Shares in Vodafone rallied from opening falls mid-morning, ticking higher in tandem with the market's recovery, and as confirmation of ABN Amro's upgrade in stance offset earlier news of a downgrade in rating by Merrill Lynch, dealers said.
By 10.30 a.m., Vodafone shares were 0-3/4p firmer at 170p, having earlier reached back to a low of 165p, with the FTSE 100 index at 53.4 points higher at 5,246.7.
In its latest Pan-European Cellular Telecoms note, ABN Amro has upped its stance for Vodafone to 'add' from 'hold', citing as its basis its view that the stock is 'fundamentally undervalued'.
The Dutch-owned broker said it calculates fair value for Vodafone shares as 180p.
However, ABN Amro added, notwithstanding Vodafone's fundamental value, there remain two key short-term risks for the stock related to exposure to roaming revenues, and the group's gearing to market perception of the success of GPRS roll-out in 2002.
In a contrary move, earlier today Merrill Lynch cut its rating for Vodafone to 'accumulate' from 'buy', and reduced its target price to 195 pence, citing valuation grounds.
AFP