JPM sees BT share price doubling in 2024: I’m not buying it

BT (LON: BT.A) share price has been one of the top-performers in the FTSE 100 index this week. The stock pumped to a high of 127.85p on Tuesday, the highest point since June this year. It has soared by almost 17% from its lowest point in November, beating FTSE 100, which has risen by less than 3% in the same period.

JPMorgan believes BT can double

The most recent catalyst for the BT share price is a bullish statement by JP Morgan analysts. In a note, the analysts upgraded the stock and predicted that it could double in 2024.

They cited several factors, including price increases as part of inflation adjustments, lower interest rates in the UK, and upside to its revenue, EBITDA, and margins. As part of this growth, JP Morgan believes that the company will be able to increase its free cash flow from 1.2 billion pounds in 2023 to over 3.2 billion in a decade.

Analysts have mixed opinions on BT Group. In a recent note, analysts at Bank of America reduced their estimates for the company even as they left their buy rating. UBS and Berenberg have sounded cautious about the name while Deutsche Bank has a neutral rating. In all, 7 analysts have a buy rating while 4 have an outperform, and 3 hold.

I am in the camp that believes that there are better alternatives out there than BT, a company that is not growing. It also has limited growth potential in the coming months because its market is already mature and saturated.

The most recent results showed that BT Group’s adjusted revenue rose to 10.4 billion pounds in the half-year to September. Profit after tax dropped by 5% to 844 million pounds even as its capital expenditures dropped.

Therefore, the hope for BT Group is that its revenue will hold steady in the coming years and that its costs will retreat. To achieve this, the management announced that they will slash up to 55k jobs by 2030 as it bets on artificial intelligence. It now has over 99k employees.

If BT Group share price doubles as JPM expects, it means that it will need to jump to about 256p, the highest point since January 2017. That is a big ask for a company that is not growing at all. Also, as shown below, BT Group stock has consistently traded below its analyst estimates for years.

BT chart by TradingView

Turning to the weekly chart, we see that the BT Group stock price has been under pressure for a long time. It formed a double-top pattern at 182.05p whose neckline was at 120p. In price action analysis, this pattern usually leads to a bearish breakout.

Its attempts to invalidate the bearish view faded after the stock rose to 154.40p earlier this year. It remains below the 50-week and 100-week moving averages. Therefore, I suspect that the stock will continue falling in the coming months. A break below the support at 105p will open the possibility of it falling to the double-top target at 60p.

The only hope for BT stock is that it has also formed a double-bottom pattern around 110p. If this pattern works out, the highest the shares can rise to is 182p.