Citigroup has cut its target price for BT Group PLC (LON:BT.A) while retaining a ‘neutral’ stance on the telecoms blue-chip, as the US bank feels that while valuation remains appealing, positive catalysts are lacking.
The bank reduced its target price for the FTSE 100-listed firm to 165p, down from 205p previously, but that was still above the current share price of 153.68p, which was only off 0.04% on Monday’s close.
In a note to clients, Citi’s analysts said: “At the current share price of £1.53, BT trades in line with the sector on FCF yield at 6.7%, even with our below-consensus estimates.”
“However,” they added, “fairness measures have just came into effect (we estimate £250mln EBITDA at risk); the full year results in May could come with a worse-than-expected reset (we are 12%/30% below consensus on FCF and dividend); and VMED could decide on network wholesale (we see at least 1m lines at risk).”
The analysts concluded: “With the newsflow likely skewed to the downside, BT remains a potential value trap for now.”