Broker forecasts… love them or hate them, we can’t ignore them. And a couple of big names have raised their Vodafone (LSE: VOD) share price targets in December.
On 8 December, Barclays lifted its target to 120p. And with the price at 95p at the time of writing (17 December), that would mean a 26% rise. Then on 11 December, Deutsche Bank came in with a 140p target — suggesting a 47% jump.
We head towards 2026 with the shares up 39% year to date. They’ve still, however, fallen 28% over the past five years. So what might these latest upratings mean?
Erratic profits
Vodafone earnings have been erratic over the past few years, to put it mildly. The telecoms giant even slumped to a loss per share of 15.9 eurocents in the 2024-25 year, though the company posted positive adjusted earnings per share (EPS) of 7.9 cents.
In the update, CEO Margherita Della Valle admitted “there is much more to do.” But she added that the “period of transition has repositioned Vodafone for multi-year growth.”
Forecasts show reported EPS of 7.3 cents in the current year, rising to 9.1 cents by the 2027-28 year. Considering Vodafone is very much still in its restructuring phase, there’ll be sizeable margins for error in those predictions. And forecasts like this are only good until they’re not — which could be six months ahead, next week, or tomorrow.
Shareholder rewards
There’s a mooted price-to-earnings (P/E) ratio of 15 this year based on the current Vodafone share price, dropping to 12 on 2028 forecasts. And that does stir some optimism in me. On its own, it’s far from a buy-it-now multiple. But the rebased dividend should provide a 4.1% yield this year, with modest increases in the pipe for the following two years.
And then comes Vodafone’s share buyback programme. By this year’s halfway stage in November, the company had completed €3bn in repurchases, with a further €1bn to go. That should boost future per-share measures. And it also adds to the attractiveness of that P/E valuation.
Cash flow flood
Earnings, dividends, P/E, price forecasts… none of them mean anything unless the cash is there to support them. And that’s where I think Vodafone’s big strength could lie.
Adjusted free cash flow for 2025 came in at €2.5bn. And for 2026, management predicts between €2.6bn and €2.8bn. That’s with the benefit of a turnaround in Germany, which had been holding the company back for years. We should see €7.2bn to €7.4bn in adjusted EBITDAaL (EBITDA excluding leases) from Germany this year.
Bigger prediction?
On a discounted cash flow basis, my Motley Fool colleague Simon Watkins recently calculated a fair value for Vodafone shares of 238p — a whopping 150% ahead of today. That’s based on a commendable long-term outlook though. And there are plenty of hurdles still to overcome in the short term.
High net debt of €25.9bn is one risk. And the future of the now-completed Three integration still holds uncertainties.
But I reckon long-term investors should consider Vodafone for potential growth plus dividends in 2026 and beyond.
