BT share price: Morgan Stanley says stock “cheap on a sum-of-the-parts valuation”

Analysts nevertheless cautious about stepping in too early

BT share price: Morgan Stanley says stock “cheap on a sum-of-the-parts valuation”

Morgan Stanley sees shares in BT Group (LON:BT.A) as a ‘cheap on a sum-of-the-parts valuation,’ Proactive Investors reports. The analysts, however, remain cautious about stepping in too early.

BT’s share price has jumped in London this afternoon, having added 1.88 percent to 260.20p as of 14:15 GMT. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index having slipped into negative territory and currently standing 0.21 percent lower at 7,378.39 points. The group’s shares have lost more than 27 percent of their value over the past year.

Morgan Stanley trims valuation

Morgan Stanley, which has a ‘neutral’ rating on BT, lowered its price target on the shares from 320p to 290p today. The analysts noted that the group’s stock is around 50 percent down from its highs of late 2015.

“Marking to market BT’s divisions […] could drive a share price of 340p (or ~35% upside potential),” the broker pointed out, as quoted by Proactive Investors, adding, however, that the timing on such value creation was ‘very uncertain’.

Morgan Stanley expects BT’s share price “to remain subdued until the issues around capex, content costs, pension and dividend are further clarified”.

The comments come after earlier this week, the former telecoms monopoly came under fire over payphone earnings, with FTSE 100 rival Vodafone (LON:VOD) calling on regulators to clamp down on payphone access charges.

Other analysts on BT Group

Numis Securities reiterated its ‘buy’ rating on BT this week, valuing the shares at 400p, while Deutsche Bank, which sees the former telecoms monopoly as a ‘sell,’ lowered its valuation on the shares from 265p to 238p earlier this month. According to MarketBeat, BT currently has a consensus ‘hold’ rating and an average price target of 344.11p. 

As of 15:06 GMT, Thursday, 30 November, BT Group plc share price is 260.00p.

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