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BT Share Price is at a 36.5% Discount, This Calculation Shows


The BT share price is under pressure as worries of the new coronavirus wave in the UK. On Monday, the stock declined by more than 7% and crashed to the lowest level in more than a month. Today, it is trading at 180p, which is about 13% below the highest level this year.

BT news. BT Group is a leading telecommunication company in the UK. The company has been in the spotlight recently. For one, its stock price has jumped by more than 87% from its lowest level in November, becoming one of the best-performing companies in the FTSE 100.

BT also made headlines when it reached an agreement with the biggest union recently. The deal will avert the company’s biggest industrial action that would have led to significant disruption. 

Additionally, with interest for UK companies rising, there is chatter that BT could come in focus. As we wrote last year, a survey showed that BT was one of the companies that foreign buyers were interested in. 

Still, there are concerns about whether the government would accept such a bid considering that the company has billions of dollars in pension obligations. The rumours continued two months ago when Patrick Drahi of Altice became the biggest shareholder in the company. 

BT’s business is expected to grow rapidly as demand for its data solutions rise. In fact, the company is in a hiring drive as it seeks to connect more businesses and homes. 

So, is the BT stock a buy? Analysts view BT as a company that is relatively undervalued. First, a DCF calculator by Simply Wall Street shows that the company is trading at a 36.5% discount. The company also has a trailing PE ratio of about 12, which is significantly cheaper compared to its Western counterparts. BT will provide an update to investors on July 29.

BT share price analysis

A few weeks ago, I pointed to the fact that the BT share price has formed what looks like a classic Elliot Wave pattern. I noted that the current decline is part of the fourth wave. As such, I argued that the shares would continue falling as bears target the key support at around 180p.

This prediction was accurate since the stock has declined to this level. Therefore, I suspect that the shares will start rebounding as investors move to the fifth wave of the wave. Therefore, in the near term, the target for the stock is the YTD high at 208p. On the flip side, a drop below 175p will invalidate this view.

BT stock chart

BT share price

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