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Numis reiterates ‘buy’ rating on BT as it believes consensus forecasts are “likely to start climbing"

The broker's analysts said they think the consensus expects no volume growth post an Ofcom price cut, which the analysts think is “unrealistic”
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The Numis analysts concluded that upgrades to consensus forecasts are likely to drive a strong share price recovery by BT in 2018

Numis Securities reiterated its ‘buy’ rating and 400p price target on BT Group PLC (LON:BT.A) today as it believes consensus forecasts are “likely to start climbing.”

In a note to clients, about “relatively uncontentious issues and arithmetic”, the Numis analysts said they do not “try again to call whether Ofcom will cut Openreach's price for '40/10' fibre access and hence (as the regulator agrees) hurt all-fibre deployment in Britain.”

READ: Past year unkind to BT after regulatory crackdown, says Deutsche Bank

They said, however, that they think the consensus expects no volume growth post an Ofcom price cut, which the analysts think is “unrealistic”.

The analysts also noted that consensus forecasts of pension top-ups required by BT have changed relatively little in the last seven quarters, which they think is “too bearish”.

They also said they think the consensus has ignored BT, noting that its turnaround in 'Public Sector' is near complete and that 'Business' is set to keep winning mobile market share.

Thus, the Numis analysts concluded, upgrades to consensus forecasts for BT are likely from now, and so BT's share price will recover strongly in 2018.

BT shares were lower, however, in lunchtime trading, down 1.2%, or 3.2p at 269.6p.

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