Numis argues that BT Group (LON:BT.A) is ‘totally mispriced’ as it has scope to roll out fibre to the premises (FTTP) to 15 million homes by mid-2020, Citywire reports. The comments came as the broker reaffirmed its rating and target on the share price.
BT’s share price rose 0.9 percent in the previous session to close at 167p, marginally underperforming the broader UK market, with the benchmark FTSE 100 index which gained 1.04 percent to 7,281.94 points. The group’s shares have given up more than 23 percent of their value over the past year, as compared with about a two-percent fall in the Footsie.
Numis still bullish on BT
Numis reaffirmed BT as a ‘buy’ yesterday, with a target of 340p on the stock. Citywire quoted the broker’s analyst John Karidis as commenting that the telecoms giant had ‘upgraded in the eyes of many’, ‘mended fences’ with industry regulator Ofcom, and “retired much risk related to its pension fund”.
“The focus of retail competition keeps moving to well-priced bundled services and BT owns the incumbent wireline network and the best mobile network,” the analyst reckons, adding that in contrast to what BT’s current share price implies, the broker believes that the former telecoms monopoly “has good scope to build FTTP to 15 million properties by mid-2020s and sustain its dividend”.
The comments mark a boost for the FTSE 100 company which updated investors on its first-quarter performance last month, posting a fall in revenue, as well as a hefty drop in normalised free cash flow, reflecting increased capital expenditure and higher interest and tax payments.
Other analysts on telco
Berenberg reaffirmed the former telecoms monopoly as a ‘hold’ yesterday, without specifying a target on the BT share price. According to MarketBeat, the FTSE 100 group currently has a consensus ‘buy’ rating and an average valuation of 258.33p.