BT share price dips as RBC points to lack of catalysts

Analysts trim rating on former telecoms monopoly

BT share price dips as RBC points to lack of catalysts

Shares in BT Group (LON:BT.A) have fallen into the red in today’s session, pressured by a downgrade at RBC which has pointed to a lack of catalysts for the stock. The comments came after the former telecoms monopoly announced yesterday that its Openreach division was introducing discounts on fibre broadband for telecoms firms, with the move expected to pressure the division’s revenue and earnings this year.

As of 14:38 BST, BT’s share price had given up 1.32 percent to 220.95p. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.64 percent lower at 7,659.90 points.

RBC trims rating on BT

Royal Bank of Canada lowered its rating on BT from ‘outperform’ to ‘sector perform’ today, trimming its price target on the shares from 385p to 275p.

“Although BT is underpinned by an eight percent free cash flow yield, a seven-percent dividend, and potential convergence benefits, we see few catalysts to re-rate the stock in the next 12 months,” the analysts explained, as quoted by Proactive Investors, adding that the former telecoms monopoly was yet to confirm a replacement for outgoing chief executive Gavin Patterson, who is due to step down at the end of the year.

The broker further noted that BT expects a £1-billion headwind over the next three years as a result of stricter regulation forcing the company to lower wholesale prices for its Openreach network.

Other analysts on telco

Barclays reaffirmed BT as an ‘equal weight’ today, while UBS continues to see the former telecoms monopoly as a ‘neutral’. According to MarketBeat, the FTSE 100 group currently has a consensus ‘hold’ rating and an average price target of 284.41p.

BT is scheduled to update investors on its first-quarter performance on Friday.

As of 15:05 BST, Wednesday, 25 July, BT Group plc share price is 221.80p.

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