Analyst Rating Upgrade and Price Target
Goldman Sachs raised Vodafone Group Plc’s rating from Sell to Buy, citing accelerating return on invested capital driven by recovery in the UK mobile market and ongoing cost‑cutting measures. The brokerage increased its price target to 155 pence, up from the previous 85 pence, marking the first time its estimates have been above consensus in years.
Sector Outlook
The analysts, led by Andrew Lee, reiterated a bullish outlook for the Digital Infrastructure sector, projecting a 14 % compound annual growth rate in free cash flow for 2026‑2030, the highest among defensive‑sector peers. They forecast shareholder‑return yields to climb to 6 % in 2027 and 7 % in 2028, compared with roughly a 4 % yield for the next‑best defensive sector. Net debt to EBITDA is expected to decline by a factor of two over the next three years. Assuming leverage remains at current levels, the team indicated that shareholder‑return yields could reach 8 % in 2027 and 9 % in 2028.
Relative Ratings Across Telecoms
In the same reassessment, Goldman assigned high‑risk, high‑reward Buy ratings to BT Group, Deutsche Telekom AG and Telefónica SA. Orange SA and KPN NV were flagged as more defensive, lower‑risk Buys. Tele2 AB and Telia Company AB retained Buy ratings on the strength of Nordic markets, while Telenor ASA and Elisa Oyj were cut to Neutral from Buy due to weaker near‑term catalysts. Cellnex Telecom SA was downgraded to Sell from Neutral because of lingering investor concerns over its structural growth outlook. Sell ratings were also maintained on Swisscom AG and Sunrise Communications AG, reflecting limited growth potential in the Swiss market.
Risks and Market Conditions
The analysts noted that satellite competition remains a key investor concern, although they expect the impact to taper over the coming quarters. They also highlighted that the sector is better positioned than in the past to endure a higher interest‑rate environment.