The BT share price is up 80%. Would I buy it?

In October last year, BT (LSE: BT.A) shares had pretty much hit rock bottom. The BT share price was down to the lowest in over a decade, having fallen below 100p.  Less than eight months later, it is up 82%. It is significantly up (by 62%) even from this time last […]

In October last year, BT (LSE: BT.A) shares had pretty much hit rock bottom. The BT share price was down to the lowest in over a decade, having fallen below 100p. 

Less than eight months later, it is up 82%. It is significantly up (by 62%) even from this time last year when things were not quite as bad for the telecoms company. 

So what has changed?

Why is the BT share price rising?

A look at the BT share price trend reveals two specific episodes in the past eight months driving a large and sustained upward jump.

The first happened in early November. From the start of the month to its third week, the BT share price gained 28%. 

No points for guessing why. The stock market rally started at this time. Many battered stocks saw sudden investor interest as the outlook improved. I reckon that BT was one of them. 

Additionally, the timing coincided with BT’s results for the half-year ending September 30 2020. While the company was impacted by the pandemic, it was also optimistic. This showed up both in its improved guidance for 2020-21 and a reinstatement of dividends from 2021-22. 

Before the pandemic, BT had a pretty big dividend yield. This was a key reason it was attractive to investors. 

The next jump in the BT share price came in at the end of February after it had fallen a little in early 2021. This coincided with management changes, even though overall, February was a sluggish time for the FTSE 100 index and it lost 1% of its value.

From then, up to today, it has added another 38% to its share price. 

After falling on its final results’ announcement a few days ago, the BT share price is once again on an upward trajectory. I think this is in spite of the impact of the pandemic continuing to show in its results as it’s maintaining optimism about the next year. 

Strong operational performance

Operationally too, BT has performed well. EE, the company’s mobile network, has seen a 42% increase in mobile data usage over the past year. Also, 5G has now reached 160 locations, with a ready customer base of 3.2m. Openreach, which maintains telecom networks including cables and poles, is also making progress. Its fibre connections to end-users increased by 73% in the past year

My takeaway for the BT share price

The one challenge with BT shares, however, is their long-term price performance. The BT share price may be gaining ground now, but it was falling for years before the pandemic happened and it fell even more as the Covid crisis continued. 

On the whole though, I think a bunch of reasons have now come together to sustainably improve its share price prospects. These include overall investor bullishness, the return of its dividends, expectation of better performance, and an optimistic outlook on the UK economy for 2021 and even 2022.

I would expect the BT share price to rise more. I have already bought it, but even if I hadn’t it would be a buy for me. 

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Manika Premsingh owns shares of BT GROUP PLC ORD 5P. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The post The BT share price is up 80%. Would I buy it? appeared first on The Motley Fool UK.

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