Here’s the growth forecasts for BT shares through to 2027!

BT shares fell again last week after a gloomy third-quarter trading update. Are the FTSE firm’s growth forecasts looking increasingly fragile?

| More on:
A young woman sitting on a couch looking at a book in a quiet library space.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Hopes of recovery have driven BT Group (LSE:BT.A) shares sharply higher in the past year. Up 28% on a 12-month basis, the telecoms giant’s risen, in part on expectations that interest rate cuts will prompt a turnaround.

However, the release of latest financials on Thursday (30 January) has reminded investors of the severe challenges it continues to face. Following the trading statement, it was the FTSE 100‘s third-worst-performing share on the day.

Is this just a blip in BT’s recent share price recovery though? And should investors consider buying BT shares for their portfolios?

Should you invest £1,000 in BT right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if BT made the list?

See the 6 stocks

Recovery expected

A series of setbacks have kept BT under pressure for around a decade. These range from rising competition across its product segments, tough economic conditions, regulatory issues, and the high costs of its fibre rollout programme.

As a result, it’s reported whopping earnings drops in four of the past five years. But while City brokers predict another bottom-line reversal this fiscal year, they expect BT to begin a tentative recovery from the new financial year, beginning in April.

Year To MarchPredicted EPSAnnual growthP/E ratio
202517.83p-4%8.1 times
202618.06p+1%8 times
202718.82p+4%7.7 times

How realistic are these forecasts? Many people — myself included — aren’t exactly convinced following third-quarter trading numbers last week.

Another weak update

BT’s fresh update showed adjusted revenues down another 3% between October and December, to £5.2bn. This was caused by continued weakness at its Consumer and Business units, where corresponding revenues both dropped 2%.

Combined, these units make up 86% of group sales. At Consumer, poor smartphone demand damaged the top line, while revenues elsewhere dipped due to weak trading overseas.

In better news, Openreach recorded a 1% revenues improvement over the quarter. Turnover rose as BT’s infrastructure arm added a record 472,000 customers to its full-fibre network in the December quarter.

On another positive note, adjusted EBITDA rose 4%, to £2.1bn, in part due to ongoing cost-reduction measures. BT slashed its total workforce by 3% between April and December, to 117,000. It also managed to trim energy costs by the same percentage.

Tough times ahead?

Created with Highcharts 11.4.3Bt Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

On balance though, BT gave the market little to celebrate with last week’s update. Further cost-cutting and moves to become a more UK-centric business could help earnings. But the outlook still remains pretty bleak, in my opinion.

The major issues that have dogged it since the mid-2010s remain very much in play. And it continues to creak under massive debt, casting a shadow over future growth and dividends.

Net debt rose to £20.3bn as of September, due largely to its expensive fibre rollout programme and extra contributions to its pension scheme.

While it’s up more than a quarter since early 2024, at 143.9p, BT’s share price is still a long way from the 417.9p it was trading at 10 years ago. Given that the firm continues to struggle with the same challenges, I think it’s in danger of plunging again before too long.

Despite its low price-to-earnings (P/E) ratio of around 8 times, this is a FTSE 100 share I’m not even touching with a bargepole.

Should you invest £1,000 in BT right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if BT made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

An investor who put £10,000 into BAE Systems shares at the start of the year would already have…

BAE Systems shares have made a stellar start to 2025, as the FTSE 100 weapons maker benefits from today's troubled…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

If a 30-year-old invested £250 a month in UK stocks, here’s what they might have by 65

Harvey Jones says the earlier people start investing, the better. And a 30-year-old can take advantage of the biggest investment…

Read more »

Investing Articles

Will the Ocado share price hit £1 or £10 over the next 5 years?

Noting a big thumbs down to the retailer’s 2024 results, our writer considers how the Ocado share price might perform…

Read more »

Growth Shares

2 reasons why the Rolls-Royce share price could hit £10 by year-end

Jon Smith explains why the Rolls-Royce share price has popped higher again and details why the move could keep going…

Read more »

Investing Articles

How 49 words lifted the Games Workshop share price by 8%!

The Games Workshop share price responded positively to today's trading update, which was notably short on detail.

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Dividend Shares

2 dividend shares with yields double the current base interest rate

Jon Smith talks through a couple of dividend shares with yields in excess of 9%, with one in particular enjoying…

Read more »

Calendar showing the date of 5th April on desk in a house
Investing Articles

Can AI build the perfect Stocks and Shares ISA? This is what ChatGPT says!

Mark Hartley enlisted the help of artificial intelligence with an aim to develop the perfect Stocks and Shares ISA. Here…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

A FTSE 100 share and an ETF for cautious investors to consider in March!

A lump sum investment in this FTSE 100 share and this gold fund could pay dividends in what's shaping up…

Read more »