It’s fair to say the BT (LSE: BT.) share price has been choppy in recent months. Now hovering just below 200p, it’s been swinging between roughly 173p and 242p over the past year.
For a brief moment it looked like it would hold above 200p, but it slipped back in May after the company reported softer revenue and higher-than-expected infrastructure investment.
With tomorrow’s (23 July) Q1 trading update due, the big question is: will BT show enough progress on cash flow and cost savings to justify buying the shares?
What the numbers are telling us
Several valuation models currently point to the shares being significantly undervalued. One ultra-optimistic estimate of 375p suggests they could be trading about 50% below fair value.
Consensus 12‑month price targets are in the 220p–225p range – roughly 15%–17% above today’s level. The most pessimistic analysts eye a 143p target, while the top end are aiming for 330p.
Of the 17 analysts I researched, seven give it a Buy rating, four a Hold, and six a Sell, which feels like a fairly balanced view.
Looking at the latest results, that’s not surprising.
Full‑year figures to 31 March 2026 showed adjusted revenue of £19.6bn, down 4%, while adjusted EBITDA edged up to £8.23bn. Normalised free cash flow came in at around £1.5bn, with management guiding for £2bn this year and £3bn by 2030.
Income-wise, it declared a full‑year dividend up 2% to 8.32p per share, giving it a 4.2% yield. The group seems fairly confident about its ability to keep growing the dividend by low‑to‑mid single-digits going forward.
On valuation, its trailing price-to-earnings (P/E) ratio sits around 17.3. That’s not bargain‑basement but is below some historic levels. If cash flow beats expectations tomorrow, that multiple could reduce quite quickly.
Here’s a quick snapshot of its key financials:
| Metric | Figure |
|---|---|
| Share price range | 173p–242p (1y) |
| Latest price (approx) | 192p |
| FY26 revenue | £19.6bn |
| FY26 adjusted EBITDA | £8.23bn |
| FY26 dividend | 8.32p (+2%) |
| Trailing P/E | 17.3 |
Does that mix of moderate growth, cost discipline and a decent yield justify buying the shares today? That depends on your risk tolerance
Key risks right now
First, revenue is still under pressure, with group sales down 4% last year. Second, BT’s debt is no joke, and it’s still spending heavily on fibre and 5G. Those projects need to start delivering cash – and soon.
Competition is also intense in fixed‑line broadband: alternative networks are challenging Openreach, potentially causing 800,000 line losses this year.
These challenges, along with any change to pricing regulations or digital infrastructure policy, could derail the recovery.
So, what’s the verdict?
BT is unlikely to ever be a particularly risky stock pick, seeing as it’s a critical part of the UK communications landscape. But price performance still hinges on management delivering those cash‑flow and cost‑saving goals – and the market gets tougher each day.
In my view, it still offers strong defensive characteristics and there’s certainly some recent improvements that add to the appeal. The stable 4.2% yield, the commitment to gradual dividend growth, and the potential for free cash flow to rise towards £2bn this year are all positives.
At the same time, there are similarly strong FTSE 100 companies with even better numbers right now, so it really depends how confident you feel about the fibre rollout paying off.
I’m on the sidelines for now, so I’ll wait and see if tomorrow’s update delivers any unexpectedly good news.
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Mark Hartley does not hold any positions in the companies mentioned.
