Will It Fall Below 100?

The BT share price has come under pressure for the past few months, forcing its chief executive, Philip Jansen, to order more cost cuts and efficiencies. There have also been reports and hints that part of the cost-cutting measures will see the company laying off some of its workers amidst a payment dispute with the Communication Workers Union.

Despite Jansen talking bullishly about the plans and projects the company is currently undertaking, including its Openreach subsidiary, which is building a fast-fibre broadband network across the country, the current inflation rate is likely to see the company’s capital expenditure shooting up. Recent estimates indicate the company is likely to see a bump of £200 in its energy costs. Its expenditure will also jump from £4.8 billion to £5 billion for the financial year. Therefore, the company’s cash flow is expected to be lower than previously advertised.

BT Share Price Forecast

Last week, the BT share price dropped by 10 per cent. Extending a long-term bearish trend that started in July, which has seen its value drop by more than 40 per cent. As stated above, many fundamental factors have impacted the company’s growth for the past few months, among them the current inflation rate and its fight with the Communication Workers Union demanding better pay. 

Despite the company’s bullish projects, such as its fast-fibre broadband network, which has already passed 9m premises and has outperformed its take-up rate of 27 per cent, the short-term problems are likely to continue affecting the BT share price recovery in the markets. Therefore, for the next few trading sessions, there is a high likelihood that we might BT’s share price continue to fall. A possible trade below the 100p price level is possible at this point. However, a return above the 134 supply level, as shown in the chart below, will invalidate my bearish analysis.

BT Daily Chart