BT’s (LSE:BT.A) share price has been up and down in 2026. After rising from 184p to 240p between the beginning of the year and early May, it has fallen back to 194p.
Is it going to move higher over the next 12 months? Let’s see what City analysts think.
Analysts expect to see gains
Analysts seem to be quite bullish on BT shares today. At present, the average 12-month price target is 224p, which is approximately 15% above the current share price.
If that target was to be hit, it would turn a £5,000 investment today into around £5,775. Add in dividends, and someone could be looking at a total investment value of around £6,000.
Is 224p realistic?
Is that price target feasible? Well, I don’t think it’s crazy.
Assuming that the earnings per share forecast for the financial year commencing April 2027 (19.7p) is accurate, a share price of 224p would equate to a price-to-earnings (P/E) ratio of 11.4. That’s not particularly high.
One catalyst for a move higher in the share price could be expectations of higher free cash flow in the years ahead as the company completes the heavy lifting of its nationwide fibre buildout and capex requirements drop. By the end of the decade, BT expects free cash flow to hit £3bn versus £2bn this year.
Another driver of gains could be cost reductions due to automation and AI. Recently, the company advised that cost transformation delivered efficiencies across all units in the first quarter of its current financial year.
Why it may not get there
Having said all that, I wouldn’t bank on BT shares hitting 224p. Because they don’t have much positive momentum at present – the trend is down.
One issue that could hamper them is debt on the balance sheet – as of 31 March net debt was £20bn. This could have a negative impact on investor sentiment given that interest rates look set to stay higher for longer.
Another is a lack of growth. Looking ahead, BT isn’t expected to generate any top-line growth this financial year or next.
Investors also have plenty of other options when it comes to UK investment opportunities. While BT shares have a decent dividend yield of 4.4%, there are many other stocks offering high yields (and share price growth potential) at the moment.
Better shares to consider buying today?
Putting this all together, BT is a bit of a tricky stock. While there are some reasons to be bullish today, there are also some big negatives in the lack of top-line growth and the large debt pile.
Personally, I won’t be buying the shares for my own portfolio as there’s not enough of a clear growth driver. All things considered, I reckon I can obtain higher returns in other stocks.
Should you invest £5,000 in Bt Group Plc right now?
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Edward Sheldon does not hold any positions in the companies mentioned
