logo-loader

BT price target cut by UBS as coronavirus recovery looks slower than expected

Published: 11:32 03 Aug 2020 BST

BT Group PLC -

BT Group PLC (LON:BT.A) seems to be expecting a slower recovery from the coronavirus crisis than the market had been expecting, UBS analysts reckon. 

The Swiss investment bank cut its share price target to 108p from 120p for the telecoms giant following its first-quarter update last week.

READ: BT fizzles lower as coronavirus hits profits in first quarter

“While recent news flow on Huawei and pensions has reduced some of the downside risk, BT shares may only re-rate when there is evidence of improving earnings momentum,” said analyst Polo Tang in a note to clients on Monday. 

Given its exposure to its BT Sport televisions channel, which was the main driver behind declines in the first quarter, the group is “relatively unique in the sector”.

New guidance on underlying profit (EBITDA) implies a 7% decline for the full year at the mid-point, suggesting that COVID-19 headwinds will remain. 

Looking at the group’s various segments, management “sounded cautious about ongoing weakness” in Enterprise, given the risks to SMEs once government furlough support ends, while in Consumer, the competitive landscape in broadband may have stabilised but recent news that rival Virgin Media is freezing prices this year, “is unhelpful”.

On BT’s Openreach infrastructure arm, the prospect of long-term deals with the main communication providers in return for volume discounts “does not appear imminent”, Tang said.

As a combination of all of the above, the analyst trimmed his EBITDA estimates 2-3% for the next few years, with forecasts for normalised free cash flow also cut 2-3%.

With BT still offering a 5% dividend yield in the longer-term, UBS kept its ‘neutral’ rating on the shares.

Caledonia Mining tackles 2023 challenges with optimism for 2024 as it...

Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) chief executive Mark Learmonth tells Proactive's Stephen Gunnion the company faced a challenging 2023, primarily due to poor production in the first half of the year at its core asset, the Blanket Mine in Zimbabwe, and an underperformance...

8 minutes ago