Among the famous UK stocks, telecom giant BT Group PLC (GB:BT.A) has recently gained backing from Goldman Sachs, predicting an upside potential of over 100%. On May 22, analyst Andrew Lee from Goldman Sachs forecast that the BT share price could potentially more than double to 290p, while confirming a Buy rating on the stock. Lee maintains a highly bullish outlook on the growth prospects of the company’s subsidiary Openreach and its cost-saving initiatives, which are expected to drive increased revenues and earnings.
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BT Group is a telecommunications company that provides fixed-line, mobile, and broadband services in the UK and other countries across the world.
Goldman Sachs’ Bullish View on BT Group
Goldman Sachs is confident about BT Group’s guidance, which targets to deliver on both revenue and EBITDA, with Openreach as the main focal point. Openreach operates as BT’s wholesale digital infrastructure business for fixed broadband, contributing to nearly half of the group’s underlying earnings (EBITDA).
Additionally, Goldman remains bullish on the company’s cost management. Earlier this month, along with its annual results for FY24, the company stated that it had surpassed the peak of its capital expenditure on its fibre broadband rollout and achieved £3 billion in cost savings. BT Group now aims to generate an additional £3 billion in cost savings by the end of 2029.
Lee emphasized that the targeted £3 billion in savings will significantly enhance the company’s free cash flow compared to the previous savings. The company reiterates its confidence in achieving these savings, highlighting that 80% of the targeted £3 billion is linked to 12 well-defined programs already in progress, providing strong visibility into their implementation.
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 178p, reflecting an increase of 36% on the current trading level.
