Berenberg cuts target price on Vodafone, but keeps at 'hold'

Analysts at Berenberg cut their target price for shares of Vodafone despite what they said was its cheap valuation and 10.5% dividend yield.

To back up their case, they pointed to the three reasons why investors typically shunned telecoms companies: a dearth of growth, excessive leverage their complexity.

"It is hard to get too excited about M&A when the underlying operations are expected to keep underperforming, as shown by only a muted share price reaction to the recent UK merger news," they wrote in a research note sent to clients."

They did keep their recommendation for the shares at 'hold', but the target price was reduced from 95.0p a share to 85.0p.

On their estimates, Vodafone shares were changing hands on nine times forecast earnings.