The BT (LSE:BT.A) share price is pretty volatile. Twenty months ago, I missed my chance to buy around at £1 — I was on holiday and took my eye off the ball. It surged to £2.20 and now it’s on the way down. The reality is this one is really hard to value, and that’s probably why it’s so jumpy.
So, what do analysts think?
A wide spread
Institutional analysts are sharply divided on BT, reflecting the difficulty of valuing the company during a period of major transition. The consensus rating is Hold, but the 18 analysts covering the stock are far from aligned.
Price targets range from a low of £1.35 to a high of £3.12, compared with the current price around £1.80. The average target is 7% above the current share price.
The wide spread illustrates the uncertainty over BT’s earnings trajectory, capital expenditure requirements, and the pace of its network transformation.
Analysts are trying to weigh the long-term potential of fibre rollout and 5G expansion against near-term challenges, including competition in legacy copper services and regulatory pressures.
With such divergent views, the stock is particularly hard to value with confidence, leaving investors reliant on careful assessment of strategic progress rather than simple price forecasts.
Debt is a huge issue
One of my colleagues recently highlighted that the stock is trading around 10 times forward earnings, and that was around half the FTSE 100 average. The logic, I believe, is that if the share price were to double, it wouldn’t be bad value on relative terms.
However, I think this overlooks a huge factor, and that’s debt.
BT has a lot of debt having spent billions — and continuing to spend — on FTTP rollout. The business now has a net debt position around £22bn. That’s more than the market cap of the company (£18bn).
In short, the enterprise value (net debt plus market cap) is now £40bn. Net income is actually forecasted at £1.7bn for FY2026. That tells us that the company is actually trading around 23.5 times forward earnings when adjusted for the balance sheet.
Is this good value or not? Well, that’s a huge questions. Valuations are always relative to peers, debt, growth prospects, and margins (the quality aspect).
The bullish argument is that long-term earnings growth should be strong because FTTP rollout is positioning BT as a high-margin business.
However, the issue is that we can’t see this in the forecasts yet. Earnings growth should be relatively flat over the next 12 months. Revenue growth also look flat across the next three financial years.
The bottom line
Currently, there isn’t much margin of safety but as investors we just don’t have enough visibility. Yes, there’s a 4.6% dividend yield that I haven’t spoken about, but that wouldn’t mean much if the stock plummeted 30%. At the current price, I don’t think BT shares are worth considering.
