Broker snap: UBS downgrades BT to neutral

18th Jan 2012 10:32

UBS has downgraded telecoms giant BT from buy to neutral on the back of concerns surrounding rising competition and pensions.The stock was a strong performer in 2011, outperforming the UK market by 16%, and while the broker expects third quarter results (due on February 3rd) to show ongoing solid operating performance, uncertainties are arising from the launch of Sky fibre broadband and YouView.UBS adds that the actuarial pension review has begun, just as the 15-year UK Gilt yield dips below 3%. "It's not a direct impact, but it could put pressure on the deficit. We show rough calculations, but raise our pre-tax deficit to £6.2bn and annual deficiency payments to £650m over 12 years."The broker expects third quarter revenues to fall 5.6% to £4,754m, down 2.1% on an underlying basis.The target price is cut from 230p to 210p.Shares were down 0.24% at 205.3p in mid-morning trade.BC