Barclays downgrades Vodafone to 'equal weight' on competition concerns

Vodafone Group saw its stock recommendation lowered to 'equal weight' from 'overweight' at Barclays, with the bank raising concerns about competition despite an upbeat earnings report earlier this week.

Barclays left Vodafone's target price unchanged at 225p despite the recommendation change.

The telecoms giant’s prospects remain fairly positive according to Barclays, but rising competition related to the advent of new technology could hamper its growth.

Barclays argues that Vodafone’s valuation "looks broadly up with events, and that FCF growth beyond FY18 will likely be tempered by rising competitive intensity."

Vodafone posted its full-year results for the year to 31 March on Tuesday, with group total revenue down 4.4% to €47.6bn, while full-year organic service revenue grew 1.9%.

After offloading its stake in Verizon Wireless, Barclays has maintained a positive stance towards Vodafone.

"We believe Vodafone is investing to transform its growth profile post the disposal of Verizon Wireless, and has balance sheet flexibility to invest whilst many of its peers are less able to do so," Barclays added.

After an initial drop when markets opened on Friday, Vodafone shares were trading slightly higher (0.04%) as of 16:36 BST.