The past five years have been a pretty rough time for shareholders in former UK telecoms monopoly BT Group (LSE: BT.A). The BT share price underwent a multi-year decline from early 2017 to late 2020, losing over 75% of its value. Blimey. But the FTSE 100 stock has rebounded hard since November 2020, almost doubling in 15 months. Also, BT shares have had a good start to this year. What’s more, I suspect they will have further to go in 2022-23.
The BT share price’s wild ride
Just over five years ago, the BT share price closed at 391.75p on 13 January 2017. Alas, it has never got anywhere near this price since. The stock ended 2017 at 271.7p and closed 2018 at 238.1p. In 2019, BT shares went lower still, finishing the year at 192.44p — almost £2 below their January 2017 peak.
But then along came Covid-19 to crash global stock markets. At their low during the coronavirus crisis, BT shares slumped to a low of 94.68p on 3 August 2020. However, the BT share price bounced back, ending 2020 at 132.25p — down almost a third (-31.3%) on 2019’s close. Last year, the stock hits a 2021 high of 206.7p on 23 June 2021. The shares then bounced up and down before closing out the year at 169.55p. This gain of 28.2% was almost double the FTSE 100‘s 2021 rise of 14.3% (all returns exclude dividends).
BT stock rises in 2022
The BT share price has enjoyed strong momentum over the past four months. On 25 October 2021, it closed at 135.2p. On Friday, it closed at 192.45p — soaring by 42.3% between these two dates — and valuing the group at £19.1bn. Furthermore, the stock has had a strong start to 2022, leaping by 13.5% since 31 December. On Thursday, BT released its third-quarter results ending 31 December 2021. Initially, the BT share price dived by more than 6% that morning, but rebounded to end last week down just 3.1%.
Why I think BT could go higher
In BT’s latest results, revenues, adjusted earnings and profits all declined by up to 3% year on year. However, I’m optimistic about three developments at the firm. First, it cancelled its cash dividend in May 2020, before resuming it at a lower level in November 2021. The projected dividend yield is around 2.4% a year, but could exceed 3% if it decides to boost its final payment. Going forward, I expect higher cash payouts to support the BT share price.
Second, Altice — a Luxembourg-based French telecoms firm controlled by French-Moroccan billionaire Patrick Drahi — has built an 18% stake in BT. This is second in size only to Deutsche Telekom’s 12% stake. Market rules prevent Drahi and Altice making a bid for BT before June, but the second half of 2022 could see some corporate action. Third, BT Sport is negotiating a new sports joint venture with Eurosport UK, a division of US media group Discovery. This came after the firm decided against selling BT Sport and its 4m customers to rival DAZN.
Finally, the shares trade on 18.7 times earnings and an earnings yield of 5.4%. These fundamentals strike me as neither cheap nor overly expensive. Hence, with the BT share price already 13.5% ahead in 2022, I could see it going further during the year. However, I suspect this could be a rocky road, as in 2017-20. And if BT’s next set of results disappoint, then the stock could head south once more!
