UBS has lowered its rating on BT Group (LON:BT.A), arguing that it will take several quarters for the former telecoms monopoly to restore investor confidence, Proactive Investors reports. The move follows the telco’s recent fourth-quarter update which revealed a fall in revenue.
BT’s share price has been steady in today’s session and as of 13:31 BST, had added 0.57 percent to 204.15p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.19 percent higher at 7,748.66 points. The group’s shares have lost just under 34 percent of their value over the past year, as compared with about a 3.3-percent rise in the Footsie.
UBS trims stance on BT
UBS lowered its rating on BT from ‘buy’ to ‘neutral’ today, trimming its price target on the shares to 310p. Proactive Investors reports that while the broker had hoped that the group, which recently agreed to a new 13-year funding plan for its pension scheme, would be able to maintain earnings at current levels, it now realised that was not going to happen following the recent reset to estimates.
“Our estimates assume EBITDA [underlying earnings] steps down to £7.3bn for FY-19 (guidance £7.3-7.4bn) and sees limited growth thereafter,” the analysts elaborated, noting that they separately assumed “capex rises to £4.0bn pa longer-term as Openreach does more on FTTH [fibre to the home]”.
Other analysts on telco
Sanford C. Bernstein trimmed its stance on BT to ‘market perform’ yesterday, lowering its price target on the shares from 305p to 215p, while Numis Securities, which is bullish on the telco with a ‘buy’ rating, slashed its valuation from 400p to 325p. According to MarketBeat, the former telecoms monopoly currently has a consensus ‘hold’ rating and an average price target of 296.65p.