BT Group PLC (LON:BT.A) got its target price bumped up to 125p from 110p by Citigroup as the upside leans on consumer recovery and the fibre to home (FTTH) wholesale.
According to analysts, BT’s expectation of returning underlying earnings (EBITDA) to pre-Covid level by financial year 2023 showed its confidence in turning around the consumer segment and driving growth in Openreach through fibre acceleration.
READ: BT Group eyes £7.9bn underlying earnings in 2023
However, the rising capital expenditure and cash leakage in the meantime means free cash flow could stay at £1.2-£1.3bn level over the next three years, offering tight cover to BT’s 7.7p dividend resuming next year, the bank noted.
“The second half is going to be an eventful period for BT, testing BT’s ability to execute,” analysts commented.
“We retain our neutral stand on BT and expect the stock to be volatile in the near term.”
Shares rose 2% to 125.3p on Monday morning, having declined 36% in the year to date.