hunter, head ofequities at Hargreaves Lansdown, said in a trading note.
"The power of the company's cash generation has already resulted in theannouncement of a share buyback programme, whilst the generous dividend yield of5.3 percent is extremely supportive in the current interest rate environment,"he said.
Reuters messaging rm://david.brett.thomsonreuters.com@reuters.net
Vodafone (VOD)
