Deutsche Bank stays at 'buy' on Vodafone despite 'not great' underperformance

Analysts at Deutsche Bank kept their recommendation for shares of Vodafone at 'buy', despite their underperformance versus the sector and the wider market year-to-date.

The company delivered total shareholder returns of approximately 16% in the back half of 2019, followed by the start of a recovery in organic service revenues in 2020, fading headwinds from currencies and with a deal to sell its Italian towers to Inwit at an "attractrive" multiple.

Alas, year-to-date the shares were down 26% in euro, having underperformed the Stoxx 600 telecommunications sector index by 8% and the wider pan-European Stoxx 600 by 4%.

"Not great for a supposedly defensive stock," said Deutsche.

Deutsche attributed that to liquidity issues during the stock market sell-off, local indices, emerging market exposure and the company's leverage.

The analysts trimmed their target price from 233.0p to 220.0p.