BT share price analysis ahead of H1 earnings

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BT (LON: BT.A) share price has been in a strong bearish trend in the past few months amid rising concerns about the ongoing strikes. The stock was trading at 126.60p, which was slightly above the year-to-date low of 117.40p. It has crashed by more than 34% from its highest level this year.

Ongoing challenges

BT Group is one of the biggest telecommunication companies in the UK. It operates through several brands, including BT, EE, Plusnet, and Openreach. These businesses are in four consumer-facing lines of business, including Consumer, Enterprise, Global, and OpenReach.

Its consumer business serves over 14 million households while its Enterprise business serves 1.2 million customers in the UK and Ireland. OpenReach is a fully-owned subsidiary of the company.

BT Group has had a difficult year in 2021 as expectations of a recession in the UK have risen. The key catalyst for such a recession will be the soaring consumer and producer inflation. Data published last week showed that the country’s inflation rose by double digits in September.

Inflation has three main impacts on BT Group. First, it makes it more expensive for the company to buy products and operate its business. Second, high inflation has led to several strikes by workers, who want to salary increments. They downed their tools early this week.

Third, unlike other companies, BT operates in a highly regulated and competitive industry. As such, it is often difficult for the company to increase prices even as inflation rises. Therefore, in all, BT is expected to experience slow growth and weak profitability.

The next catalyst for the BT share price will be the upcoming half-year earnings scheduled for November 3rd. Analysts expect that the company’s revenue remained flat or retreated in the first half of FY’23.

BT share price forecast

The daily chart shows that the BT stock price has been in a strong bearish trend in the past few months. As it dropped, it managed to move below the important support level at 148.70p, which was the lowest level on March 4. 

The stock has moved below all moving averages and is forming a bearish pennant pattern that is shown in green. At the same time, the Relative Strength Index (RSI) has formed a bullish divergence pattern. The stock will likely have a bearish breakout as sellers target the next psychological level at 110p.

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