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He B.T. (LSE:BT) share price has had a great week. It has jumped an impressive 8.67% at a time when the FTSE 100 As a whole, it only rose 0.71%.
It's not hard to see why. This is due to the news that the Indian telecom conglomerate Global Recruitmentco-founded by Sunil Bharti Mittal in 1976, has just completed the acquisition of a 24.5% stake in BT from the French altice.
Markets knew a deal had been reached in August, but were happy to see it completed. As CEO Allison Kirkby said over the summer, this “It is a great vote of confidence in the future of BT Group and our strategy”.
Can these FTSE 100 stocks continue to recover?
It certainly is. I've spent the last year wondering if I should invest a few thousand pounds in BT shares. Bharti Global has shed $4 billion. That makes him the largest shareholder in Britain's largest mobile phone and broadband company. Should I do the same, but in my much more humble way?
BT has lost confidence since its shares hit a high of just under 500p nine years ago. They were dormant at around 100p in April, having lost 80% of their peak-to-trough value. However, they have bottomed out and are up 25.99% in the last 12 months.
If I had dived in and bought BT shares earlier this year, I would have done quite well. Plus, you would have enjoyed a trailing yield of 5.33% to begin with.
It's a shame, but not the end of the world. BT still appears to be good value for money with a P/E ratio of just 8.1. That's comfortably below the FTSE 100 average of 14.2 times.
It is also attractive when measured by a price-to-sales ratio of just 0.7. That suggests you would only pay 70p for every £1 of income. So what do the experts say?
The market consensus around BT remains bullish. Of the 12 institutional analysts following the business, six rate it a “strong buy.” Three others call it a “buy,” meaning two-thirds are in favor. Two say “hold” and two have rated BT a “strong sell”.
Six analysts consider BT a “strong buy”
This diverse sentiment, from “strong buy” to “strong sell”, is also reflected in the 12-month stock price forecast.
The 12 brokers have set an average target of 199.15 pence per share. If correct, the shares would rise 32.8% from 150p today, as my chart shows.
| Opinion | 12-month share price forecast | Potential profit/loss |
| Optimistic | 290p | +93.3% |
| Average | 199.15p | +32.8% |
| Pessimistic | 110p | -26.7% |
However, BT still has problems. On 7 September it reported a 3% drop in interim revenue to £10.1bn and a 10% drop in pre-tax profits to £967m, largely due to lower trading outside the UK.
Still, the board increased the interim dividend from 2.31p to 2.40p as free cash flows rose 57% to £700m. But I'm thinking this. If I can't commit to making a small commitment to BT despite the attentions of big names like the Mittel family and Mexican tycoon Carlos Slim, who also has a stake, it means I don't really believe in BT's investment case. I was tempted, but not strongly enough. So I will look for a company that I do believe in.
