6% less today, is the price of BT shares preparing for a larger fall?

The worse performance stock in the Ftse 100 Until now today (February 18) is Group BT (LSE: Bt.A). With 142.7p, it has dropped almost 6%, mainly due to a reduction of a leading Wall Street bank. With some of the reasoning provided by the research team, it could mean problems to wait for the price of BT shares.

Turning your eyes

The research team in Citi BT Degraded Group of a previous purchase recommendation to a sale. They reviewed the target price for next year from 200p to 112p. Basically, it is basically in half the expectations, with the opinion that the action will fall, it will not meet, from the current level.

In terms of reasoning, they make a fairly great statement that they feel that Openreach will have a decrease in income for next year and will continue to be like that for the rest of the decade. As a result, this could exert pressure on free cash flow. CITI also quotes concerns about the sustainability of the long -term consumer division pricing structure.

Since the bank is very good reputation in terms of research and content, the perspective and collection of the target price have been the main trigger for the drop in the price of the shares today. Clearly, the implications that Citi cites are not just concerns for today. If it is true, it could cause a big lower movement in the coming months.

The other side of the currency

Some investors may feel that the statements around Openreach will not be correct. The division, which manages the United Kingdom broadband infrastructure, has significantly progressed in the expansion of its complete fiber deployment (FTTP). As this continues, BT becomes an even more dominant fiber supplier in the United Kingdom.

FTTP broadband plans generate greater average income per user, so as more users migrate to complete fiber, Openreach will benefit from premium prices. In theory, this should increase the income of this division, not decrease it.

In addition, one of the key reasons behind the new deployment is that companies depend more and more on cloud computing, ai and applications with data. The expansion of the fiber with Openreach attends to this. Then, in the coming years, there is a good possibility of greater corporate subscriptions for BT.

Implications here

The price of BT shares has still increased by 37% during the past year, even with today's move. This highlights that investors are happy with the company's management.

Even with this movement, the relationship ratio is 8.17. This is still below the fair value point of 10 that I use when trying to assess companies.

According to current finances and the valuation of the company, it is difficult for me to see how the shares will fall to 112P as Citi suggests. I have no cash without buying BT at this time, but I think this represents a fall that other investors could consider buying.