Can the BT Group plc share price maintain its upward trajectory?

Does BT Group plc (LON:BT.A) (BT.A.L) have further upside potential?

BT Group plc
BT Group plc

Investors seemed to react positively to the half year results released by BT Group plc (LON:BT.A) (BT.A.L) yesterday. The company’s share price increased by as much as 9% following the news, with a price of over 260p being the highest level recorded since January 2017.

This is clearly positive news for investors in the company. I feel that the progress being made by the business is relatively impressive. Yesterday’s results showed that it is delivering on its cost reduction strategy, with around 2,000 roles having been made redundant. It is also continuing to improve customer satisfaction levels, while investing in its consumer offering.

This could lead to improving financial performance over the medium term in my view. And with BT set to see a new CEO start work in the early part of next year, I feel that the business could deliver higher levels of profitability over the coming years.

That said, the stock continues to be relatively risky in my eyes. It is still expected to report falling EPS in the current year and next year, while revenue and profit growth continued to disappoint in the first half of the year. A new CEO may also make changes to the business which could lead to further instability, while sports rights, pay-tv and the mobile industry remain highly competitive.

Therefore, I think there is a long way to go until the BT share price will have recovered from the falls it has recorded in the last few years. Its single-digit P/E ratio suggests that it is still unloved by investors, which indicates that they remain unsure about its prospects.

Having underperformed the FTSE 100 and a number of sector peers in recent years, I feel that the stock could deliver a successful turnaround in the long run. In the near term, though, there could be further risks and volatility ahead for the company.

About Robert Stephens 5151 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 [email protected] or use one of the other contact methods available on the 'Contact Us' page