BT share price cup & handle pattern forms: will it jump to 250?

BT Group share price rose by over 3% after the company reached a new £200 million deal with Northern Ireland Electricity Networks (NIE). It jumped to 206p, up slightly from this week's low of 198p. It has formed the bullish cup-and-handle pattern, pointing to a rebound this year.

BT Group reaches major deal with NIE

BT share price rose on Tuesday after announcing a surprise deal with NIE, a top utility company in Northern Ireland.

The deal, worth $200 million, will see it provide a suite of products, including network infrastructure and cybersecurity solutions. Also, it will be responsible for ensuring services and support across the business. The company’s CEO said:

“With our experience in supporting critical services and our long-standing presence in Northern Ireland, we are in a unique position to provide the secure, trusted connectivity and specialist expertise that will help strengthen the network for years to come.”

BT Group’s business is continuing its turnaround efforts

The BT share price has jumped by over 20% from its lowest level in November last year, helped by the ongoing turnaround efforts. It is also facing some major challenges, including the loss of broadband subscribers.

The most recent results showed that the company's revenue dropped to £4.97 billion in the third quarter from £5.13 billion in the same period a year earlier.

This slowdown was mostly because of its international business, whose revenue dropped by 14% to £522 million. The company has been reducing its presence abroad in a bid to focus on its local business. For example, it sold its US business last year to 22nd Century Technologies.

BT Group’s business segment also continued slowing, with its revenue dropping by 6% to £1.92 billion. This segment has been under pressure for years because of the rising competition and the struggling legacy voice business.

BT Group's consumer segment made £2.468 billion, down by 1% from the same period a year earlier. Its profitability also retreated, with the consumer, business, and international EBITDA falling by 1%, 11%, and 7%, respectively.

The company shed over 210k broadband customers, and now expects to lose 850k in the full year, lower than the previous guidance. This slowdown was offset by a surge in its Openreach business, whose customers jumped to 21 million.

The most recent consensus document shows that its annual revenue will be £19.6 billion, down by 3.4% YoY. Its annual EBITDA is expected to come in at £8’2 billion, flat from the previous year.

BT stock price chart | Source: TradingView

The daily chart shows that the BT Group stock price has rebounded in the past few months, moving from a low of 171p in November last year to the current 206p.

A closer look shows that it has formed a cup-and-handle pattern, which is a common bullish continuation sign in technical analysis. It has already completed the cup section and is now in the handle section.

The stock remains above the 100-day Exponential Moving Average (EMA). It has also formed a harami candle, which often leads to a recovery. Harami is a two-candle pattern that forms when a big bearish candle is followed by a smaller bullish one.

If this happens, the next key target level to watch will be at 216p, the upper side of the cup. A move above that level will point to more gains, possibly to the next major target at 250p. This rebound will likely happen after its full-year earnings report in May.