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Technology Stocks : Vodafone-Airtouch (NYSE: VOD) -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (2883)	7/1/2000 2:32:15 PM
From: MrGreenJeans	Read Replies (1) \| Respond to of 3175

DAILY BROKER'S REPORT Deutsche: Vodafone worth 465p? June 30, 2000 By Tom Winnifrith, UK-iNvest.com Telecoms stocks are under something of a cloud at present. There has recently been a spate of reports suggesting a slowdown in European subscriber growth and there are also mounting fears that companies are over-paying in third generation (3G) mobile phone license auctions. Even mighty Vodafone AirTouch (VOD) is not immune: its shares have underperformed the wider market by 13.5% over the past three months, sliding to 286p. Ahead of the publication of second quarter subscriber numbers on July 6, analyst Andrew Beale of Deutsche Bank thinks the sell-off has been overdone. He rates the stock a "strong buy" and argues there is potential upside up to 465p a share. The broker predicts Vodafone will have enjoyed a record quarter with 5.8 million net additions to its subscriber base -- 4.6 million of which will have come from the UK, Europe, the Middle East and Africa. Overall, at a group level, Deutsche expects quarter on quarter growth of 10.7% and annualised growth of 43% But it will not all be good news. Beale warns that in the UK, Vodafone is losing market share to Orange (ORA) although on the flipside, Germany is expected to report "stellar growth". But with the market in an unforgiving mood the shares could be hit by the news from the UK even though Britain accounts for only 16% of Vodafone's business. That, it is argued, would present a classic buying opportunity particularly as there is a very good reason for that loss of market share: viz, that Vodafone (unlike Orange) is unwilling to chase low-cost, low-margin business." The proof of the pudding is at the bottom line. Deutsche forecasts that in the year to March 31 2002 the company will generate revenues of £27.357bn, Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) of £10.2bn and earnings per share of 6.7p. Next year those numbers are forecast to race ahead to £31.6 bn, £12.909bn and to 9.1p respectively. That is undoubtedly a growth story. Bears would argue that Vodafone's weakness lies not in its P&L but in its balance sheet, which remains overburdened with debt. Rumours that the company is planning a significant bond issue continue to circulate in the City In terms of its EV/EBITDA multiple Vodafone AirTouch already trades at a 25% discount to its peers among the International telecoms giants. Assessing just its standard voice services the broker arrives at a valuation for this stock of 280p a share. But the real growth potential over the medium term comes from the transmission of data and Beale's with data valuation for Vodafone is 465p a share. That would be upside indeed.