Vodafone's Q2: Investors to be reassured despite European turmoil

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Vodafone will publish its second-quarter results Nov. 13 with the aim of calming investor' fears over the lingering Eurozone crisis.

Vodafone is expected to report quarterly revenues 0.6 per cent lower than its previous quarter, according to analysts with investment firm Jefferies. The analysts have not changed their "hold" rating on Vodafone shares, according to ShareCast.

UBS analyst Nick Lyall, however, said he expects the UK-based operator to reveal a difficult period, but no worse than expected.

He estimates that consolidated organic revenue will fall by 0.7 per cent as revenue falls across Southern European show no signs of slowing. "A tough Italian top line and rising Spanish costs mean we believe the potential for early margin stabilisation has fallen," the analyst told Proactive Investors.

Lyall said he expects first-half underlying EBITDA of £6.88 billion and a 31.1 per cent margin, down 1 percentage point. He adds that revenues in the troubled Southern European region are expected to drop by as much as 12 per cent, while Vodafone's 45 per cent stake in Verizon wireless should buoy the company's results. "It seems harsh Vodafone has underperformed South European and U.S. stocks despite its greater diversification and stronger balance sheet," Lyall added.

Of note, the UBS analyst predicts the expected special dividend from Verizon will instead be replaced by a buyback.

Financial analysts elsewhere are mixed with regard to Vodafone's second-quarter performance. Societe Generale and Exane BNP Paribas have reiterated a "sell" rating on the company's shares in research notes to investors, while Macquarie restated an "outperform" rating, according to Jags Report.

For more:
- see this ShareCast article
- see this Proactive Investors article
- see this Jags Report article

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