BT PLC (LON:BT.A) shares are significantly undervalued, according to one leading City bank.
The investment arm of Barclays reckons the telco is worth 525p, which is 36% ahead of the current share price.
Reiterating its ‘overweight’ stance, Barclays pointed out BT under-performed the sector ‘materially’ last year.
It also pointed out that regulation ‘remains an overhang’. Remember, the company is involved in a stand-off with watchdog Ofcom over how its Openreach arm is governed.
Setting that aside, Barclays likes the business’s ability to generate cash.
While the roll-out of its network of fibre lines might impinge on this, BT would still have financial firepower to deliver 10-15% dividend growth over four years on a compound annual basis, according to Barclays.
At 8.30am, the shares were marking time at 385p each. That’s around £1 lower than the current consensus price target.
Of the 14 brokers logged as following BT, eight are ‘buyers’ and only two have ‘sell’ recommendations on the stock. The remainder think BT is fairly valued.