The near-term prospects for the BT Group plc (LON:BT.A) (BT.A.L) share price appear to be challenging in my view. The company is in the process of implementing a major new strategy and is doing so with a CEO who will not be in his position for many more months.
As a result, I feel that investors may remain cautious about the company’s prospects. After all, there are a number of possible challenges facing the business, with there even being the potential for changes in strategy once a new CEO is appointed.
Further, there seem to be a number of other stocks in the TMT sector which offer stronger growth potential over the next couple of years. Shares such as Talktalk and Vodafone are expected to post double-digit EPS growth over the next couple of years, while BT is forecast to record a fall in EPS in the current year and next year.
As a result, I wouldn’t be surprised if the company’s share price experiences a continued decline over the near term. It may suffer from continued uncertainty among investors.
In the long run, though, I believe that a near-200p level undervalues the BT share price. The company has a dominant position within the quad play sector, and this could lead to stronger financial performance in the coming years.
A focus on efficiency and its operational performance may make the company stronger, with its financial outlook potentially becoming more sustainable. This could help to improve investor sentiment and may mean that the stock market deems it necessary to upgrade is PE ratio of around 8.5.
As a result, I remain optimistic about the investment potential of the company. It may experience further volatility in the near term, but in the long run its current strategy could be sufficient to lead to improved performance in the coming years.