Broker tips: BT Group, National Grid, Acacia Mining

Exane BNP Paribas downgraded shares of BT Group from 'neutral' to 'underperform'.

At the same time, the broker cut its target price by 15% to 260p.

Exane said BT's underlying business was "teetering on the edge" and that it had identified more than a dozen factors - excluding regulations - which would drag on its operating profits and free cash flows more than markets were anticipating.

"In our view the market is mispricing BT as they transition from growth to decline," Exane said.

As far as the regulatory pressures bearing down on the company were concerned, Exane said that with Ofcom breathing down its neck BT faced the prospect of upwards pressures on its capital outlays just as consumer spending was plateauing.

The dividend also needed to be rebased by more than the company had hinted thus far.

"On our new estimates they face a £800m cash shortfall over 3 years to fund just 2% growth," analysts Sam McHugh, San Dhillon, Kohulan Paramaguru and Alexandre Roncier.

Analysts at Goldman Sachs boosted their target price for shares of National Grid after rejigging their valuation methods for the company, but said the premium they were trading at was not justified, leading them to reiterate their 'sell' recommendation.

The investment bank said the company's allowed regulated returns would diminish as the average 10-year trailing iBoxx index to which they were indexed increasingly reflected the then current interest rate environment.

That would offset the benefits for the company from investing in its asset base, which together with rising interest costs and declining profits from its other businesses would result in muted earnings per share growth over coming years.

Nonetheless, the 12-month target price was increased from 855p to 946p, albeit partially reflecting higher trading multiples for its regulated rivals, analysts Ajay Patel and Alberto Gandolfi said.

A committee of experts appointed by Tanzanian President John Magufuli stated on Wednesday that Acacia had not fully declared all of the minerals contained in the concentrate and so its export ban would remain in place.

"This is not a laughing matter," said Investec, "but it sounds like someone in the committee has missed a decimal point somewhere along the line. Alternative explanations don’t bear thinking."

But Jonathan Guy at broker Numis said that given the scale of production at the mines, he did not believe that the accusation of a tenfold understatement is credible.

"However, it provides a further indication of how problematic the relationship between the company and the government has become," he said, but expressing confidence the company and government will resolve the dispute before too long.

RBC Capital Markets analyst Tyler Broda downgraded Acacia's shares to 'underperform' from 'sector perform' as he felt the developments may even put the miner's local operating license under pressure.

Broda felt the Tanzanian accusations were "highly unusual" and "metallurgically questionable" and therefore further investigations "may - in theory - provide some relief for the company although it is unclear what next steps can be taken to clarify this matter".

But with the lack of near-term resolution to the concentrate ban and uncertainty around the future implications, the shares were likely to sag as investors further discount the potential cash flows in the near and medium term.