Vodafone share price continued its strong recovery, rising to its highest level since August 2022, as demand for telecom stocks rose. VOD jumped to a high of 10.78p, up by over 47% from its lowest level in 2024. So, does the stock have more upside?
Why Vodafone share price has jumped
Vodafone stock price has jumped for three main reasons. First, the rally has coincided with the gains in the telecom space. For example, BT Group stock has jumped by 50% in the last 12 months, making it one of the best-performing companies in the FTSE 100 Index.
Similarly, in the United States, AT&T stock price has surged by 55% in the same period, while T-Mobile is up by 36% and Verizon is up by 15%. Other global telecom stocks like Deutsche Telekom and Telekom Italia have also jumped by double digits.
Most of these companies have jumped because of their valuation multiples and the fact that many of them underperformed for years. Their management have also embraced cost-cutting measures. For example, Vodafone is expected to slash up to 1,600 jobs following its merger with Three. It has already slashed over 10,000 workers in the past few years.
Second, Vodafone share price has jumped because of its shareholder returns. It recently completed its €2 billion share buyback plan and then immediately initiated a new one of the same amount. Share buybacks are important because they help a company to grow its earnings per share.
Vodafone spent €3.4 billion in capital return to shareholders last year, and the management expects to increase this amount gradually.
Read more: Vodafone share price could be on the cusp of a breakout
Transformation continues
Third, the Vodafone share price has jumped as the company continues its transformation. It has already exited some of its markets like Spain and Italy, and used the proceeds of these funds to pay debt.
The company is also working to improve its market share in key markets, such as the UK, through the merger with Three. This transaction made it a more formidable competitor to BT Group’s EE.
Further, investors believe that the management will succeed in its strategy to grow its German business. The most recent results show that Germany’s revenue decreased by 5% due to the MDU TV law. Without that law, its sales would have dropped by 2% because of the soaring competition.
Vodafone’s other markets are doing modestly well, with UK’s organic revenue rising by 1.8% and its African operations rising by 4%.
Most importantly, Vodafone has improved its balance sheet in the past few years. It ended the financial year with over €16 billion in cash and short-term investments against net debt of €22.4 billion.
Vodafone share price technical analysis
VOD stock chart | Source: TradingView
The daily chart shows that the VOD stock price has been in a strong bullish trend in the past few years. It moved from a low of 60.86p on April 9 to a high of 81.2p today.
Vodafone share price has moved above the crucial resistance level at 75.45p, the upper side of the cup-and-handle pattern. This is one of the most bullish signs in the market.
VOD has formed a golden cross pattern, a popular bullish continuation sign. Also, the Relative Strength Index (RSI) and the MACD continued rising, with the RSI reaching its overbought level.
Therefore, the stock will likely continue rising as bulls target the key resistance level at 100p over time. The alternative scenario is where the stock drops and retests the key support at 75.45 and then resumes the uptrend.
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