BT share price: Jefferies says telco’s dividend is safe

on May 21, 2019
Updated: Apr 28, 2020

Jefferies argues that BT Group’s (LON:BT.A) payout to shareholders is ‘well covered’ and that cutting it would be ‘illogical,’ Proactive Investors reports. The comments came after the former telecoms monopoly recently updated investors on its full-year performance, posting a drop in revenue while maintaining its dividend.

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BT’s share price has been steady in London in today’s session, having added 0.52 percent to 204.30p as of 14:18 BST. The stock is marginally outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.45 percent higher at 7,344.03 points. The group’s shares have added less than one percent to their value over the past year, as compared with about a 6.5-percent drop in the Footsie.

Jefferies sees BT’s dividend as safe

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Jefferies, which rates BT as a ‘buy,’ lowered its price target on the shares from 340p to 325p today. Proactive Investors quoted the broker as commenting that  there was a ‘highly credible prospect’ that the blue-chip company will return to EBITDA (underlying earnings) growth next year which should ease any concerns.

“[The] decision to keep dividend policy unchanged shows the new CEO’s confidence in the business after his due diligence. It would be illogical (and is not necessary) for BT,” the broker pointed out in a note to clients, adding that its “overriding impression is that BT under its new CEO is a lot more focused on delivering goals that will endure over the long-term”.

Jefferies further reckons that ‘within limits,’ the near-term challenges, such as pressure on forecasts and the share price, could assist BT in discussions with industry regulator Ofcom.

Other analysts on blue-chip telco

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Numis also reaffirmed the former telecoms monopoly as a ‘buy’ yesterday, without specifying a target on the BT share price. According to MarketBeat, the blue-chip telco currently has a consensus ‘hold’ rating and an average price target of 266.82p.

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