In the last year, the BT Group plc (LON:BT.A) (BT.A.L) share price has traded as high as 277p. This occurred in December 2017, and since then it has experienced a period of heightened volatility.
In fact, it has traded as low as 203p in May, with investor sentiment improving significantly since then as it has posted a rise of over 50p per share. A couple of reasons could be behind this in my view.
The first is progress with the delivery of its revised strategy. It announced earlier this year that it would seek to become increasingly efficient through a major headcount reduction. In last quarter’s results it reported that 2,000 roles had been made redundant, and this could suggest that lower costs and improving profitability may be ahead.
The second reason for the rise in BT’s share price in recent months could be the appointment of a new CEO. Although I feel that the current CEO has done a good job of expanding the business into a truly quad play operator with a strong position in pay-tv and sports rights, investors seem to have reacted positively to news of a new CEO being appointed. The impending arrival of a new CEO in the New Year could be helping investors to become increasingly optimistic about the stock’s long-term outlook.
In order for BT to trade above its one-year high it would need to rise by a further 8%. I feel that this is achievable over the medium term. However, I also believe that there could be volatility and uncertainty ahead for the business. It is seeking to make significant changes to its management team and business model, while its EPS growth is due to be negative over the next two years.
Therefore, while I’m optimistic about its long-term prospects, I think that there could be further challenges ahead after a tough 12 months for the business.