Shares in Vodafone Group plc (LON:VOD) fall ahead of this week’s trading update.
After having seen something of a resurgence in recent weeks, shares in Vodafone (LSE: VOD) (NASDAQ: VOD.US) dropped off today as the market opened, with many analysts downgrading from 'buy' to 'neutral'.
Citigroup was one who downgraded Vodafone, citing elevated M&A risk:
"Addressing shortcomings in Vodafone's convergence offering may require M&A in both consumer and business, in our view. In B2B this is unlikely to require a huge deployment of capital but the numbers get larger to achieve a sizeable consumer footprint. Assets are scarce with cable and, in places, unbundled local loop operators, still short of national reach."
As one of the biggest constituents of the FTSE 100, the UK's premier market followed suit and on Monday was dragged down with the world's largest wireless phone company by market cap.
The downgrades come ahead of Thursday's trading update for the quarter ended 31 December 2012, which has added to caution among investors. Vodafone's shares fell 2.5%, or 4p, back down to 169p.
However, this 'investor caution' must be noted, and that the multinational telecomms company has not actually released any firm news to justify investors jumping ship. I, for one, await Thursday's interim management statement not as a panicked shareholder but as a Foolish one, aware of the long-term benefits that holding the shares for at least three to five years can bring me.
So, too, will City super-investor Neil Woodford, who owns a significant holding of Vodafone within his high-yield portfolios. The Motley Fool has produced a special report on the eight blue-chip companies favoured by Mr Woodford, now updated for 2013. It's completely free, but available for a limited time only. Just click here to have the report delivered instantly to your inbox.
> Sam owns shares in Vodafone, but no other company mentioned. The Motley Fool has recommended shares in Vodafone.