How will the BT share price move after the UK election?
With the Conservative Party expected to win a majority in the upcoming election Jeremy Corbyn’s plans to nationalise the broadband unit of BT will likely be averted. But the stock price could nose dive if Labour come out on top.
Labour Party leader Jeremy Corbyn has pledged that he will nationalise the broadband division of BT Group to offer free internet across the UK if he wins a majority in the upcoming election on Thursday.
However, with the Conservative Party ahead in the polls, the chances of this happening are unlikely. But if Labour can come out on top on 12 December, the BT share price could take a tumble as investors’ renationalisation fears become a reality.
BT could see gains eroded if Labour nationalises broadband unit
BT has seen its share price struggle this year, with it trading nearly 20% lower on a year-to-date (YTD) basis.
However, after hitting a five-year low of 158p in August, the company’s stock has recovered some of the ground it has lost, up more than 20% since then to trade at 193p as of 16:00 GMT on Monday.
Though unlikely, considering that the Conservative Party controls a significant lead in the polls, if Labour were to win on December 12 the telecoms provider could see its shares slide due to the prospect of its broadband unit being nationalised.
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Barclays Capital pessimistic about the BT share price
Analysts at Barclays Capital reiterated their ‘underweight’ rating for BT in December and downgraded their target price for the stock from 160p to 155p a share.
Based on BT trading at 193p, Barclays target represents a potential downside of 19.6% for the stock.
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