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BT Group share price crashed after earnings: buy the dip?

on Nov 3, 2022
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  • BT Group crashed hard on Thursday after the company's earnings.
  • The company vowed to continue cut costs and raise prices.
  • Its revenue was flat to what it had in the same period in 2021.

BT Group (LON: BT.A) share price slipped sharply on Thursday after the company’s earnings. It crashed to a low of 117p, which was the lowest level since March 1. Shares of the former monopoly have plunged by more than 30% this year alone.

BT Group earnings

BT Group is a leading telecommunication company that provides several services in the UK. It owns OpenReach, a company that provides fibre optic services in the UK. The company also provides communication services to companies and individuals in the country.

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BT published results that were in line with what analysts were expecting. Its revenue remained unchanged at £5.24 billiom in the quarter, helped by the strong OpenReach earnings. The company’s adjusted earnings before interest, tax, depreciation, and armotisation rose to £1.97 billion. Its EBITDA was better than what analysts were expecting.

Meanwhile, earnings in its consumer division rose by a fifth to £670 million. This growth helped to offset a significant drop in its enterprise division. 

In its statement, BT said that it will increase its cost-savings target by a fifth. It expects to raise its cost-savings to between £2.5 billion and £3 billion by the end of 2025. The statement added that the company will continue adding its earnings to be in line with inflation starting from 2023. UK’s inflation has jumped by more than 10% this year.

BT share price dropped as investors predicted more pain for the telecommunication company. Another key challenge is the conflict between BT Group and the Communication Workers Union (CWU). Its workers had a strike for four days in October to protest poor pay.

So, is BT a good buy? BT is a giant UK telco that is seeing slow growth and no major catalyst. Therefore, it is a bit difficult to recommend a stock that has crashed by more than 68% from its highest point in 2015.

BT Group share price forecast

BT Group share price

The daily chart shows that the BT Group share price has been in a strong bearish trend in the past few months. It retested the key support level at 117.30p, which was the lowest level on October 14. The shares have plunged below all moving averages and the key resistance level at 128.55p.

Therefore, the stock will likely continue falling as sellers target the key support level at 115p. A move above the resistance point at 122p will invalidate the bearish view.