Bt Share Discussion Threads

[grupo guitarlumber] 09/12/2021 14:55

FWIW TAKE FROM IT WHAT YOU WILL






3 reasons the BT share price can keep rising

Rupert Hargreaves | Thursday, 9th December, 2021


The BT (LSE: BT.A) share price has been on a bumpy ride this year. After dropping to a low of around 120p at the beginning of February, the stock rallied above 200p in mid-July. The shares then plunged in value, falling to a low of 135p.

Since then, the BT share price has been pushing higher. It is currently trading around 173p after recovering from most of the losses in the third quarter.



Overall, over the past 12 months, shares in the telecommunications giant have jumped around 25%. However, I think there are three reasons why the stock can continue rising over the next few weeks and into 2022.

BT share price: takeover potential

The first reason I think the stock can continue rising is the bubbling takeover talk surrounding the business. Ever since French telecoms billionaire Patrick Drahi bought a 12% stake in BT over the summer, speculation has been swirling in the city that he will make a full offer for the company.

In reality, I think it is unlikely such an offer will emerge.

BT is a sprawling giant with a multi-billion pound pension deficit.

Untangling the enterprise and managing these pension assets would be a hugely complicated process.

These challenges are likely to put off buyers.

What’s more, it is highly likely the government will interfere in any deal due to the national importance of the company and its influence over the UK’s communications network.

Having said that, speculation of a potential acquisition could be enough to continue to push the stock higher.

Drahi’s interest supports the idea that BT looks cheap.

Considering his success as an investor, other market participants may want to ride his coattails and buy the stock.

Reorganisation potential

As well as takeover speculation, investors may continue to buy BT as the corporation pushes ahead with its restructuring plans. This year, the group has undergone somewhat of a significant transformation. It is spending more money on its core telecoms business, focusing mainly on improving fibre connectivity around the country.

At the same time, management has been trying to restructure non-core divisions, including the group’s pay-TV business.

This has been a drain on the company for several years. BT’s pay-TV arm, which includes BT Sport, initially set out to capture a large share of this market by offering consumers an all-in-one package. Customers can bundle pay-TV, broadband and phone packages together in a straightforward package.

Unfortunately, the division never lived up to management’s lofty expectations. Moreover, BT Sport became entangled in an arms race with Sky over sporting rights. The price these competitors were willing to pay to gain exclusive streaming rights for sporting events skyrocketed, and their returns plunged as a result.

BT is now trying to untangle this business. It has agreed on a £600m deal with streaming company DAZN to co-operate on a streaming sports business. There is also speculation that Discovery, the US media group which owns Eurosport, is in talks with BT about a joint venture for its sports businesses.

This initiative will allow the company to spend more time focusing on its core business model. It could also reduce losses and improve the offer for customers.

Overall, I think the reorganisation of this business model will help improve the organisation’s sales and profitability.

This is likely to lead to a higher share price when the benefits start to show through on the company’s bottom line.

The undervalued BT share price

The third and final reason why I believe the BT share price can continue to climb is the fact that the stock currently looks undervalued.

Before the pandemic and the launch of the company’s new growth initiatives, the group was struggling. Net profit slumped from £2.5bn in 2016 to £2.2bn for 2019. Income has fallen further since, with the company reporting a net profit of £1.5bn for its 2021 financial year.

This is expected to be the low point for the enterprise. Thanks to the company’s focus on customer service and network expansion, sales and profits are recovering, albeit at a relatively slow pace.

According to the City, net income will hit £1.8bn for the company’s current financial year, rising to £2bn in fiscal 2023.

Based on these projections, the stock is currently trading at a 2023 price-to-earnings (P/E) multiple of 8.5. This suggests the corporation is deeply undervalued at current levels. Historically, the BT share price has commanded a P/E of around 11, indicating the stock could have significant upside as the group continues to push ahead with its restructuring and growth plans.

I think a profit recovery will be the catalyst that causes the market to take another look at the business. The company’s dividend is also returning this year. For the current financial year, analysts have pencilled in a dividend per share of 7.5p, giving a yield of 4.4% on the current stock price.

This level of income is incredibly attractive for income investors in the current interest rate environment.
Bumpy road ahead

However, I do not believe it will be plain sailing for the group from here on out.

The company faces a range of challenges. These include fighting off competition to meeting regulators’ demands for increased broadband connectivity across the UK.

The group also has a lot of debt on its balance sheet. The cost of this debt could increase substantially if interest rates rise, which would impact overall profitability and hold back growth. And finally, the company has a multi-billion pound pension deficit. Management will have to find the cash to fill this gap.

Still, despite these risks and challenges, I would be happy to buy to stock for my portfolio today, considering its growth potential and current valuation.


Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned.

[grupo guitarlumber] 09/12/2021 14:45

nice dividend payment due in February 2022




Interim dividend 2.31p Dividend payment date 7 February 2022

[grupo guitarlumber] 09/12/2021 14:41

Bt
176 +2.41%

[buyzantium] 09/12/2021 14:39

Jilou - Good question what have you read? Best advice is never sell a rising share and with the current conjecture surrounding BT it would be unwise to do so.

[bc4] 09/12/2021 14:11

What have you read?

[grupo guitarlumber] 09/12/2021 14:10

jillou

would tend to go with WENDSWORTH for a number of reasons

Dividend is expected soon

it has recently broken thru the 172.70p resistence

the next important resistence is apparently at 205.60p


Consensus

Mean consensus OUTPERFORM

Number of Analysts 23

Last Close Price 171,85 GBX

Average target price 194,47 GBX
Spread / Average Target 13,2%

High Price Target 263,00 GBX
Spread / Highest target 53,0%

Low Price Target 94,90 GBX
Spread / Lowest Target -44,8%


of course the sentiment might change

good luck with your decision



EV ENTERPRIZE VALUE CURRENTLY DOUBLE CURRENT SHARE PRICE

[wendsworth] 09/12/2021 14:01

jillou : In answer to your fundamental question ....... but not knowing your personal circumstances, .......'NO'.

[mercedes] 09/12/2021 13:32

I read some report that said the copper owned by BT would be valued at 50% of the companies total market value, at that time!! Food for thought

[wendsworth] 09/12/2021 13:28

Pierre : That's a very good point. Is this an asset JANSEN's team has possibly taking account of ? I certainly hadn't.

[pierre oreilly] 09/12/2021 12:05

Don't follow this much, just got an investment and letting it run, pleased to see the recent performance.

Any update on the £30bn or whatever of copper bt has in the ground? Is BT digging it up, or are errrm, others?

[1224saj] 09/12/2021 11:43

Let's say he's been buying shares off market over the last 4 months. His average could be 1.60? Not a bad return on a possible 2 billion punt. 200m return if he jumps off in the next 24hrs

[1224saj] 09/12/2021 11:39

The last of the Frenchman's mates getting on board the shuttle named " take over " :-)

[netcurtains] 09/12/2021 10:59

Do we know why its rising?

[wendsworth] 09/12/2021 09:53

craftyspeculator : Wouldn't argue with thrust but doubt the timing.There are other substantial holders / 'vultures' . The aim is fully utilise the shareholder value in OPEN REACH and that can be achieved by an IPO. Result ...everyone happy including the government.

[craftyspeculator] 09/12/2021 09:49

Draghi bid on Monday? Or DT bid on Monday? Or joint bid from both with an agreement to carve off the bits they really want to keep?

[nige co] 08/12/2021 11:41

You walked in to that one George? Lol

[craftyspeculator] 07/12/2021 19:39

back to your village George. They're missing their resident idiot.

[wendie27] 07/12/2021 17:23

I don't know what it is you're on George, but it certainly must be good stuff!

[george stobart] 07/12/2021 17:02

avoid this dividend scam. it's worse than dead. dead meat as they say in my village

[eaaxs06] 07/12/2021 16:53

LAMMERGEIER7 Dec '21 - 16:05 - 42903 of 42907
0 0 0
Volume already at 53 million shares,with half hour to go,probably will be 2nd highest

in nearly the last month.Announcement of some corporate action soon maybe.



The trading volume today was swayed out of proportion by 2 identical trades of 22m shares going through at 173.55p, both of which were recorded as sells. Make of that what you will.

If you strip them out, and the 11m end of day auction, you're left with a measly 12m shares traded in under 6,000 trade. That's very light trading for BT.

Good luck everyone, Sid.

[arees1969] 07/12/2021 16:42

I think even if there is no immediate announcement with all main brokers aligned to buy for BT and BT Sports decsion i would be surprised if there were any large drops in SP, I can see this stock climbing on the run up to Xmas.

[dope007] 07/12/2021 16:27

General market behaviour I have seen many times. Traders will be buying in. If nothing happens they will sell. The ups and downs of the mkt but the most important thing is the recent results were outstanding and the stock is good value here in my view

[arees1969] 07/12/2021 16:24

Don't think so whats that based on?