This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Trade Parameters
Technical Observations – For
Technical Observations – Against
Share price breakout increases potential for rally back to ceiling of falling channel at 235p (+5%), retracing the May sell-off. Management recently reiterated FY guidance even after accounting changes. New CEO on the way by year-end which could improve relationship with regulators and fix things after strategy struggles. The 7% dividend yield is very attractive versus UK Index peers, and thus supportive for the share price.
Risks to the shares include an equity market rally that favours risk assets rather than defensive telecoms. Whilst a 7% dividend yield is attractive, as bond yields rise some may be prefer the safety of government paper over the risk of share price declines. Regulatory changes could force BT to allow even easier network access, increasing competition.
Consensus is Bullish (50% of brokers say Buy; only 8% say Sell) while 86% of brokers suggest upside from current levels. This offers potential for the share price rebound to attract the attention of the 42% Neutrals, encouraging them to upgrade their ratings. The average broker target since early May is 255p, well beyond our objective of revisiting the ceiling of the long term falling channel.
Next Event: First Quarter results, 27 July; Ex-div, 9 Aug
Latest Broker 12-Month Consensus: 48% Buy, 44% Hold, 8% Sell (full breakdown on request)
Source: DowJones Newswires, Reuters News, Bloomberg or Company Press releases
| Share | 1wk | 1m | 3m | 6m | 1yr | 2yr | 3yr | 4yr | 5yr |
| Perf % | 3.0 | 8.3 | -1.9 | -18.8 | -24.2 | -45.5 | -51.1 | -42.9 | -29.4 |
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Prepared by Michael van Dulken, Head of Research