The BT (LSE:BT.A) share price has had a remarkable run, climbing over 50% since the start of 2024, propelled by a transformation strategy that’s finally showing real results. And while the stock’s eased slightly from its recent peak, it continues to trade near-five-year highs at around 190p.
So the question now is, can the company continue to march upward? Or is the rally losing steam? Here are the latest projections…
What do the experts think?
Despite BT Group making some genuinely impressive progress in repairing its balance sheet, the opinion among institutional analysts in July is pretty much split.
Of the 19 experts tracking the business, 10 currently rate it as a Buy while six have put it into the Sell category, with the others adopting a wait-and-see Hold recommendation.
This divergence of opinions also materialises in BT’s 12-month share price forecasts.
One analyst thinks that if the telecommunications giant continues to restructure and optimise its operations, then BT shares could potentially reach 76% higher at 330p. Yet at the other end of the spectrum, the more pessimistic outlook suggests BT shares could start tumbling to as low as 143p, or a 24% decline from current levels.
In other words, if I were to invest £5,000 today, by this time next year I could have anywhere between £8,800 and £3,800. Needless to say, this is a pretty wide range of outcomes. So who’s right?
The bull versus bear argument
BT’s latest full-year results gave plenty of room for optimism. Its Openreach business surpassed 4.8 million new premises with full fibre broadband, bringing the total to 23 million – a number that’s expected to rise to 25 million by December this year.
At the same time, free cash flow’s also on a clear upward path, reaching £1.5bn, and on track to climb to £3bn before the end of this decade. And what’s more, the Verizon joint venture that was announced last month adds a further new dimension.
By combining its international operations with Verizon’s international enterprise arm, the joint venture is expected to generate $4bn in annual revenue – half of which will go to BT.
So why are some analysts still sceptical? Even with this encouraging progress, BT’s core problems remain unsolved. The debt pile’s still ginormous, with close to £22bn of loans and lease liabilities still on its balance sheet.
Meanwhile, cash generation might be improving, but growth remains elusive with the top line still shrinking, albeit modestly. And it seems that some analysts aren’t convinced that, in a market as fiercely competitive as telecommunications, BT will be able to reignite its growth engine.
So what should investors make of all this?
The bottom line
BT’s transformation is undeniably working. The fibre build’s the fastest in Europe, cash flow’s inflecting sharply, and the Verizon deal’s a strategically sensible simplification of a business that was once spread far too thinly.
But overall, I remain unconvinced. While I’m not as pessimistic as some bearish analysts, unless BT can get revenue growing meaningfully again and put a dent in its debt pile, I think the BT share price will struggle to maintain its recent momentum. That’s why I’m keeping this stock on my watchlist for now.
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Zaven Boyrazian does not hold any positions in the companies mentioned.
