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Vodafone keeps FTSE rally alive
by Chris Marshall on Feb 21, 2014 at 10:21
Vodafone took the lead on another session of rallying UK shares on Friday.
The telecommunications company rose 2.3% to 235p as brokers raised their expectations for the share price ahead of the £49.4 billion payout to investors, and share consolidation – which starts on Monday – after the company’s sale of its stake in Verizon.
Expectations are growing in the City that a smaller Vodafone (VOD.L) could be a bid target for a competitor like AT&T. The US group said last month that it doesn’t plan to make an offer for telecoms company in the next six months, but City scribblers suggested it would return later in the year.
Both UBS and Citigroup have raised their price targets on the stock, to 275p and 290p respectively.
Vodafone’s rise helped broader stock markets higher, with Britain’s FTSE 100 up 0.5% at 6,846, ahead of gains of 0.2% on the pan-European FTSE Eurofirst index.
That continues a rally that started over two weeks ago. A return to January’s hard selling had looked possible on Thursday morning after weak data on factory growth in China. But the worst of the declines were later erased by a forecast-beating report on US manufacturing.
That data, showing US factory activity grew at its fastest pace in nearly four years in February, boosted US and Asian stocks overnight.
Share markets have recovered from January’s sell-off, which was prompted by fears over the health of emerging markets and the impact of the gradual end of US stimulus. The FTSE 100 is now up 0.7% year to date. That comes on top of last year’s 14% rise for the UK’s main market.
While some corporate financial updates have failed to meet investor expectations, a steady stream of corporate activity on both sides of the Atlantic has fed animal spirits. In the US Facebook agreed to buy WhatsApp for $19 billion on Thursday, while in the UK this week, both Pets at Home and Poundland revealed plans for stock market flotations.
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