Berenberg remains bullish on BT Group (LON:BT.A), arguing that the telco’s investors ‘need to be patient,’ Proactive Investors has reported. The comments came after the former telecoms monopoly recently updated investors on its fourth-quarter performance and its new strategy which involves slashing 13,000 jobs over the next three years as well as the company moving out of its headquarters in Central London.
BT’s share price has been steady in London in today’s session, having added 0.39 percent to 204.05p as of 14:27 BST. The stock is marginally underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.67 percent higher at 7,830.93 points. The telco’s shares have lost more than 34 percent of their value over the past year, as compared with a near five-percent gain in the Footsie.
Berenberg bullish on BT
Berenberg reaffirmed BT as a ‘buy’ today, while trimming its price target on the shares from 310p to 260p.
“Part of our Buy case was based on a return to EBITDA growth in 2019/20, which we do not now expect until 2020/21: investors will have to be patient,” the analysts explained, as quoted by Proactive Investors. The broker, however, lowered its estimates for 2019 and 2020 by two percent and four percent for EBITDA and by two percent and three percent for revenues, respectively, to reflect higher operating expenditure expected at the telco’s network arm Openreach.
Investment case ‘derisked
Berenberg further commented that the telco’s investment case was now clearer with the market knowing the outcome of BT’s pension review, the auction for 4G and 5G spectrum, the Premier League auction and Ofcom’s review into the prices Openreach which charges broadband providers.
“Looking ahead, the investment case is now derisked with the only major events in the next 18 months being the government’s Future Telecoms Infrastructure Review, the 700MHz spectrum auction and Ofcom’s Business Connectivity Market review,” the analysts pointed out, as quoted by Proactive Investors.