Could BT Group plc’s share price end 2018 in positive territory?

Are further gains ahead for BT Group plc (LON:BT.A) (BT.A.L)?

BT Group plc
BT Group plc

The BT Group plc (LON:BT.A) (BT.A.L) share price started the year at around 272p. During the course of the year it has fallen to around 204p before mounting a recovery to trade at its current price level of approximately 256p.

Therefore, it is around 16p from breaking even for the year. This would equate to a rise of just over 6%. Given that it has gained around 23% since May, this could be achievable between now and the end of 2018 in my view.

The recent update from the company showed that it is performing relatively well in my opinion. Sure, its financial performance was relatively lacklustre, but its operating performance seems to be improving according to my research. It was able to reduce headcount by 2,000, and this could have a positive impact on its financial performance over the medium term. And with customer satisfaction scores continuing to improve, I feel that the company could be in an improving position.

Of course, things could change for BT in 2019. It is due to welcome a new CEO, and it is a known unknown as to how he will manage the business and strategy. The company’s rating of around 10 suggests that investors continue to be relatively cautious about its prospects. I feel this is a good idea, since it is forecast to post declining EPS in the next two years.

Therefore, its financial performance could get worse before it gets better. And in my view, it may take time for BT to generate a more resilient financial performance at a time when the quad play industry is becoming increasingly competitive.

As a result, I’m cautious about its prospects over future months. I feel there are a number of possible risks facing the business. But in the long run I believe there could be further capital growth ahead.

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