Will Vodafone disappoint?

While the Vodafone share price has recovered a little ground in recent weeks, to some degree on the back of the euphoric start to the year in the FTSE, its results to be announced tomorrow have been awaited with some question marks hanging over what is likely to be reported. Could the downward trend continue if Vodafone comes in lower than expected? It looks like the market is ready to be disappointed.

Vodafone Group is expected to post 'growth deterioration' in its financial results Thursday.

Last month Deutsche bank lowered its recommendation from ‘buy’ to ‘hold’ citing concerns about the telecom company’s worsening cash returns.

"We forecast growth deterioration through calendar 2013 with the outlook for financial FY14 set to confirm declining free cash flow (FCF), no further dividend-per-share (DPS) growth and a scaled down buyback to avoid increased leverage."

Deutsche Bank said it anticipates organic service revenues to falter further this year, with a return to positive growth unlikely until 2014.

It also reduced its target price for the shares from 225p to 175p.

http://www.digitallook.com/news/20674165/Thursday_preview_Vodafone_Group_to_report_growth_deterioation.html?username=&ac=

"Growth deterioration" doesn't sound good, but a lot will depend on how much deterioration and it does have its Verizon Wireless investment to help it out, although it appears to be talk around a possible Verizon buyout of Vodafone that seemed to be helping the share price recently. Would Verizon seriously consider a bid for Vodafone? Can Verizon afford it?

A better than expected report tomorrow could see Vodafone continue to recover from its lows in the 150's, worse than expected and we may see 155 tested again over the next few weeks. It will be interesting to see what the charts look like by the end of tomorrow.

Vodafone chart before recent recovery below.

http://sevenpillarstrading.blogspot.co.uk/2012/12/no-christmas-love-for-vodafone.html