After over a decade of underperformance, the Vodafone (LSE:VOD) share price is finally starting to bounce back. Since 2025 kicked off, the telecommunications giant has seen its market-cap jump by 36% under the new leadership of Margherita Della Valle.
This new momentum follows from what was a pretty radical restructuring of the enterprise. A large swathe of its international operations was sold off, raising capital to pay down debt, and retargeting operations exclusively to the UK, Germany, and Africa.
While this attempted turnaround is still under way, investors are growing increasingly positive about this FTSE 100 stock. And it’s easy to see why, with growth slowly ramping back up, earnings following in its footsteps, and a massive €500m share buyback scheme now being executed.
But can this momentum continue? And where could the Vodafone share price land at the end of 2025?
Catalysts for growth
One of the biggest recent developments for this business is its completed merger with Three UK. This deal is expected to generate combined synergies of £700m a year, paving the way to wider margins and improved free cash flow generation.
If Vodafone’s internal projections are correct, this takeover alone could yield a further €400m in underlying profits. However, the real growth catalyst is management’s efforts in Germany. This is the business’s biggest market and also the most troubled.
Regulatory changes aside, the company has struggled to retain a stable customer base over the years in large part due to fierce competition. In fact, customer reviews have been weak, resulting in churn that has ultimately dragged down sales and profits in the core region.
Today, this issue persists. In its latest quarterly trading update, service revenue continued to shrink. And yet this problem may soon be in the rear-view mirror.
The top line is still shrinking, but the rate at which this is happening has slowed significantly. And it’s an early sign that management’s infrastructure upgrades, price adjustments, and heavy investment into improving customer services seem to be paying off. So much so that German sales could return to growth before the end of 2026.
Where are the shares going?
When Della Valle was first appointed in 2023, investors were rightfully sceptical. Not because of her track record, but rather the numerous CEOs before her tenure who tried and failed to fix the problems. And while there’s still a lot of progress needed, Vodafone’s business and share price are finally starting to move back in the right direction.
But will it continue to climb further? All things considered, I don’t actually think Vodafone shares will climb much higher before the end of 2025. That’s because the expected profit boost from the Three UK merger and the improvements in Germany seem to already be baked into today’s valuation.
Having said that, the company reports its next set of earnings later this month. And if it can deliver better than expected results, I may be proven wrong. But without a surprise catalyst or significant progress in deleveraging the still-debt-heavy balance sheet, chances are the stock will remain near the 90p mark, in my opinion. Or worse, if the recovery progress has slowed, the stock could end up moving in the wrong direction.
Given this weak risk-to-reward ratio, I think there are far better investment opportunities to explore today.
