Is VOD a buy ahead of earnings?

The Vodafone (LON: VOD) share price remained under pressure on Monday morning as investors reacted to news that Etisalat had bought a stake in the company. The shares declined to a low of 14.63p, which is close to the lowest level since November 2021. The stock has dropped by more than 23% from its highest level this year, meaning that it is in a bear market.

Vodafone earnings ahead

The Vodafone share price has been in a strong downward trend in the past few months as investors worry about the company’s growth. The firm also had an exposure to the Russian market.

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During the weekend, Emirates Telecommunications Group, formerly known as Etisalat, announced that it had bought a 9.8% stake in the company. The firm spent about $4.4 billion for the acquisition.

The acquisition came a few months after Cevian Capital announced that it had acquired a stake in the company. The hedge fund is seeking to break it up in a bid to create value for the company. 

The next key catalyst for the stock will be the company’s earnings that come out on Tuesday this week. Analysts expect the company’s group revenue will rise to 45.43 billion euros in FY 2022. They also expect that the firm’s adjusted EBIT rose to 5.78 billion euros. For its free cash flow, the firm expects that it will be at about 5.2 billion euros.

The results will also come at a time when there is talk that the company will merge with Three UK. If the deal happens, it will combine number 3 and 4 companies in the sector in a bid to compete with leaders like Virgin Media O2 and EE. Also, there are rumors that the firm will place a bid for TalkTalk in a deal that values it at 3 billion pounds.

Vodafone share price forecast

On the 1D chart, we see that the VOD share price has been in a spectacular downward trend in the past few months. The sell-off accelerated after the shares dropped below the important support level at 15.40p, which was the lowest level on 9th March. The stock moved below the 25-day and 50-day moving averages while the Stochastic Oscillator has moved to the oversold level. 

Therefore, while the Vodafone share price will likely keep falling, there is a likelihood that it will bounce back to the resistance at 15.40p. This is known as a break and retest pattern.

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