The BT Group (LSE:BT.A) share price has been on quite the rally in 2024. Since May, the telecommunications giant has seen its valuation jump 40% on the back of a rather promising earnings report. And based on current trends, it looks like the stock’s heading towards the £2 threshold.
While the firm still has a lot of challenges relating to its debt and pension plan, cost-cutting initiatives seem to be delivering results. £3bn of annual cost savings were successfully achieved a year ahead of schedule. And it seems management’s aiming to repeat this success once again by 2029.
Assuming this strategy’s successful, there’s a lot of potential margin expansion for shareholders. And it’s a hugely welcome sight considering the lacklustre performance BT’s delivered over the last decade. So much so that the latest analyst forecasts are looking far more positive than they were a year ago.
2025 share price forecast
Analyst forecasts always need to be taken with a healthy dose of scepticism. After all, predicting where shares are going to trade in the future requires a lot of assumptions that often don’t come true. And when it comes to consensus ratings, there’s a potential conflict of interest where an analyst doesn’t want to spoil a relationship with a company by giving a bad rating.
Having said that, analyst outlook still serves as a handy tool in gauging investor sentiment. So what are they saying about BT Group right now compared to a year ago?
| Recommendation | Strong Sell | Sell | Hold | Outperform | Buy |
| October 2023 | 0 | 3 | 5 | 7 | 4 |
| September 2024 | 0 | 3 | 1 | 11 | 5 |
It seems City analysts were rather pleased with the firm’s latest progress. While there are still a few bearish points of view, institutional investors have changed their recommendations towards the buying end of the spectrum. This has become especially apparent when looking at the share price targets.
| Outlook | Pessimistic | Average | Optimistic |
| 12-Month Price Target | 110p | 190p | 290p |
| Potential Return | -24% | +32% | +101% |
While there are a broad range of opinions, it seems on average most City analysts believe BT shares are likely to rise quite significantly over the next 12 months. So does that mean investors should be considering the stock right now?
Is it time to buy BT Group shares?
As exciting as the prospect of a double- or even triple-digit return is, it’s important to take a step back and consider what could go wrong.
I’ve already mentioned the firm’s notable pile of debt and pension deficit. But digging deeper into the analyst forecasts reveals something interesting. Both revenue and earnings growth are expected to be essentially flat over the next two years. Therefore, the market’s seemingly betting on BT Group’s cash flow generation to rebound, enabling management to start paying off its £23.4bn of debt and equivalents.
Is that likely to happen? The recent accomplishment of cost savings certainly gives credit to this assumption. We’ve already seen the debt pile shrink by roughly £1.5bn since September 2023. But there’s still a long road ahead. And this isn’t the first time management’s tried to fix the firm’s balance sheet.
Therefore, despite the comeback potential, I’m still on the fence and won’t be adding any BT shares to my portfolio today.
This post was originally published on Motley Fool
