On Tuesday, Barclays (LON:BARC) downgraded shares of BT Group Plc. (LON:BT/A:LN) (NYSE: BT), changing its rating from Overweight to Equalweight and adjusting the price target to £1.90 from the previous £2.15. The firm cited increasing competitive pressures and revenue headwinds as the rationale behind the downgrade, specifically pointing to challenges from alternative network providers, commonly referred to as AltNets.
The Barclays analyst expressed concerns that BT Group would continue to experience negative broadband line loss through its Openreach division, projecting this trend to persist into fiscal year 2026. The analyst's outlook suggests that unlike most European incumbents, BT Group may not see revenue growth in FY26e. This perspective contrasts with the general market trend where European telecom companies are expected to improve their revenues.
Despite the downgrade, Barclays acknowledged the potential for mergers and acquisitions to contribute to market repair. The analyst mentioned the possibility of consolidation among alternative network providers and hinted at the scope for corporate actions involving Vodafone (NASDAQ:VOD) and 3UK. However, the optimism about potential upside from these developments was tempered by the acknowledgment of significant forecast risks, particularly concerning revenue projections.
The revised price target of £1.90, while lower than the previous target, still implies that there may be some upside potential for BT Group's stock. Nevertheless, Barclays' outlook remains cautious due to the anticipated sustained competitive pressure from AltNets and the expected continuation of broadband line losses, which are likely to challenge BT Group's financial performance in the upcoming year.
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