BT Group PLC (LON:BT.A) is approaching an operational inflection point, that’s according to Credit Suisse, which today lifts its price target for the telecoms and TV bundler.
The Swiss bank increases its target from 190p to 200p, compared to the current price of 138.6p.
In a note, Credit Suisse highlighted its expectations for the ongoing roll-out of high speed internet, measured in FTTP (fiber to the premises) connections.
“We expect BT to reach 16mln FTTP premises by FY25 (company target 20m in mid-/late-2020s),” the bank’s analyst said in a note.
Credit Suisse also noted the higher price point of faster connection and said that BT would be likely to see “one of the strongest” post-COVID rebounds.
“BT has seen one of the biggest domestic incumbent EBITDA declines (FY21 -5% vs peers -2% on avg) due to high exposure to pay-TV/roaming/B2B,” it said.
“Conversely, we expect a strong recovery from Q1 FY22 as COVID losses revert.”
In London, BT shares rose by 3% in Friday’s early deals changing hands at 138.73p.
BT shares on Wednesday jumped after the Budget announcement from chancellor Rishi Sunak including a surprise policy that will allow companies to cut their tax bill if they increase investment.
Under the two-year investment “super deduction” policy, businesses investing in new plant and machinery assets will be able to reduce their tax bill by 130% of the cost of investment. In other words, the super deduction will allow companies to cut their tax bill by 25p for every £1 they invest.
BT is expected to be a big beneficiary as its Openreach arm is investing millions to upgrade its UK broadband network to full fibre optic cable run right up to the door, known as FTTP.
On Monday, BT announced its chairman Jan Du Plessis will step down from his role as soon as a replacement is found.
Du Plessis joined BT as a non-executive in 2017 and took over as chairman in November of that year.