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The BT (LSE: BT) share price is taking a breather. After an impressive rally, it’s slipped 6% over the past month.
For those of us who missed its recent recovery, this could be a moment worth watching. Especially with the stock trading at a modest price-to-earnings ratio of just 10.6.
FTSE 100 recovery story
For years, BT was seen as a sprawling mess: legacy landlines, fading handset sales, and costly football broadcasting rights that stretched its focus too thinly.
It needed someone to simplify, streamline and get back to basics. That’s broadly what CEO Allison Kirkby has done since her appointment in February 2024.
She’s cut costs, simplified business units, pushed forward with Openreach full-fibre broadband (FTTP) and accelerated 5G deployment.
BT shares are up 35% over the last year, and 70% over two. But can they continue this great run?
Full-year results published on 24 May disappointed, with adjusted revenues falling 2% to £20.4bn. Tough international trading conditions and weaker consumer handset sales more than offset Openreach gains.
On 24 July, Q1 results showed revenues down 3% to £4.87bn, while reported pre-tax profits dropped 10% to £468m, due to higher finance costs, plus depreciation and amortisation.
Even so, the board insists it remains on track to meet its full-year 2026 and longer-term guidance.
Where can this stock go next?
BT is still seeing record demand for Openreach FTTP, with net adds up 46% to 566,000 in Q1. But it’s also losing broadband lines, down 169,000 over the quarter, as rivals snatch business and a weaker market hits across the board.
So what do the experts think? Consensus forecasts are currently producing a median share price target of 210.4p. This suggests a modest 5.4% gain from today’s 199.55p. Add in the dividend yield of around 4.1%, and the total return could reach 9.5%. That would turn £10,000 into £10,950, if correct.
Forecasts are just educated guesses, at best. Although after such a strong run, I’m not surprised to see expectations cooling.
Income and growth potential
BT still has plenty of challenges. Smaller alt-nets continue to nibble away at its broadband base. International business is tricky. Debt still looms large, with £23bn on the balance sheet against just £2.8bn in cash. And the pension scheme remains a huge burden.
On the positive side, Kirkby seems to have a grip on priorities. Fibre rollout is progressing, cost control is helping, and the addition of Indian billionaire Sunil Bharti Mittal to the board adds credibility and fresh perspective.
On balance, I think BT may be worth considering for buyers comfortable with some volatility and looking for both income and modest growth. But I can’t say I’m absolutely itching to buy it. The company is still juggling plenty of moving parts. The big fibre investment may have peaked, but the pay-off is uncertain.
For now, I’ll stay on the sidelines while I scour the FTSE 100 for juicier bargains. I think there are other blue-chips with better potential, and fewer legacy issues.
