BT Group share price crossed a crucial level: May 21 will be critical

BT Group share price has done well this year and is now hovering near its highest point since January 2017. It has soared from the pandemic low of 74.8p to the current 220p. This rally may continue in the foreseeable future as the company prepares to release its annual report on May 21.

BT Group stock has been in a strong uptrend in the past few weeks as investors predict that its business will be less exposed to the ongoing crisis in the Middle East. Besides, it is largely a domestic company that has no exposure to the region.

The next important catalyst for the BT Group share price will be its annual report, which will come out later this month.

These numbers are expected to show that the business remained under pressure last year as the amount of broadband churn continues.

Its recent trading statement noted that the company expects to lose 850k broadband customers, fewer than what it was expecting. It lost 210k customers in the third quarter.

This slowdown has been offset by the retail FTTP customer base, which has jumped by 32% to 4.2 million. It also recorded a strong surge in OpenReach customers.

BT Group made over $1.5 billion in revenue in the fiscal third quarter, down by 4%, but better than what analysts were expecting. This decline was mostly because of the ongoing drop in service revenue, which fell by 2% in the quarter.

City analysts expect the upcoming results to show that the company’s revenue and profits dropped modestly in the last quarter. The consensus is that its revenue dropped by 3% in the fourth quarter to £4.8 billion.

Its consumer business is expected to bring in £2.3 billion in revenue, while the struggling business segment is expected to bring in £1.3 billion. The international business, which the company is scaling down, is expected to make £834 million.

Analysts believe that BT Group’s revenue will remain under pressure in the coming years as it lacks potential growth drivers. For example, its annual revenue in the last financial year is expected to be £19.6 billion, a 3% drop from a year earlier. It will then make £19.3 billion this year and £19.3 billion next year.

On the positive side, its profitability and free cash flows are expected to improve as the company reduces its cost structure. Its annual EBITDA is expected to move from £8.2 billion last year to £8.25 billion and £8.36 billion in the next two financial years.

BT share price chart | Source: TradingView

The weekly timeframe chart shows that the BT share price has been in a strong uptrend in the past few months and is now hovering near its highest level in nearly a decade.

It moved slightly above the important resistance level at 216p, its highest point on August 26. This was an important level as it was the upper side of the cup-and-handle pattern, a common continuation sign in technical analysis.

The stock has remained above all moving averages and the Supertrend indicator. It has also moved to the extreme overbought level of the Murrey Math Lines tool.

Therefore, the most likely scenario is where the stock continues rising in the coming days as bulls target the next psychological level at 250p. However, a drop below the Ultimate Support level of the Murrey Math Lines tool at 200p will invalidate the bullish outlook.