Some interesting analysis from our friends at Swiss bank UBS assessing the prospects for BT Group PLC (LSE:BT.A).
It is one of three sellers of the stock out of the 23 listed as covering the telco, which puts it in the minority – which in our view merits attention.
In the past, BT shares have correlated reasonably closely with movements of gilts and their yields (which in turn is largely a function of the pension deficit).
The link to gilts should be supportive as interest rates rise globally, you'd think.
Not so, says UBS. It reckons the ‘gilt’ effect is set to diminish, while competition to BT’s Openreach infrastructure arm could hold back the company’s performance along with “macroeconomic uncertainty”.
The “period of outperformance” seen over the summer (and prompted by the acquisition of a 12% stake by billionaire Patrick Drahi) is expected to “unwind”, according to UBS.
It reckons the stock is worth 130p, 13.5p lower than the current price. The consensus target price, meanwhile, is 192p.