Financial Trading Blog
Stock of the day 28/10/2015 – BT Group PLC
After starting the year at £4.04 BT went on a bit of a tear in the first quarter of 2015, quickly rising to a then all-time high of £4.71 by the end of March. It was a period that saw BT pay a lot less for its Premier League coverage than Sky AND agree definitive terms to acquire EE, helping the company overcome a slightly mixed Q3 2015 announcement at the end of January.
Following its swift 2015 ascendance BT struggled to break above that aforementioned all-time peak until July, spending the intervening months ping-ponging between lows of £4.40 and highs of £4.70. A near the middle of July finally saw it best its own record, just about crossing the £4.80 (if only for a moment). However, a mixed Q1 2016 report, with a 2% year-on-year decline in revenue of £4.2 billion countered by the fact that its adjusted profit rose 9% to £694 million, and, more importantly, the market chaos of August and September, saw BT plunge to 8 months lows of £4.04 towards the end of the latter month.
(Source: IT-Finance.com 28/10/2015)
Since then, with the markets themselves seeing a healthy recovery, BT has been lifted away from its September gutter, and at the start of the week was trading at a 10 week high of £4.50. And that was before the CMA, which had been mulling over BT’s EE merger, gave its approval on Wednesday for the deal to go ahead, sending the stock to a current trading price of £4.69 (IT-Finance.com, 28/10/2015).
With the EE/CMA issue out of the way, investors will be keen to see if Thursday’s fiscal second quarter report continues an update on Openreach, and whether or not BT will be forced to make its infrastructure division independent after the company had been accused of providing poor broadband services for its rivals who use the network. Also in focus will be BT’s subscriber growth, especially in its TV division, a sector that will be particularly scrutinised following Sky’s own robust figures last week.
BT Group has a consensus rating of ‘Hold’ with an average target price of £5.06.
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