Berenberg stays at 'hold' on BT Group heading into full-year results

On their estimates, growth was set to accelerate in Q1 2023/24 thanks to price increases.

Nonetheless, given an average 5% drop in the share price over the past six full-year results days, they viewed the upcoming update from the company as a risk event.

That was despite the fact that the company had typically been good at delivering on its guidance, although its forward-looking outlook had disappointed.

Hence, guidance for 2023/24 was top of their list of things to watch at the next results presentation.

Next on their list was whether the so-called "EBITDA underpin" had already been used.

They were referring to the possible reversal of the company's bonus provision in order to hit its forecast for earnings before interest, taxes, depreciation and amortisation in 2022/23.

Another key issue was whether or not average growth in revenues per user at its consumer fixed business had continued to slow.

Lastly, they were interested in the rate of decline in BT Openreach's broadband base.

As regarded the company's valuation, they surmised that it was cheap on earnings but expensive in terms of its cash flow.

The shares were trading on 17 times its enterprise value-to-operating free cash flow and on normalised equity free cash flow of 5% for 2023/24, against peers on 14 seven times, respectively.

In terms of its price-to-earnings ratio on the other hand, the shares looked cheaper, trading at a multiple of 10 against the sector on 15.