On Tuesday, Citi reiterated its Buy rating on BT Group Plc (LON:BT/A:LN) (NYSE: BT) stock with a price target of GBP2.00. The firm forecasts a decline in the company's EBITDA for the first quarter of the 2025 fiscal year, citing lower price increases and pressure on Consumer Average Revenue Per User (ARPU) as factors. These trends, along with higher salary inflation, are expected to lead to an approximate 4% year-over-year drop in EBITDA.
The report anticipates a recovery in EBITDA trends during the second half of the year as the company faces easier comparisons and begins to benefit from its cost efficiency program.
Despite the expected near-term pressures on top-line revenue and EBITDA, Citi remains positive on the long-term prospects of BT Group, especially the value of its Openreach division.
Furthermore, the analysis suggests a modest quarter-over-quarter deterioration in Openreach's line losses due to limited market growth and heightened competition from alternative networks seeking to expand their penetration. This outlook aligns with the management's own projections discussed during the fourth quarter results call.
Citi's position reflects confidence in BT Group's long-term attractiveness, despite the short-term challenges that the company may face in the upcoming quarter. The firm's assessment underscores the potential for BT Group's strategic initiatives to offset the immediate pressures on revenue and earnings before interest, taxes, depreciation, and amortization.
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