The turnaround of BT under Allison Kirkby suffered a setback yesterday at the hands of analysts at Citigroup. Shares in the FTSE 100 telecoms giant fell as much as 6.5pc before closing down 2.9 per cent, or 4.4p, to 147.15p after Citi downgraded the stock from ‘buy’ to ‘sell’. The bank’s analysts also cut the target price to 112p from 200p, warning that revenues at its Openreach arm will decline in the coming years.
They also warned of ‘over-optimistic’ cost-saving estimates. The downgrade followed a 40 per cent rise in the shares since Kirkby became chief executive in February last year. She has outlined plans to axe as many as 55,000 jobs in a bid to save cash as she moves to make BT simpler and more focused. Blow: The downgrade followed a 40% rise in the shares since Allison Kirkby (pictured) became chief executive in February last year.
Since Kirkby took the helm, Indian billionaire Sunil Bharti Mittal has become BT’s biggest shareholder after buying the near-25 per cent stake held by embattled French tycoon Patrick Drahi. She has also welcomed Mexican billionaire Carlos Slim onto the share register with a 4.3 per cent stake. The backing of Mittal and Slim has been seen as a vote of confidence in Kirkby’s plans. With talks over Ukraine, the threat of US tariffs and concerns about the UK economy giving investors plenty to deal with, the FTSE 100 inched down 0.01 per cent, or 1.28 points, to 8766.73 and the FTSE 250 slipped 0.3 per cent, or 57.12 points, to 20,881.56.
Gold rose back above $2,900 an ounce after Goldman Sachs said it expects the precious metal to hit $3,100 this year. Defence stocks rose in early trading as pressure mounts on European countries to increase military spending – not least from US President Donald Trump. BAE Systems, despite gains during the day, closed down 0.1 per cent, or 1.5p, to 1336.5p following Monday’s 9 per cent gain. But Chemring added another 3.7 per cent, or 13p, to 360.5p and Qinetiq put on 2.7 per cent, or 10.6p, to 402.6p. Rolls-Royce hit another record high, up 1.4 per cent, or 9p, to 644.4p.
Daniela Sabin Hathorn, senior market analyst at Capital.com, said: ‘One of the key takeaways from the Munich Security Conference over the weekend was the renewed focus on increasing military spending within Nato, particularly among European nations. This policy shift has significantly benefited European defence stocks, which have rallied sharply since Trump’s inauguration in mid-January.’. BAE is due to publish full-year results today. As is banking giant HSBC, which yesterday added 1.9 per cent, or 16.8p, to 898.1p.
Banking stocks in general were boosted by strong wage growth, which led some to believe that the Bank of England may cut interest rates by less than expected this year. With higher rates typically good news for lenders, Natwest gained 1.4 per cent, or 6.2p, to 445.2p and Barclays rose 1.3 per cent, or 3.8p, to 308.2p. Shares in Hollywood Bowl added 2.2 per cent, or 6p, to 279p after the bowling alley operator announced plans for a £10million buyback.
Trading platform Plus 500 was hit by profit taking after business was boosted by rising customer numbers. The FTSE 250 firm hailed a ‘strong’ performance in recent months with 118,010 new customers signing up in 2024. Revenues rose 6 per cent to £609million. The company also announced plans to distribute around £160m to shareholders. But shares fell 4.8 per cent, or 138p, to 2726p as investors took profits following a near-80 per cent rise since the start of last year.
