In major news on UK stocks, BT Group PLC (GB:BT.A) shares rallied nearly 11% as of writing after the company issued an upbeat outlook for its cash flow despite posting a slump in its FY24 profits. The company aims to achieve a normalized free cash flow (NFCF) of £1.5 billion in FY25, compared to £1.28 billion in FY24. BT Group also detailed its strategy to raise its NFCF to £2.0 billion in FY27 and ultimately double it to £3 billion by the end of 2030.
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BT Group is the biggest telecommunications company in the UK, with operations in 180 countries worldwide.
Investors Cheer BT Group’s Positive Outlook
Aside from higher cash flows, BT Group expects its adjusted revenue to grow between 0 and 1% for FY25. Moreover, adjusted EBITDA is anticipated to reach £8.2 billion, up from £8.1 billion in FY24.
Additionally, the company emphasized its plans to streamline its global business during the next phase of BT’s transformation. This strategic move will result in a simpler organizational structure with more focus on the UK market, positioning the company to deliver significant growth for all stakeholders.
This came as a relief for investors after the profit before tax declined by 31% year-over-year to £1.2 billion in FY24. This was mainly due to a substantial non-cash impairment of goodwill, coupled with higher depreciation, amortisation, and pension interest expense.
Year-to-date, BT stock has remained almost flat at 0.80%
BT Group’s FY24 Performance
In the full-year Fiscal 2024, BT Group’s adjusted revenue grew by 2% on a pro forma basis to £20.8 billion. The company’s revenue was primarily driven by price hikes, higher service revenue, and sales of fibre-enabled products in the Openreach unit. The company’s Openreach unit witnessed a solid demand for fibre, resulting in a net addition of 397,000 connections in Q4, bringing the total premises connected to over 4.8 million.
Moving on to shareholders’ returns, BT Group announced a final dividend of 5.69p per share, leading to a full-year dividend of 8p per share. It marked an increase of 3.9% over the previous year’s payment.
Is BT a Good Stock to Buy?
According to TipRanks consensus, BT.A stock has received a Moderate Buy rating based on three Buys, one Hold, and one Sell recommendation. The BT Group share price target is set at 171p, reflecting a 51% increase from the current trading level.
