Could the BT share price sink lower than 300p?

Is the BT Group plc (LON:BT.A) (BT.A.L) share price set for further falls?

BT Group plc
BT Group plc

In the last year, the BT Group plc (LON:BT.A) (BT.A.L) share price has fallen 30%. While disappointing, that is not a great surprise to me. The company has experienced a difficult period – particularly in 2017.

For example, it has reported difficulties in its Italian segment. They were announced at the same time as a profit warning, which inevitably sent the BT share price lower and led to a decline in investor sentiment in my opinion.

To my mind, the BT share price could move lower in the short run. The company faces an uncertain period, with competition in the quad play sector rising. It is also seeking to integrate EE into the business and spend significant amounts on differentiating its product via sports rights. They increase its financial risk in my view, which could push its share price below 300p.

In spite of the risk of more falls, I think the BT share price has long-term investment appeal. Although it may be volatile, I think it could perform well on a relative basis versus other TMT stocks.

I feel BT has a sound strategy through which to improve its profitability. It is now one of the dominant quad play operators after the purchase of the UK’s largest mobile network, EE. This should provide it with cross-selling opportunities, which may boost its sales and profitability. I also agree with the strategy of investing in sports rights, since they help to create more customer loyalty to my mind.

I also believe the BT valuation shows there could be upside ahead. It has a P/E of just over 11 and is forecast to have positive EPS growth in the next 2 financial years. Therefore, while things could get worse before they get better, I view the BT share price as being relatively appealing for the long term. BT has the right strategy and opportunity to register improving financial figures in the long run in my opinion.

About Robert Stephens 3395 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email or use one of the other contact methods available on the 'Contact Us' page