UBS remains bullish on BT Group plc (LON:BT.A) and Vodafone Group PLC (LON:VOD), repeating a ‘buy’ rating on the two stocks.
However, the bank reduced its target prices for the telecoms giants, with BT lowered to 310p from 330p and Vodafone cut to 270p from 280p.
For BT, the reiterated 'buy' rating and target price cut comes a day after the company said it would be merging its enterprise businesses in the UK and Ireland as part of a wider restructuring plan.
READ: BT merges UK enterprise businesses to simplify operations
BT is simplifying its operations to reduce its high cost base amid tough competition and regulatory changes.
Meanwhile, UBS said Vodafone shares have been weighed down by near-term uncertainty over whether the company will issue equity to fund acquisitions and the pending entry of rival mobile operator Iliad into the Italian market.
READ: Vodafone deal to buy Liberty Global assets would increase free cash flows, says Citi
Vodafone is in talks to buy some of the European assets owned by US cable company Liberty Global.
UBS said the cut to its target price on Vodafone reflects a lower benefit from mobile phone recharges through its plan to merge its India business with Idea Cellular.
However, UBS thinks “the underlying story for Vodafone is robust with a recovering top-line helped by a tailwind from cost savings.”
Shares in Vodafone edged up 0.44% to 207p while BT dipped 0.23% to 242p.