The last time the Vodafone (LSE:VOD) share price was trading above £1 was back in 2023. But after several years of laying foundations, it seems the strategy from the new management is finally starting to bear fruit.
As such, the telecommunications stock’s up almost 17% since the start of the year. And if analysts’ forecasts are correct, the shares might soon be back above the £1 threshold within the next 12 months.
Encouraging progress
A big part of the renewed investor sentiment revolves around Vodafone’s recent merger with Three UK. According to the analyst team at UBS, the deal’s expected to generate £700m in annual cost and capex synergies while providing an estimated €400m in extra underlying earnings each year.
Analysts at JP Morgan seemingly have a similar hunch about the merger, and have also praised the group’s ongoing progress in its restructuring.
Several efficiency improvements have already been delivered. And by disposing of non-core divisions and focusing solely on the UK, German, and African markets paves the way for a far more profitable enterprise in the long run. And when excluding one-time non-cash impairment charges, operating profits were up almost 11% in its 2025 fiscal year (ending in March).
As such, UBS currently has one of the most optimistic share price targets of 120p, representing a potential 50% capital gain over the next 12 months.
What could go wrong?
Despite the bullish sentiment, both UBS and JP Morgan have outlined some significant challenges that could prevent Vodafone shares from maintaining their current upward trajectory.
The biggest concern continues to be the group’s lacklustre performance in Germany. Despite being one of the biggest markets in Vodafone’s portfolio, a combination of poor-quality customer service and competitive pressures from cheaper providers has resulted in repeated market share losses.
Management has begun trying to address the problems and deliver a better experience for customers. But so far, those efforts have failed to materialise into meaningful customer attraction, let alone retention.
A successful integration with Three UK could offset the impact of this and allow the bottom line to continue expanding. In this scenario, beyond the improved financial flexibility, Vodafone could also continue tackling its substantial debt burden. But that too is far from guaranteed, with large-scale acquisitions of this nature often running into challenges, introducing considerable execution risk.
The bottom line
All things considered, can the Vodafone share price bounce back above the £1 threshold? Personally, I’m cautiously optimistic. While the progress has been slow so far, the new management team’s starting to deliver on its promises, putting the business on the path to recovery.
However, while Germany continues to underperform, investor sentiment’s likely to remain weak. As such, investors might not see the Vodafone share price reach £1 in 2025, even if no new spanners are thrown into the works.
I think this is a wait-and-see stock and I wouldn’t consider it at the moment.
