The BT Group (LSE:BT.A) share price has enjoyed a solid run throughout 2024. While it was a slightly soft start to the year, the shares have surged over 40% since the start of May. And looking at the latest analyst forecasts, the telecommunications giant could see its market-cap double over the next 12 months!
What analysts think
Since the start of December, there are 20 City analysts keeping tabs on BT, each with differing opinions as to where the business might go from here. Overall, the sentiment seems to be pretty positive, with most expecting the shares to outperform the market.
But what’s more encouraging is that opinions have been improving over time as analysts shift their recommendations away from Sell and move towards Buy.
| Recommendation | Strong Sell | Sell | Hold | Outperform | Buy |
| Analysts (December 2024) | 0 | 2 | 2 | 11 | 5 |
| Analysts (December 2023) | 0 | 3 | 5 | 7 | 4 |
Seeing improving sentiment’s almost always a healthy sign. And considering the progress management’s made in cutting costs to bolster cash generation, some celebration is definitely in order. With that in mind, it’s not so surprising that the 12-month share price forecast anticipates a potential near-100% return.
| Opinion | BT 12-Month Share Price Forecast | Potential Gain/Loss |
| Optimistic | 290p | +96.7% |
| Average | 190p | +28.9% |
| Pessimistic | 110p | -25.4% |
Digging deeper
On a forward basis, the company’s price-to-earnings ratio sits at just 8.4. Considering its historical average has been closer to 11.8, it further signals the potential for some upward movement next year. But could this momentum double the BT share price?
The group’s successful cost-saving initiative helped wipe out £3bn of annual expenses, with a further £3bn of savings expected to be achieved by 2029. Subsequently, in its latest results, while revenue and earnings still stumbled, operating cash flow generation jumped by 29%, reaching £3bn.
That’s definitely a welcome sight. However, when it comes to making growth investments to fuel even more cash growth, management’s hands are a bit tied. The balance sheet‘s still riddled with £23.5bn of loan obligations and lease liabilities. In addition, there’s a £4.3bn pension deficit to worry about.
To management’s credit, both gearing and pension health are steadily improving – a trend I expect will continue. But unless these fundamentals are enhanced meaningfully, I’m not convinced that a doubling of the BT share price is realistic. At least, not in the next 12 months.
Should I consider buying BT?
As a recovery play, I think BT shares have some potential to reward shareholders. New-ish CEO Allison Kirkby has only been on the job since February. And so far, her contributions appear to be building value. But the biggest question I have is whether the firm can restore meaningful revenue growth.
After all, margins can only be improved by so much. Boosting profitability’s definitely a good place to start. But I think BT shares will be stuck under a glass ceiling unless top-line expansion can make a comeback. I think the jury’s still out on whether Kirkby can deliver that. So for now, I’m watching from the sidelines.
This post was originally published on Motley Fool
