UBS reiterates 'buy' rating on Vodafone

With the bulk of the group performing well, analysts at UBS reiterated their stance on shares of Vodafone on Tuesday, highlighting how the telecommunications giant's organic service revenues ended the fourth quarter ahead of analysts' estimates.

With top-line trends in-line or ahead at the majority of its business units - aside from "light" activity in Spain - the broker said that "overall growth drivers for Vodafone remain intact", with mobile data monetisation feeding through in most markets, strong growth in broadband and market share gains in Enterprise.

Vodafone saw organic service revenue grow 1.4% over the final three months of the last trading year and combined with cost savings (consensus: 1.1%), UBS thinks the firm can continue to deliver mid-single EBITDA growth per year going forward.

Looking at the negatives, UBS said, "Expectations for Italy are low given the expected entry of Iliad into the Italian mobile market, but with Spain also likely to see negative organic service revenue growth, consensus is likely to factor in close to 0% service revenue growth for Q1/Q2."

"We reiterate our view that the bulk of the group is performing well and will benefit from cost savings," UBS said as it doubled down on its stance on Vodafone, reiterating its 'buy' recommendation and 270p target price for the shares.