The BT (LSE: BT.A) share price is surging upwards. From a low of 105p early last year, the share price more than doubled. Such rapid growth is making a lot of people wonder when BT shares can recover their previous highs. When might they hit £3 again?
The £3 mark would be a notable one. It’s around a 50% increase from the current price. And given the current upwards trajectory, which overlaps with new CEO Allison Kirkby’s stewardship, it might not be far away at all.
For one, it’s nothing new to the stock. The shares were well above the 300p mark before the dotcom crash. The shares briefly nudged past that mark before the ‘great recession’ too. Even as late as 2017, shares in BT were above this mark.
The good
That 2017 reference might be more relevant than first appears. The shares fell after a scandal at its Italian division. The accounting irregularities ended up in a half-billion-pound financial write-down. In addition to the financial cost was a loss of investor trust.
It’s possible that trust is being won back now. The new person in the corner office might be helping there. Among other things, Allison Kirkby has shepherded a smooth ‘full fibre’ broadband rollout, which was expected to result in massive capex and ballooning debt. With Kirkby saying the firm has passed “peak capital expenditure”, there’s good news on that front too.
The fibre sector has become quite competitive, but BT is fighting a good fight in this area. The firm’s Openreach fibre network is expected to reach 25m households in the UK by the end of next year. Good news all round then. Or is it?
The less good
One looming issue is the November budget. It’s an open secret that tax rises are on their way, and BT could be hit harder than most. Kirkby has warned that “government-inflicted costs” like red tape or taxes are 10 times higher than in Europe. That could impact profitability.
While analysts can’t factor in the manueverings of Starmer, Reeves et al., the latest forecasts do look good. Earnings and dividends are both set to slowly grow for the rest of the 2020s. Both of which should support the share price. Of course, analysts’ forecasts are never guaranteed, and especially more than three years out sometimes need to be taken with a rather large pinch of salt.
As for that £3 share price, let’s make a little prediction. I think the positives outweigh the negatives here and the BT could outperform the FTSE 100 in the years to come. A 50% gain in four or five years doesn’t seem unreasonable. Perhaps the BT share price will reach £3 before 2030, then.
