Broker snap: Nomura ups target for BT

22nd Mar 2013 16:04

Telecoms giant BT Group was a strong riser on Friday after Nomura raised its target price for the stock from 290p to 360p and kept its 'buy' rating. Regulatory rhetoric is turning positive for all of Europe's network owners, but the benefits should prove more tangible for fixed networks and highly significant for BT, in our view," said analyst James Britton. "An EC recommendation for indexed prices on legacy broadband and an absence of charge controls on fibre is likely to compel the market to reassess BT's Openreach valuation."Britton says that benchmarking against the regulation of the UK's regulated entities leaves him comfortable with Openreach at 7.3 times forward earnings before interest, tax, depreciation and amortisation (EBITDA), up from 5.3 times prevoiusly but well under the UK water-sector average of 10-11 and National Grid at 9.3.At 270p (Thursday's closing price was 272.7p), the "BT rump" is trading at 3.3 times EBITDA, "which highlights BT's ongoing value appeal", Britton said.He said that positive catalysts (such as BT's imminent restructuring plan, confirmation of the EC's broadband plan and a solid launch of BT Sport) will outweigh the negatives (union wage negotiations and the widening of the pension deficit).The share price was up 3.94% at 276.8p by 16:20.BC