The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.

Less Ads, More Data, More Tools Register for FREE

BT Group shares ripe for a re-rating, says JPMorgan

Thu, 04th Apr 2024 11:56

(Sharecast News) - Shares of BT Group appear heavily undervalued and "ripe for a major re-rating", JPMorgan Cazenove said in a note on Thursday.

The bank, which rates the stock at 'overweight' with a 290p price target, said BT's equity story remains intensely debated.

"Despite having achieved a structural growth inflection, its shares continue to yoyo aggressively between £1-2/share, and are currently back at their lows," JPM noted.

"Such volatility reflects uncertainties related to: (1) The company's growth prospects (nascent pricing power); (2) The competitive landscape (fibre altnet threat); and (3) The resulting post-fibre FCF outlook."

Against this backdrop, JPM argued that BT's new chief executive should consider providing mid-term guidance.

JPM noted that it will be several years before we have clear line-of-sight on BT's fibre returns and said mid-term targets would bridge the duration gap. In addition, it pointed out that most telcos (70%) now provide mid-term outlooks.

"BT is a rare exception - unhelpful for such a controversial stock, and a factor behind its wide consensus forecast range," it said.

JPM noted that BT has guided for Mar-28E capex and opex to fall £1.5bn as fibre spend rolls off. It said investors worry these savings will be "gross" not "net".

The bank also said that with visibility poor, BT's shares often "overreact" to results and news flow.

Related Shares

More News
24 May 2024 10:26

Berenberg raises target price on BT Group following FY results

(Sharecast News) - Analysts at Berenberg raised their target price on telco giant BT Group from 135.0p to 155.0p on Friday, stating the group was now ...

24 May 2024 09:23

LONDON BROKER RATINGS: HSBC cuts Aviva; Deutsche Bank cuts Ryanair

(Alliance News) - The following London-listed shares received analyst recommendations Friday morning and on Thursday:

22 May 2024 09:53

LONDON BROKER RATINGS: Barclays cuts NextEnergy but lifts JLEN

(Alliance News) - The following London-listed shares received analyst recommendations Wednesday morning and on Tuesday:

22 May 2024 09:51

BT fined by Ofcom for "failing" EE and Plusnet customers

(Alliance News) - BT Group PLC must pay a GBP2.8 million fine after its "unacceptable" failure to provide adequate information to prospective customer...

22 May 2024 07:18

Ofcom fines BT £2.8m for knowingly breaching contract info rules

(Sharecast News) - Ofcom announced on Wednesday that it has fined BT Group £2.8m, for failing to provide more than one million customers with cle...

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.