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BT gets hefty upgrade from US broker as Openreach headwinds ease

Published: 11:05 15 Feb 2019 GMT

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BT can handle Champions League inflation suggests Jefferies

US broker Jefferies has bumped up its target price for telecoms behemoth BT Group PLC (LON:BT.A) to nearly 50% above the current market level.

“With regulatory clarity near and the government supportive, a RAB (regulatory asset base) return approach to valuing Openreach is credible and underpins a new 340p price target.”

READ: BT dividend hike seen as unlikely by analysts as telecoms firm tackles costs, pensions and debt

Headwinds are receding for network arm Openreach and will offset consumer pressures where regulator Ofcom’s plans to open up the consumer 'fibre to the premises' market (FTTP) are at the forefront of BT's current thinking.

Other issues on the consumer side include Champions League inflation, price cuts for landline-only users and mobile bill limits, but these are all manageable suggests Jefferies, which expects underlying profits [EBITDA] to trough at £7.3bn in the year to March 2020. 

The new share target is 28% higher than its previous 265p estimate, while 'Buy' remains the investment stance.

Shares edged up to 230.4p.

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