The last 12 months have been quite impressive for Vodafone (LSE:VOD) shares, climbing 60% since February 2025. Even in the last month, the telecommunications giant has seen its market-cap continue to expand by double-digits, largely thanks to continued progress of a long-anticipated turnaround.
But of course, past performance doesn’t guarantee future results. So the question now becomes, can Vodafone maintain its current momentum and climb even higher throughout the rest of 2026?
The bull case
Following the recent completion of its merger with Three UK, Vodafone’s currently on track to enjoy an estimated £700m in synergy benefits. Meanwhile, in its core German market, after years of decline due to competitive pressure, growth has finally returned for two consecutive quarters, marking a potential inflexion point.
Combined with the continued strong performance of its fintech operations in Africa, investor sentiment surrounding Vodafone has notably improved. And with the shares trading at an exceptionally low valuation a year ago, it’s hardly a surprise to see such rapid share price expansion.
Today, the bull case rests on management continuing to deliver a robust turnaround.
Its latest results, while positive, were a tad weaker than expectated due to tough year-on-year UK comparisons. However, in terms of underlying earnings and free cash flow, Vodafone remains on track to hit full-year expectations, paving the way for a further welcome debt reduction.
The bear case
While Vodafone’s outlook is becoming more positive, there nonetheless remains some significant challenges and headwinds to overcome.
Its German operations may have returned to growth, but only by a marginal 0.7%. And management still has plenty of work left to do in recapturing previously lost market share.
Needless to say, that’s a lot easier said than done. And the challenge is only amplified by the firm’s still-substantial €51.5bn debts & equivalents, as well as £11bn committed UK investment capex as part of its Three UK merger agreement with regulators.
In other words, with the bulk of free cash flow allocated towards deleveraging and UK infrastructure upgrades, management’s financial flexibility in Germany might be too limited to aggressively compete against local rivals.
The bottom line
The recent price rally’s pushed Vodafone shares to their highest level since 2022. But the stock nonetheless remains significantly below the highs seen in 2018 and is priced pretty cheaply against expected underlying earnings of €11.3bn for its 2026 fiscal year (ending in March).
So is this a buying opportunity? Vodafone shares remain on a pretty short leash at the moment. The company has a long track record of missing expectations, particularly in Europe, so investors are understandably wary of any signs of weakness, given that trust with previous management teams has been broken repeatedly.
However, for long-term investors willing to be patient, the recent stronger results might warrant a deeper investigation.
