BT Group PLC (LON:BT.A) saw its shares ease back on Monday following a jump last Friday after news that its under-pressure chief executive Gavin Patterson is to step down later this year.
The weakness came as Deutsche Bank cut back its target price for the FTSE 100-listed telecom incumbent as it focused on some operational issues.
READ: BT boss Gavin Patterson to step down later this year
The German bank trimmed its target to 235p from 248p, with the shares currently trading at 204.45p, down 0.2% on Friday’s close.
It maintained a ‘hold’ rating on the stock, having upgraded its stance from ‘sell’ in February this year.
In a note to clients, Deutsche Bank’s analysts said: “We were a bit early to u/g to Hold after a 30 month Sell but despite the lower share price since, we restrain ourselves from an unsubstantiated positive view.”
The analysts said they think BT is stuck between “a pension rock and a fibre hard place”.
They added that while the pension drag may wane, new fibre build is set to wax.
The analysts pointed out: “Telescoping to the next triennial review could see the deficit eliminated post £4bn of top-ups and a decent move in real yields, however projecting to that future could also see copious alt-net fibre build pressuring wholesale and retail, with a commensurate risk of defensive capex.”
They concluded: “Further, news on alt-fibre is imminent whereas a pensions holiday is more speculative and near-term top-ups are a drag. Convergence may also prove a bane before it becomes a boon.”