Shares in BT Group (LON:BT.A) have jumped more than two percent in London in today’s session, as UBS turned bullish on the former telecoms monopoly. The analysts have pointed to a lower estimate for the company’s sizeable pension deficit.
As of 14:12 GMT, BT’s share price had added 2.35 percent to 274.40p, outperforming the broader UK market, with the benchmark FTSE 100 index having slipped marginally into the red and currently standing 0.15 percent lower at 7,485.09 points. The group’s shares have lost nearly a quarter of their value this year.
UBS turns bullish on BT
UBS lifted its rating on BT from ‘neutral’ to ‘buy’ today and hiked its price target on the shares from 310p to 330p, with the move driven primarily by a lower pension deficit estimate at £6.5 billion gross versus consensus of between £11 billion and £12 billion.
“We remain cautious on the fundamentals for BT but, at current levels, we think the downside from overhangs weighing on the share price […] is priced in and that newsflow over the coming quarters could turn more positive,” the analysts explained, as quoted by Proactive Investors.
The broker further noted that while an agreement with the BT pension trustees on the deficit looked likely by May next year, it could come sooner. UBS also expects the Premier League broadcast rights auction to be in February.
‘Inflection in earnings momentum’
Proactive Investors quote UBS as pointing out that the UK government support could reduce or reverse regulatory cuts on wholesale fibre pricing, with an update also due in February, and with this potentially marking the start of “an inflection in earnings momentum”.
The comments come after Barclays recently trimmed its price target on the former telecoms monopoly, even as it issued a positive note on the European telecoms sector.