Will the BT share price ever recover to 400p?

Does the BT Group plc (LON:BT.A) (BT.A.L) share price have capital gain potential?

BT Group plc
BT Group plc

The BT Group plc (LON:BT.A) (BT.A.L) share price has fallen from around 400p earlier this year to its current level of 309p. In my view, the BT share price has fallen mostly because of the profit warning it released after announcing difficulties in its Italian division.

However, the BT share price has been lower than 309p this year. It has been to 297p, but to my mind has recovered a little partly because of a deal regarding the future of Openreach. This seemed to improve investor sentiment to a degree, and I think it could be a good thing for the BT share price in the long run.

BT’s management should now have more time to focus on other areas, such as the integration of EE and the investment it is making in differentiating its product. Both of these factors could be catalysts on the BT share price in my view.

I believe BT’s position as a dominant player in the quad play market following the EE acquisition could be beneficial. There may be cross-selling opportunities, for example, which could provide a boost to its EPS in the medium term.

Regarding whether the BT share price could ever recover to 400p, I feel optimistic about the company’s future. It has a P/E of 10.7 at the moment, which I feel indicates the market has priced in at least some of the potential challenges it may face in future. Although EPS growth is forecast to be lacking in the next year or two, I think BT’s strategy could lead to improving EPS numbers over the long run.

I also believe BT’s higher dividend yield may now attract investors at a time when CPI inflation is moving higher. BT has a dividend yield of approximately 5%, which I feel has appeal. Although the company may be a relatively risky prospect given its uncertain outlook, I’m optimistic about its long-term share price potential.