BT Group shares set to rise ahead of H1 earnings, says Credit Suisse

• BT Group set to unveil half year results on Thursday 29 October
• Telecoms provider expected to see profits hit hard by Covid-19
• Analysts at Credit Suisse remain optimistic BT Group will bounce back, lift price target

BT Group will unveil its second quarter (Q2) and half year (H1) results on Thursday 29 October, with investors not expecting a strong performance due to Covid-19 postponing global sporting events, resulting in BT Sport profits forecast to take a £400 million hit.

However, despite the telecoms company facing a challenging trading environment, analysts from Credit Suisse think that the group will bounce back over the long-term, propelling its share price back to near pre-crisis levels.

BT Group is closed at 106p per share on Monday, with the stock down 46% year-to-date.

Credit Suisse lifts share price target for BT Group

Analysts from Credit Suisse reiterated their ‘outperform’ rating for BT Group in September and lifted their price target for the stock from 180p to 185p per share, implying a potential upside of 74%.

The Swiss investment bank, despite acknowledging that tough times lie ahead for BT Group, believe that the future looks bright for the telecoms company over the long-term.

Even though the company is expected to see underlying profits slide by 4% between now and the end of 2023, analysts from Credit Suisse argue that by 2022 much of the negative impact sustained by the company will begin to reverse. In fact, the investment bank even forecasts that EBITDA will grow by 1% to £8 billion.

BT Sport’s decline due to Covid-19 is also expected to be offset slightly by Openreach, the group’s fibre-to-the-premises (FTTP) unit, which plans to connect an additional 20 million British households with super-fast broadband over the next few years. This FTTP expansion plan is expected to lift annual EBITDA by around £100 million, according to Credit Suisse.

BT Group outlook

In its first quarter results published on 30 June, BT Group said it expects adjusted revenue to fall by between 5% - 6% and to report EBITDA of between £7.2 billion - £7.5 billion in its 2020/21 financial year.

Meanwhile, the company expects capital expenditure to fall between £4 billion - £4.3 billion and generate normalised free cash flow of £1.2 billion - £1.5 billion.

‘Despite our strong operational performance in the first three months of the year, it is clear that Covid-19 will continue to impact our business as the full economic consequences unfold,’ BT Group CEO Philip Jansen said.

‘Beyond this year and based on current expectations, we expect to return the business to sustainable adjusted EBITDA growth, driven in part by the recovery from Covid-19,’ he added.

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