J.P. Morgan upbeat on BT Group following retail price hike

Analysts at JP Morgan sounded an "optimistic" note on BT Group's recent decision to raise its retail prices by 9%, telling clients that "success" held the potential to support meaningful consensus upgrades.

"Whilst investors seem skeptical of both the appropriateness and sustainability of this move, our analysis offers a more optimistic read, and shows that

success has the potential to support meaningful consensus upgrades," the analysts said in a research report sent to clients.

Worth noting, that price hike came in the wake of 15 years of deflation in the industry.

Furthermore, they estimated that roughly 40% of BT customers were still mid-contract, meaning that they could not churn in order to avoid the increase in prices.

JP Morgan was also expecting a wave of similar announcements out of Vodafone, O2, and TalkTalk in February, while Virgin Media had already said that it would raise prices in March and Sky was expected to do the same in April.

"We estimate average UK household Telco spend may rise £70 per annum – arguably modest when compared to broader inflationary pressures elsewhere," they added.

In their 2022 outlook report they had already reiterated their "positive" stance for European telecoms, while adding BT Group to the investment bank's Analyst Focus List and naming it as their 'top pick'.

This time around they also highlighted the "rich" list of catalysts for BT that they saw ahead, which they expected would confirm that the company was on the cusp of a structural return to growth.

They estimated that would boost the company's equity free cash flow from £1bn at present to £3.5bn long-term.

JP Morgan was at 'overweight' on the stock with a target price of 255.0p.