Shares in BT Group (LON:BT.A) have climbed higher in London this morning, as Goldman Sachs turned bullish on the former telecoms monopoly. Proactive Investors has quoted the analysts as arguing that the company is trading at an ‘increasingly unwarranted’ discount to its peers.
As of 10:20 GMT, BT’s share price had added 1.91 percent to 261.50p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.25 percent lower at 7,045.09 points. The group’s shares have added just under one percent to their value over the past year, as compare with about a 3.6-percent dip in the Footsie.
Goldman Sachs lifts rating on BT
Goldman Sachs hiked its rating on BT from ‘neutral’ to ‘buy’ today, further lifting its price target on the shares by a third to 320p, implying around 25-percent upside to its current share price of 261.85p. Proactive Investors quoted the analysts as saying in a note to clients that the former telecoms monopoly traded at a 10-percent discount to its peers, which they believed was ‘increasingly unwarranted,’ with the group starting to deliver earnings momentum with improving regulatory clarity.
Broker signals outlook confidence
Goldman Sachs further noted that it was confident of BT’s long-term outlook and its higher estimates for the company. The analysts explained that the telco has adjusted its strategy around going ‘back to basics’ with fibre investment and a multi-year cost transformation which is already paying dividends.
Proactive Investors quoted the broker as concluding that the bottom-up nature of BT’s plan should minimise future execution risk ahead of Philip Jansen replacing Gavin Patterson at the helm in February.
The comments came after Barclays lifted its price target on BT last month, while noting that the telco was facing a number of headwinds in coming quarters.