Up 58% in a year, the BT share price could be the FTSE 100 target to beat in 2025

With the BT Group (LSE: BT.A) share price up 58% in the area of the final 12 months, the lengthy slide since late 2015 may actually have been reversed.

And thru all these years BT has maintained its concentrate on dividends. Covid introduced a lower, however the annual funds are again on monitor.

With the shares on a rebound, we’re a forecast dividend yield of 4.9% now. The 2024 dividend was raised 3.9% after normalised free money move got here in forward of steerage.

Shiny outlook

In January’s Q3 buying and selling replace, CEO Allison Kirkby instructed us: “Advantages from our value transformation greater than offset decrease income exterior the UK and weak handset gross sales.” She added: “We proceed to make progress in direction of turning into absolutely centered on the UK, with the sale of our knowledge centre enterprise in Eire.”

“BT’s continued supply means we stay on monitor to ship our monetary outlook for this yr and our money move inflection to c.£2bn in 2027 and c.£3bn by the finish of the decade,” concluded the boss. That feels like loads of money to maintain the dividend rising.

Full-year outcomes for 2024-25 are due on 22 Could. And in the event that they present extra of the identical progress, this may be the FTSE 100 funding to beat this yr. Earnings progress is predicted for the subsequent few years. And I see a good probability of the share price success persevering with into subsequent yr and past.

The analyst consensus echoes that optimism, with a mean BT share price target of 195p. That’s a 17% achieve on the price as I write on 25 April. It could elevate the forecast price-to-earnings (P/E) ratio to 14. With additional progress in earnings and dividends on the playing cards for the subsequent few years, which may appears honest worth.

An excessive amount of too quickly?

But the downside I see is that the inventory valuation does appear to take in all the optimism, however possibly not the danger. Sentiment has reversed for the higher since Allison Kirkby took cost in February 2024, because it typically does with a new boss. And I do assume she brings a clearer focus to BT that the firm had been missing.

However she’s solely been in the job for a very quick time. And I’m reminded of how lengthy it took Amanda Blanc to really flip issues spherical at Aviva.

Essentially the most bearish of analysts count on a price fall of greater than 30%, to 112p. I feel they may have their eyes on BT’s rising web debt pile. It was up once more at H1 time, to £20.3bn. And the firm continues to be paying down its pension fund deficit, with one other £0.8bn in the interval.

I count on BT will retain excessive debt for a very very long time. However I simply need to see margins enhancing and a few effort being made to scale back it. Till then, I’ll maintain away. However seeing how debt hasn’t impacted the dividend outlook, I can perceive why some traders may be pleased to overlook it and take into account shopping for.