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Shares in UK Index telco heavyweight Vodafone (VOD) have found an excuse to bounce from another close shave with 200p, this thanks to slightly better than expected Q3 results this morning. Pragmatism has prevailed with investors concentrating on progress in pre-tax profits, operating cash flow and net debt, rather than negatives including weakness in handsets, FX moves denting revenues/profits, a more than doubling of the net loss (all €5bn related to an Indian write-down) and lower than hoped CAPEX.
Solid organic growth in major markets Germany and Italy is allowing investors to remain positive about continental prospects, especially post Brexit, even more so when management says better than expected performance in the region has allowed it to narrow its guidance range for FY profit (EBITDA) towards the upper end of its prior range. Today’s jump will please investors and traders alike, keeping alive an 8yr uptrend from lows of 100p and rekindling the likelihood of a 10% recovery to October highs just shy of 230p
Mike van Dulken, Head of Research, 15 Nov
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