Vodafone shares "too cheap" as Exane BNP Paribas upgrades to 'outperform'

Exane BNP Paribas said it sees "much better times ahead" for Vodafone as it upgraded its view on the stock from 'neutral' to 'outperform'.The broker also hiked its target price from 220p to 270p, which implies 17% upside from Tuesday's closing price.Exane analyst Michael Williams said the telecom giant's Project Spring investment programme has felt like a "long cold winter" for shareholders, but things are looking up."The combination of a dramatically improved proposition (both absolute and relative), the secular trend of increased data consumption and the benefits of an improving market structure (and hence data monetisation) should see a return to revenue and [profit] growth on an underlying basis in YTM2016e (and on a reported basis the following year)," Williams said."The normalisation of capex will see a step change in free cash flow (FCF), restoration of dividend cover and improved shareholder returns."Project Spring will distort Vodafone's valuation long after capex normalises, Williams said, but the stock still "looks too cheap on FCF metrics as Spring turns to summer in our view".The share price was up 1.6% at 232.18p by 10:16.