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This post has been floating around in my mind since I first saw the consensus update last week.

After the results, the first Q1 consensus forecast of this new trading year is imminent within a week. (Maybe longer if unexpected results vary from forecasts considerably).

The reason I'm posting this - is that things were setting up nicely, to put right something that's been an Achilles heel within BT
(No, not debt.
Nor pension deficits)
- but declining revenue!

On the last update, the analysts increased year 3, quite noticeably but still the 3 year forecast for revenue is quite an unappetising 3-year V shape, and not conducive to bullish sentiment.
It's possible that could all change in the very first Q1 forecast due v soon after the results. I think it could be quite exciting for revenue - the final bugbear.
(There are management plans for debt and pension deficits but not a dickybird on the future of revenue).

Currently, there's an awful forecast for revenue to come in significantly below last year (year 1).

Year 2 unfortunately is for an even further, deeper drop.

Only by year 3, does revenue show any signs of an increase over year 2 the absolute floor.
But even then, year 3 is still below year 1 - due to be revealed next week.

Here's the page turner bit.
So great was the increase forecast in year 3, it suggested that a corner may have been turned and that the new year 3, to be revealed after the results could possibly continue the old year 3's increase.
All in all, that would mean after the results the new set up would be year 1 (2021/22) as the floor, the lowest in recent years - but the absolute floor!

The new year 2 (previously the old year 3 (2022/2023) should maintain that latest increase so straight away we have a Y-OY increase on show.

Now comes the big unknown.

The new year 3 (2023/24) may well continue that resurrection in the old year 3's fortunes and if so, then on display would be 3 years of revenue displaying increasing years of Y-OY increases!

It would be a game changer IMO. As the year progressed all that would be feeding through to the media and market sentiment, for the first time in 6 years - would be Y-O-Y increases - in revenue!

(Net profit is almost a forgone conclusion to continue its recovery).

Yes the new year 1 revenue, the year just commenced on April 1st will be even lower than whatever is published next Thursday, but that would be overwhelmed by the lovely sight of a row of 3 years worth of revenue forecasts, increasing one after the other Y-O-Y.

The psychological effect on sentiment as the year progressed would have profound effects on market sentiment IMO. I'm more enthused in looking towards the new Q1 later this month than the expected full year report next Thursday.

Hope I haven't been led up the garden path by the analysts, but I'm reading a lot into that larger increase at last week's update into year 3's revenue. It will be akin to holding a full house, in a

Tied up next week, and unavailable on results morning the 13th, so going to try and post a "targets to beat" list this coming weekend, for use on the morning of the 13th results day.

Will try and keep it neat and succinct but will post a fuller target list, as the data provided by all the brokers in-house analysts is a resource provided by BT's website that really puts you ahead of the general investor as most companies just don't provide that kind of data, leaving investors to shell out for sites like Research Tree etc.,

I will attempt to include minimums, maximums and the average "target" the market will be looking for. Take the pension deficit (as that seems to be the hot topic on here recently).

As posted the other day, the analysts are looking for the actual pension deficit to come in at circa £9.75bn
They don't actually say that, they produce a mean and a median of £9.7bn and £9.8bn
- I just add the two and further average them out - in every metric heading - for simple, clearer, posting.

They also issue the lowest forecast and the highest.

So it's hard to prove the analysts forecasts were beaten or not, as they can always claim a wide-ranging forecast.

For instance:

Although they're looking for £9.75bn deficit, allow a little leeway on the day from £9.7bn to £9.8bn to consider it still within a bull's-eye.

Should the deficit be several billions above that, it can still be within the expected forecasts as the analysts have published £11.3bn as the maximum.

And should the deficit be less than feared? Well if it's only £7.5bn on the day that too is within their forecast.
See here -

Analysts Pension Deficit Forecast:
Mean = . . . .£9.7bn
Median = . .£9.8bn
= (hence £9.75bn 'average')

Minimum = £7.5bn
Maximum = £11.3bn

In other words, if the deficit comes in anywhere between £7.5bn and £11.3bn it's still within their forecasts, so a graded valuation would apply and not an out and out beat or fail.

Come in above £11.3bn (say £12bn and it will be considered a fail and adverse comments in the media would ensue.

Come in below £7.5bn (say £6bn) and holders would be entitled to expect positive media sentiment reactions.

So, will try and include the minimum and maximums and that should cull any cries of "market manipulation" if the SP moves unexpectedly, as then you would know what the market limits of tolerance are.
It should be noted that the current analysts SP valuation is 174p - and that's recognising the deficit might come in at £9.75bn!

So beware of any bearish reports of: Oh it's come in at nearly £10bn that's bad - as it's already baked-in to their 174p SP forecast.

Will try and include forecast targets for :

Revenue,
Pre-tax profit
Net profit,
Pension deficit (already above).
Net Debt.

" Target price raised from 180p to 200p "
-----------------

180 -200 still undervalues SLP when compared the industry averages. "
In that IC article (thanks Bazza) it early on quotes the data from the Liberium analyst, and concludes:

"implying the shares are rated on a cash-adjusted price/earnings (PE) ratio of 3.5 "

As the industry average is currenly P/E 9.46 that puts fair value in the 330p's

Later on in the same article he states he calculates the forward PE as 4.00 which at tonight's close implies an SP to represent fair value to the indusatry whole as in the 290p's.

So let's say circa £3 from both suggestions in the article.

That's £3 if (and only IF) the market should value SLP as similar to its peers within the industry.

For a "speculative" LOL!" stock the suggestions of 180 - 200p in the article still render SLP spectacularly cheap, suggesting a longer-term hold until the market thinks SLP worthy of being considered equal to its peers which at 124p tonight it woefully isn't.

" The CPO hearing for Patourel's class action against BT is due to be heard in June, so this is ongoing in the background. I mentioned my dealings with Sky is to highlight that all businesses charge higher rates to lazy customers who don't switch; So is there any merit to this case? "

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For those looking to top-up or an initial entry, it might be worth notating calendars for around then, as could be a bargain entry level should the financial media overplay the danger. Also the results would be out of the way, with any short term inexplicable reactions around good results (if good) being another opportunity.

Closer to home, possibly or not, a smaller opportunity on the horizon is maturing and brewing now, that might mislead in the wrong direction. As the predominant trend is strongly bullish, I didn't comment on something bearish I'd observed. However, I see someone below may be trying to capitalise on it, if there is a (small) pullback. The poster concerned further below mischievously posted:

" Time to short above 165p! "

- But he may just have seen what is in plain sight, and that is: that the SP has entered Overbought territory and it's quite sizeable now. Only thing is, in bullish up trending stocks the pullback is often unnoticeable as nothing more than short term "noise".
Different case when a stock is in a long term downtrend -
then it's a case of - watch out!

So forewarned is forearmed. The SP might pullback a little in the coming week/s (or move so little, that no one notices much, because it's in a predominant strong uptrend).
Whatever, if it does, don't confuse it with that bearish shorting assertion. Just someone trying to capitalise on a natural phenomenon common to strong up trending stocks - and not the start of a retrace, if it does pullback, it might go unnoticed, so strong is the uptrend.

I'm still underweight so may top-up if the pullback is attractive enough.

" They can di ck about all they want but this has £1.40-£1.50 written all over it within the next 2/3 weeks. "
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I agree on condition you allow the caveat on to the end sentence, 'within the next 2/3 weeks' of,
- "or if not by then +/- within the next 2/3 months."

.

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- Anyway, by the end of August I expect 150 to be such a small dot in the rear view mirror, that the SP will have revealed itself to, not being a linear player of small steps of reasonable expectations anymore, but show such out-performance, all dumped into July/August, it will knock socks off; forcing M&S to issue a nationwide public warning to all SLP holders not to view the SP during August, as socks will get blown clean off (never to be found again if doors and windows are left open) so pointless putting any on in the mornings of August, as M&S say they will be forced to have Pan-technics on standby delivering brand new supplies of socks.

"analysts opinions are useless you might as well put your finger in the wind "

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I agree specifically but disagree consensually.
ie., -

Studies have shown that yes, their opinions actually perform no better than retail investors opinions.

However, it's not the veracity of their opinions that's required - but, as studies have shown, their consensus or herd-like direction is very useful to the retail investor to judge likely market sentiment direction.

ie., If all of them as a group via consensus keep submitting forecast updates that are uniformly bullish, but all differing in their individual pounds and pence forecasts - it's still a good sign that the SP will prosper but maybe not to any specific SP targets they forecast.
Same in reverse should they uniformly submit bearish downgrades as a consensus, is usually a bad sign - as they form market sentiment.

Supposedly, a company that performs greater than their consensus forecast is said to have a 'beat' and is usually a positive sign the SP will be viewed favourably by the market or bearishly should a company's earnings fall well short of market guidance ie., in effect a handful of analysts form market consensus forecasts.

So it's not the actual figures they spout that are the be-all and end-all, but the consensus drift of their overall forecasts direction.
ie., Are the forecasts rising on each consensus forecast or retracing?

It's that fact, that's important to know.
For instance the current consensus SP forecast for BT is given as £1.74

That figure in itself is worthless, but what is important, since last November I've noticed it increasing from previous months where it was circa £1.50-odd.

So that consensus increase month by month of how they see the future SP is an important signal to the market - not the actual pounds and pence amount (as that's probably the most hopeless forecast of them all by analysts. - the SP forecast).

Imagine if from a few months ago, instead of rising up from £1.50 it was now steadily reducing.

Whether they increase or decrease as a consensus group, defines market sentiment - not the actual SP amount they forecast.

The pension deficit forecasts in their latest update is their most bearish I've ever seen.
So it's likely that the deficit revealed with the coming results will be 'worse' than last year. What no one knows is exactly to what amount.
But with consensus being bearish about the deficit, a substantial 'beat' would have an effect on the SP :)

As BT have only ever issued guidance to expect worse than last year - that's unlikely; BT is of the same mind as the analysts. However, no one can agree on how much as there are too many variables to ponder.

They're your sentiment direction indicator, a broad sentiment direction, that's all
- not your stock market tip sheet.

It's important as an investor to distinguish the difference.

Anybody who guesses the deficit that is posted in the results, can not claim mathematician of the year award.

But they can claim luckiest bast@#d of the year award and be encouraged to try their hand in the national lottery :)

" Analysts at Berenberg hope the deficit is down to £7.5 billion. "

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£7.5bn was the most recent, bullish forecast.
The most bearish was £11.3bn.
The whole consensus lot was averaged at £9.75bn.

I lightly said I preferred the bullish £7.5bn deficit forecast to rule on the day.

Thing is, sometimes the most bearish get it right, (DB and their £1 forecast for the SP before it dropped to £1)

- othertimes other opinions.

The trick is not to praise the most bullish at the expense of the most bearish, but apply logic and most likely scenarios to all the analysts forecasts - and not to the one that fits a personal bias.

In the Forecast updates I highlighted the best of a bad lot.
That's bias on my half, that is.

It's literally anybody's guess - is more closer to the truth.

" The government target is to connect 85 per cent of the UK to gigabit-capable fibre by 2025. "

---------------------

2025?!?

Just over a fortnght ago, Joe Biden released his latest budget stimulus package for America. He's allocated $100bn to assist full 5G integration across the entire USA.

Okay so that's the world's largest economy compared to the promised £5bn assistance to BT by BoJo, for BT to meet his target that he plucked out of the air and imposed on BT.

Some deal appears to have been done whereby BoJo wheedles out of handing over the promised £5bn (given away in Covid handouts instead?) to be replaced by just over a decade of non-interference from Ofcom. Jansen appears to like that option better.

Or have I got that wrong and the promised £5bn is still on its way to BT?

The series of "?" - in the bottom table, were ticks when I posted :)

Concludes 2 of 2) >

. . . - All in two months, never mind a whole year. Jan & Feb delivered the goods as the other bonanza period for the SP.
Just need March to the end of June to deliver an overall modest performance and it's all set to declare the characteristics of SLP that have formed over the past 5/6 years as confirmation of performing to form, for me to take the 'risk' more safely in July & August.

That's the plan:
To cease tinkering with the main investment, but have fun with lesser funds in another account, in the same 'known' stock - buying/selling (trading) based on probabilities only - no certainties - so need a 'modest' spring/summer to indicate all on track for a repeat performance to type.

Of course any shocking basket revelations could ruin the fun, especially as I read the other month (at the time of China halting some factory productions due to PGM shortages) that developments are heating up in replacing lithium content in car exhausts etc., but they are so far not as efficient as the current standard set-up.

Otherwise, you tell me when this worldwide demand for short supplies of PGMs ends.

My 2021 diary for SLP -
----------------------------

Jan/Feb = . . . . .? Stonking good outperformance
March to June = Overall modest performance (June possibly the worst).
July/August = . . .? Stonking good outperformance
Sept/Oct = . . . . . x Kipper season eg., Under-performance.
November = . . . .? Outperformance.
December = . . . Modest performance.

Results so far:
Jan/Feb =.? tick. Achieved.
March to June =.?on track ...so far.

( Post 1 of 2 ) -

" Going to be very interesting to see how the next few weeks play out. "

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Indeed Stoodio.
Won't be surprised to see reasonable 130's appear as an intra-month high, nor will I be surprised if intra-month, it doesn't appear.
But will be surprised if it doesn't get surpassed and eventually trampled underfoot by a considerable margin during July/August.

I'm leaning towards yet another modest SP finish to May. So presupposing Tuesday as the first trading day of May closes pretty much in the area where the SP lies at this weekend, then my expectation will be an unsurprising high end of 120's by close of May.
Depending on Tuesday's close I will regard any close decently in the upper 130's as outperformance and higher than probabilities are suggesting.

Spring was supposed to be modest increases to meet with expectations, the tally is:

SP performance:
March = Underperformed.
April = . .Outperformed.
Cumulative for spring overall = modest % SP increase (since first day of March to end of April)

I'm writing the remainder of this post as an open Memo-To-Self, whilst I feel I have a handle on my investing profile for SLP.

I'm so uber-confident of the July/August period that I'm formulating plans now on how I'm going to deal with the probabilities.
I'm happy with my main holding but can't resist taking advantage of (or 'having a go at' taking advantage of) the peaks and troughs in SLP. Rather than diversify the risk by involving other stocks, I'm opting for taking advantage of a known bullish performer, SLP, so that all mistakes can be swept up by holding longer, until they self-correct.

Last year I sold an embarrassingly small quantity in late August, knowing I'd regret it. But it did do the trick after booking in profits after that year's March big retracement.. And I was right as rain by getting rid of that awful feeling lingering from that March crash period. So want to own up to those demons and rather than tinker with my main holding, I'm going to play with lesser cash amounts held in one of my other separate ISA's, in SLP.

The immediate plan is to either buy on July 1st and sell on the day before the annual results in September, or take a chance buying on an inter-month low in June.
(I'm not so confident about June, but pushed I'm expecting a disappointing performance for June as it mostly has done over the past 5 or 6 years, steadily).

That's on probabilities only, I think the July/August period could then deliver a stonking gain of circa 35%/40% over the two months alone, compared to whatever the July 1st SP turns out to be.

- All in two months, never mind a whole year. Jan & Feb delivered the goods as the other bonanza period for the SP. Just need March to end of June to deliver an overall modest performance, and it's all set to declare the characteristics of SLP that have formed over the past 5/6 years as confirmation of performing to form, for me to take the 'risk' more saf

Well the actual £££'s & pence and the % increases achieved in Q3 trading update impressed me, no matter what the market was expecting. (ie., Similarly impressive actual figures achieved at the annual results last September yet followed by media analysts disappointingly saying a bit under market expectations).

(With sight unseen of the Q3) I was leaning towards a modest SP increase circa closing in the 100-teens (118+) as an April close, but 123.6 is just a bit higher for that assumption to be broken (this site showing 122 close instead).
Was using 5.6% inc, but 123p close is a 10% increase - and I don't regard a double-figure 10% monthly gain as modest.

(Didn't start off using 5.6% either but less, however by mid month it had increased from that lower figure hence the suggestion of a modest monthly gain only).

Still personally holding to yet another probalistic modest SP gain for May with all bills only settled in July/Aug where any decent expectation carries water.

March closed less than it opened, April performed nicely (slightly higher than my personal expectations)
- so all in all, March & April (March open was 118 area) so a modest cumulative increase to date for spring so far, which fits in nicely with the bigger picture I have of a spring to summer producing a modest performance by the SP. (June is a different kettle of fish and looking negatively subdued).

It's still July & Aug on the cards for me, as the righting of all wrongs, with impressive & substantial gains expected over those 2 months.

All only IMO - but the SP is still all on course IMO. So far, so good

I accept that BT management are involved in their input "towards" the deficit calculations.

I'm more referring to Jansen's statements about the pension deficit making it look like the BT board is just as much in the dark.

The deficit for 2018/19 is logged in showing as £7.2bn. I don't follow internal BT deficit calculations too closely so may have missed statements on the issue, but I don't recall any advance guidance by Jansen along the lines of:
"although this year is showing a £7.2bn deficit, next year is likely to show the deficit at a record 30 year low".

- Because the next year 2019/20 is showing in the balance sheets as only £1.290bn. That was a shock but a good kind of shock.

Now he did issue a statement after that. He said words to the effect:
"Don't expect that low pension deficit to continue into next year. We already know the deficit will be substantially higher".

That warning is when the media started some alarming guesses as to the likely final deficit, which is what everyone is interested in seeing at the annual results within the next fortnight.

It's that kind of guidance I'm really referring to, when I'm alluding to the BT board also being somewhat in the dark. I accept they are involved in the process, but the actual deficit revealed last year came as complete surprise to me as no statement I can recall alerted me to expect a record low deficit. Yet it was.

And my impression was everyone's surprise was similar to my own. If there was a statement issuing guidance to expect a record low deficit, then I missed it.

That's more what I meant, so should have taken more care in my phrasing.

" They haven't listed Net of Tax figures unfortunately."

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They never do Fleccy.

Haven't fully checked back over the years, but they ignore the net heading. Too complex for them. I think there are too many future variables for them to dare take the risk so they only ever go for the one heading.
Even BT's management board are a bit in the dark until the pension trustee committees et al, choose the final decision on future interest rates and future bond yields to set their stall out and release their chosen interest rates for the future - and thus their calculation of the deficit - as they see it.

From what I've read, most pension committee's are guilty of psychologically seeing 0% interest rates as the barrier - the floor, but with the new BOE governor threatening/saying recently, when faced with interest rates at 0.1% that: "negative interest rates is still in our toolbox if needed" it may have sent a chill into their calculations of the deficit.

PS. Did you know (I have a chart/image somewhere that interest rates/ and bond yield rates have been overall falling and in decline since 1980?

I didn't (thought it was a millennial thing) - especially with that spike up to 15% interest rates in the late 80's/early 90's. These past few years appear to be the longest flatline (close to zero/ to low digits) in that log tern decline.

Got a list somewhere of EU countries and further afield already in negative interest rate territory, (could reel them off if you force me to hunt through my files but don't wanna :) mainly commercial cash savings deal rates - it's if/when it hits us, the man in the street's accounts, is when the s**t hits the fan.

Consensus view by "experts" is that holding cash is the worst possible option of all in such an environment. Hence I suppose, bitcoin and the rest.

" For Pete Tong read Polo Tang I think "

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Correct Wetherboy, yes I was referring to BT bear, Polo Tang of UBS.

It's ****ney rhyming slang for "it's all gone wrong" a satire on his real name which I usually recall as: tangy polo mints and then go by way of word association to - ah that Pete Tong bloke.

He tried to "prove" in very recent prominent media analysis of BT fundamentals that it was only worth 110p per share - way after the breakout from the 2016 SP downtrend terminated in November 2020, had been generally acknowledged, and is still the case. There is nothing in the fundamentals that supports such a view, hence my 'it's all gone wrong' for him, jibe.

I can find some potential future 'negatives' in the fundamentals - but how in hell one makes a leap from them straight to a 110p forecast share price, genuinely eludes me; particularly as he cited only one esoteric metric as 'proof' to back up his theory.
So he's:
It's-all-gone-wrong Pete Tong, to me :)

PS.

Forecast pension deficit remains unchanged.

They're still forecasting almost nearly £10bn deficit at £9.75bn but I personally hope the absolute lowest of the analysts forecast of £7.5bn proves itself on the day.
However, choosing the most bullish forecast means I have to acknowledge the most bearish forecast (that Pete Tong guy?) at £11.3bn !

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If the link below fails to open try this instead:
https://www.bt.com/bt-plc/assets/documents/investors/financial-reporting-and-news/latest-consensus/btgroup-consensus-30-apr-2021.pdf

So here it is, likely the last analysts consensus forecast update before the results are out, and not much ado in revenue to enthuse the market, except for maybe the 3rd year revenue.

Revenue for the 20/21 year just concluded they have reduced forecast yet again to £21.371bn down a little on the previous update by £6m single £m's.

Similar for year 2 (21/22) which has been reduced by £1m.

If there is a change in their outlook towards revenue it comes in the 3rd year (22/23) which they had as the strongest year, by increasing it from £21.273bn up to £21.292bn which suggests they're getting the hots for revenue only from 2022/2023 onwards - if events unfold as they forecast, that is.

That being the case, then just a week or two after the results are out, will be the first Q1 forecast of this new trading year and suggests a whole new outlook for possibly the new year 3 (2023/2024) in that the market would see the analysts as bearish on this new current year for revenue - but thereafter an increasing revenue Y-O-Y onwards, which is bound to be seen as a positive by the market, should they continue that sentiment in the first update after the mid May results are released.

In the meantime though, they have reduced Q4 revenue slightly and thus made the full year forecast lower too (only single millions as shown above).
It's only year 3 where they really start to increase revenue. So; noticeable that they've been reducing years1 and 2 at every opportunity yet increasing year 3 revenue at the same time.

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Net profit they've left the full year just closed, the same but increased year 2 (and year 3 similarly). So net profit they forecast to keep on increasing, which they have only being doing of late. Just one thing though - I still maintain their forecast is far too low for the year just closed. They forecast £1.522bn, the same as last time, but I've always believed £1.6bn with even higher if all alright on the day.

The average produced by BT for each of the past 3 quarters has been circa £425m - which the analysts seriously underestimated on each and every occasion.
But this Q4 is THE lowest they've forecast of all the quarters. Despite BT producing £425m in each quarter, the analysts are forecasting an unbelievably low of £246m for Q4 !

Unless there is a cyclical effect in BT's year/and or the lockdown contributed - I just don't see how that figure can be realistic given the past actual 3 quarters were far superior to their forecasts. What gremlins do they see in this Q4 that no one else has foreseen?

I'm cheered by the simple fact that they seriously under estimated all 3 quarters of net profit. They got every one out of whack! I'm counting on them staying true to form on this occasion too.
Bah to their £1.5bn - Has to be £1.6bn++ minimum!

https://www.bt.com/bt-plc/assets/documents/investors/financial-reporting-and-news/latest-consensus/btgroup-consensu

Thanks Stoodio - Missed that this morning!

- Saw that page began with 2020 so clicked out immediately; and went Bah, more outdated data.

So as late as Friday (30th) then?

Thanks Bazzaman. So that's where I saw it! :)

Thought I recognised your name from elsewhere but clicked on your history and I was mistaken. Noticed you've posted on in GGP (I'm a holder also).

Question:
How do you cope with the zombie-like mentality of the toxic posters on there, who busy themselves burying hatchets deep in the skull of each other, as their preferred method of research? :) ????