The BT (LSE: BT) share price has had a bumper week. It’s jumped an impressive 8.67% at a time when the FTSE 100 as a whole bumbled up just 0.71%.
It isn’t hard to see why. That’s down to the news that Indian telecoms conglomerate Bharti Global, co-founded by Sunil Bharti Mittal in 1976, has just completed the acquisition of a 24.5% stake in BT from France’s Altice.
Markets knew an agreement had been reached in August, but were happy to see it complete. As CEO Allison Kirkby put it over the summer, this “is a great vote of confidence in the future of BT Group and our strategy”.
Can this FTSE 100 stock continue to recover?
It certainly is. I spent the last year wondering whether to invest a few thousand pounds in BT shares. Bharti Global has parted with $4bn. That makes it the single largest shareholder in Britain’s biggest broadband and mobile company. Should I follow suit, but in my far more humble way?
BT has been shorn of confidence since its shares peaked at just under 500p nine years ago. They were idling at around 100p this April, having lost 80% of their value peak-to-trough. However, they’ve bottomed out and are up 25.99% over the last 12 months.
If I’d dived in and bought BT shares earlier this year, I’d have done pretty well. Plus I’d have enjoyed a trailing yield of 5.33% to boot.
That’s a shame but not the end of the world. BT still looks good value with a price-to-earnings ratio of just 8.1. That’s comfortably below the FTSE 100 average of 14.2 times.
It’s also attractive as measured by a price-to-sales ratio of just 0.7. That suggests I’d only pay 70p for each £1 of revenues. So what do the experts say?
Market consensus surrounding BT continues to be bullish. Of the 12 institutional analysts following the business, six label it a ‘strong buy’. Another three call it a ‘buy’, which means two-thirds are in favour. Two say ‘hold’ and two have labelled BT a ‘strong sell’.
Six analysts reckon BT is a ‘strong buy’
This diverse sentiment, from ‘strong buy’ to ‘strong sell’, is also reflected in the 12-month share price forecast.
The 12 brokers have set a median target of 199.15p per share. If correct, that would see the shares climb 32.8% from today’s 150p, as my table shows.
| Opinion | 12-Month share price forecast | Potential gain/loss |
| Optimistic | 290p | +93.3% |
| Average | 199.15p | +32.8% |
| Pessimistic | 110p | -26.7% |
BT still has problems, though. On 7 September, it reported a 3% drop in interim revenues to £10.1bn and 10% drop in pre-tax profits to £967m, largely due to weaker non-UK trading.
The board still hiked the interim dividend from 2.31p to 2.40p, as free cash flows jumped 57% to £700m. But I’m thinking this. If I can’t bring myself to make a tiny commitment to BT despite the attentions of big names like the Mittel family and Mexican tycoon Carlos Slim, who also has a stake, it means I don’t really believe in the BT investment case. I’ve been tempted, just not strongly enough. So instead, I’ll look for a company I do believe in.
