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Where will the BT share price go in July and beyond?

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Where will the BT (LSE: BT.A) share price go in July and beyond? Truth be told, it’s impossible to say. It’s impossible to predict what the future holds in the stock market, and it’s also impossible to say if a stock will be above or below a certain level one week, month, or a year from now.

However, in theory, stock prices should track the underlying fundamental performance of companies in the long run. This suggests that if the telecommunication giant’s profits increase gradually over the next few years, the BT share price should follow suit. 

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I think the company’s profits could well increase over the next few years. As such, I believe the outlook for the stock is encouraging

BT share price outlook

After several years of trying to become a multimedia hub, BT is now retreating and focusing on what it does best. This is providing telecommunication services across the UK. 

To that end, the company’s investing in its fibre broadband offer and customer service. It’s also looking for partners to help fund the expansion and bring in some much-needed experience. 

French telecoms executive, Patrick Drahi, has already acquired 12% of BT. This could be a precursor to a closer combination between his companies and that of the UK telecoms giant. 

The good news is that the City is already starting to notice the changes taking place, and the BT share price is starting to reflect this. 

Analysts have increased their profit estimates for the company by 7% for 2023. That isn’t a huge jump, but it’s a positive estimate, at least. It’s even more impressive considering 2023 is supposed to be the first year since 2016 where the firm will report earnings growth. 

Of course, these are only projections at this stage. There’s no guarantee the business will hit these targets at all. The company is having to spend billions of pounds on building out its fibre broadband network, which is weighing on profit margins. There’s no guarantee the group will ever be able to recoup this spending. Further, there’s no guarantee BT will find any partners to help develop its other initiatives. 

Still, if BT returns to growth in 2023, it will end six years of falling profits. 

Opportunity 

Based on this improving outlook, I think the prospects for the BT share price are encouraging. As I noted at the beginning of this article, a company’s stock price should track its fundamental performance. If the fundamental performance of BT continues to improve, the stock price should increase in value. 

Investors may also return to the business when it re-introduces its dividend. The company cut this in the pandemic to preserve cash. Analysts reckon management could restore the distribution during the next two years.

Considering all of the above, I think the BT share price can head higher over the next few years. That’s why I’d buy the stock for my portfolio today, although there’s always going to be a risk the stock will underperform. 

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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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