Shares in BT Group plc (LON:BT.A) moved higher this morning after Aussie bank Macquarie upgraded the embattled telecoms giant from ‘neutral’ to ‘outperform’.
BT saw more than £7bn wiped from its market capitalisation back in January in the wake of the corruption scandal in its Italian division.
Shares gradually recovered over the coming months but in the last few weeks they have given up all of those gains and more; sinking by 11% in June alone.
Macquarie analyst Guy Peddy now thinks the stock is at “desirable levels” where it is worth considering investing in the FTSE 100 group.
“We are upgrading BT from ‘neutral’ to ‘outperform’; this is the first time we have rated BT ‘outperform’,” wrote Peddy in a note to clients this morning.
“In our view consensus is now sufficiently cautious on the future FCF (free cash flow) generation and is implying too much negativity from FTTP (Fibre to the premises – Openreach’s ultra-fast fibre connection).”
Peddy also thinks BT, and its mobile subsidiary EE, stand to be the biggest gainers in the UK from the introduction of 5G, which is due to be rolled out in a few years’ time.
“In our view BT/EE will have the only wholly-owned vertically integrated end-to-end 5G network in the UK.
“We expect other operators to have limited 5G network scale or combine networks and sell them to a neutral host.”
As well as upgrading his recommendation, the analyst has also upped his price target to 330p (from 270p).
Shares in BT gained 1.3% this morning to trade at 292.1p.