Analyst Note
| Michael Hodel, CFA |Vodafone’s fiscal 2022 first-quarter trading update painted a mixed picture as recovery from the pandemic has been uneven across markets. Growth improved sharply as the firm lapped the worst of the pandemic impact, with consolidated service revenue up 3.3% year over year, excluding currency movements, versus 0.8% last quarter. Management believes pandemic-related items added only 1 percentage point to growth, indicating improved underlying operating performance. While Vodafone doesn’t provide margin or cash flow details with its trading updates, management reiterated its expectations for fiscal 2022 for EBITDA growth of 3%-5% and free cash flow of at least EUR 5.2 billion. We don’t expect to materially change our GBX 185/$26 fair value estimate, and we still believe the shares are attractive.