Down 8%, is BT’s share price a serious bargain at around £2?
BTâs (LSE: BT.A) share price looks increasingly disconnected from its mediumâterm earnings growth outlook, in my view.
The market is still trading on the shortâterm optics of heavy fibre capex, regulatory noise and muted consumer demand. Yet the longâterm cashâgeneration story is strengthening.
As the fibre build peaks, capex intensity falls and Openreachâs footprint expands, BTâs earnings profile should improve materially. And I believe this will power its share price much higher.
So, how high can it go?
Earnings growth potential
The consensus forecast of analysts is that BTâs earnings (âprofitsâ) will grow by an annual average of 14% to end-2028 at minimum. A risk here is that the intense competition in the sector could squeeze its margins over time.
However, one key structural force that should support that growth outlook is that BT is moving beyond the most capital-hungry stage of its fibre investment cycle. Openreach already passes more than 21m premises, according to its Q3 2025 results released on 5 February 2026. And it is on course for 25m by yearâend. As capex intensity eases, a greater share of incremental revenue can convert into profit and cash flow.
At the same time, momentum in fullâfibre adoption is building. Openreachâs average revenue per user (ARPU) continues to rise. As fibre steadily replaces legacy copper, BT benefits from a structurally higherâmargin product mix — a direct tailwind for earnings.
And BTâs mobile arm remains a quiet strength. EE is still the UKâs top-rated network, and 5G+ standalone coverage has already reached two-thirds of the country. The longâterm goal remains 99% by 2030, and this will underpin ARPU, reduce churn and support profitability.
In its Q3 2025 results,, BT reiterated that it expects to achieve its full-year financial guidance. This includes cash flow to reach around £2bn next year, and around £3bn by the end of the decade.
How high could they go?
To pinpoint BTâs value, I ran a discounted cashâflow (DCF) analysis. This identifies where any stock should be trading, based on projected cash flow forecasts for the underlying business. These, in turn, reflect the consensus forecast of analysts for the companyâs earnings growth in the years ahead.
These cash flows are then discounted back to today, using a rate that reflects the risk of owning the shares. Other analystsâ DCF models may use different inputs, of course, which could produce lower valuations.
However, my modelling — including a discount rate of 9.1% — suggests BT shares are 49% undervalued at their current £2.06 price. Therefore, its fair value could secretly be close to £4.04 a share — nearly double where the stock trades today.
And because asset prices can trade towards their fair value over time, it suggests a potentially superb buying opportunity to consider today if those DCF assumptions hold.
My investment view
I believe BTâs valuation still looks far too low relative to its improving mediumâ and long-term earnings growth profile.
When the market finally begins to properly price in that trajectory, I think the share price will soar.
Consequently, I will be buying more of the shares very soon and think them worthy of other investorsâ attention.
The post Down 8%, is BTâs share price a serious bargain at around £2? appeared first on The Motley Fool UK.
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Simon Watkins has positions in Bt Group Plc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
