Broker snap: Credit Suisse pleased with cost-cutting at BT



LONDON (ShareCast) - Credit Suisse (NYSEArca: CSMA - news) has reiterated its 'outperform' rating and 300p target price for telecoms titan BT Group (LSE: BT-A.L - news) saying that the firm's second-quarter results last week support its positive view on cost-cutting and of rising demand for high-speed broadband.

"In the Q2 results BT again demonstrated its ability to cut costs in its core UK wireline business and compensate for declining EBITDA [earnings before interest, tax, depreciation and amortisation] trends in Global Services [known as GS]," said research analyst Paul Sidney.

He said that with BT announcing a "substantial three-year cost-cutting initiative" within GS, EBITDA trends can improve within GS from March 2014 onwards.

"We cut medium-term group revenue and EBITDA by 1-2% in this report mainly due to GS although we believe we have seen the worst pace of revenue downgrades in GS now," Sidney said.

BT is currently trading at nine times full-year earnings, versus the sector average multiple of 10.5.

Shares were up 0.48% at 230.9p in mid-morning trade.