BT Group shares set to rise ahead of H1 earnings, says Credit Suisse

BT Group has had a tough time, with Covid-19 postponing global sports events and hitting the company’s profits. But analysts at Credit Suisse remain optimistic and believe the telecoms provider will bounce back over the long-term.

  • BT Group set to unveil half year results on Thursday 29 October
  • Telecoms provider expected to see profits hit hard by Covid-19
  • Analysts at Credit Suisse remain optimistic BT Group will bounce back, lift price target

BT Group will unveil its second quarter (Q2) and half year (H1) results on Thursday 29 October, with investors not expecting a strong performance due to Covid-19 postponing global sporting events, resulting in BT Sport profits forecast to take a £400 million hit.

However, despite the telecoms company facing a challenging trading environment, analysts from Credit Suisse think that the group will bounce back over the long-term, propelling its share price back to near pre-crisis levels.

BT Group is closed at 106p per share on Monday, with the stock down 46% year-to-date.

Credit Suisse lifts share price target for BT Group

Analysts from Credit Suisse reiterated their ‘outperform’ rating for BT Group in September and lifted their price target for the stock from 180p to 185p per share, implying a potential upside of 74%.

The Swiss investment bank, despite acknowledging that tough times lie ahead for BT Group, believe that the future looks bright for the telecoms company over the long-term.

Even though the company is expected to see underlying profits slide by 4% between now and the end of 2023, analysts from Credit Suisse argue that by 2022 much of the negative impact sustained by the company will begin to reverse. In fact, the investment bank even forecasts that EBITDA will grow by 1% to £8 billion.

BT Sport’s decline due to Covid-19 is also expected to be offset slightly by Openreach, the group’s fibre-to-the-premises (FTTP) unit, which plans to connect an additional 20 million British households with super-fast broadband over the next few years. This FTTP expansion plan is expected to lift annual EBITDA by around £100 million, according to Credit Suisse.

BT Group outlook

In its first quarter results published on 30 June, BT Group said it expects adjusted revenue to fall by between 5% - 6% and to report EBITDA of between £7.2 billion - £7.5 billion in its 2020/21 financial year.

Meanwhile, the company expects capital expenditure to fall between £4 billion - £4.3 billion and generate normalised free cash flow of £1.2 billion - £1.5 billion.

‘Despite our strong operational performance in the first three months of the year, it is clear that Covid-19 will continue to impact our business as the full economic consequences unfold,’ BT Group CEO Philip Jansen said.

‘Beyond this year and based on current expectations, we expect to return the business to sustainable adjusted EBITDA growth, driven in part by the recovery from Covid-19,’ he added.

How to trade stocks with IG

Looking to trade BT Group and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:

  1. Create an IG trading account or log in to your existing account
  2. Enter ‘BT Group PLC’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.