BT Still Undervalued, Say Analysts

Morningstar analysts the believe telecom firm's shares are trading below their fair value

Allan C. Nichols 5 February, 2018 | 1:52PM
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A BT hub. Shares are undervalued, analysts believe

Shares in UK telecoms firm BT (BT.) fell last week as it reported third-quarter results that were disappointing. However, Morningstar equity analysts are maintaining a 370p per share fair value estimate and narrow-moat rating, which means it has a slender competitive advantage. We believe the shares are undervalued - the shares are currently trading around 240p.

The firm reported that quarterly revenue fell 3% year on year and is now down 1% for the nine-month period versus our full-year projection of flat revenue. The biggest problem continues to be the global services division. Whereas we've been modelling a significant reduction in revenue in the UK, we had expected the US and Asia to grow in the second half of the financial year, but instead they continue to see revenue contraction as well. We think global services will continue to struggle, but to a smaller degree in the 2019 financial year, and we don’t expect a return to revenue growth until the 2021 financial year. 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating Inc3,425.52 USD0.28Rating
BT Group PLC158.45 GBX-0.13Rating

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Allan C. Nichols  Allan C. Nichols

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