£10,000 invested in BT shares 1 month ago is now worth…

BT (LSE:BT.A) shares have gained 7.5% over the past month, compounding a strong stock performance over the past 12 months. The share price is up 51% over the year. As such, £10,000 invested a month ago is now worth £10,750. This is a decent return for very little work and over a very short period of time.

What’s driven BT higher over 12 months?

Over the past 12 months, BT Group’s stock has surged, driven by a combination of strategic moves and investor confidence. Under CEO Allison Kirkby, BT’s focus on cost-cutting and operational improvements has enhanced its appeal to investors.

Chief among these is the promise to save £3bn in annual costs by the end of 2029. The FTSE 100 company has already achieved some of these savings and is on track to meet its targets. Investors were also relieved to hear that peak capital expense had been passed for the rollout of its fibre to the premise (FTTP).

In addition, a key factor in the stock’s rise was the sale of a 24.5% stake to India’s Bharti Global and the influential involvement of major shareholders like Carlos Slim’s América Móvil. These moves provided strong backing for BT’s future strategy.

Moreover, the consensus among analysts has typically been positive. At one point last year, analysts pointed to an 81% potential appreciation. Some of those share price gains were delivered.

Analysts are still backing BT

BT Group’s stock continues to be the beneficiary of positive analyst sentiment, with a consensus rating of Outperform from 18 analysts. The current share price target of £1.90 is 18.6% higher than the current share price. However, it’s worth noting that analyst’s targets vary, with the highest being £2.99 and the lowest £1.10. It’s not often that you see such a divergence of price targets on a blue-chip stock.

Nonetheless, despite the stock’s positive trajectory over the past month, there have been two notable downgrades. Most recently Barclays downgraded BT to underperform and lowered its price target. This was due to increased competition in the UK broadband market and expectations of market share losses.

The FTTP conundrum

Understanding FTTP is key to understanding BT stock. BT is heavily investing in FTTP technology as part of its strategy to upgrade the UK’s broadband infrastructure. FTTP provides ultrafast broadband by delivering fibre optic connections directly to homes. Given its increased reliability, will allow BT to reduce its maintenance team considerably as old-fashioned copper connections are fazed out. However, it’s a massive cost undertaking, with total debt now £10bn higher than the company’s market cap. And while peak capex has been passed, the business still wants to reach 25m premises by 2026 in an effort to stay competitive in the broadband market.

In short, it’s taking on a lot of debt for a smoother future. However, there’s a risk it might not pay off. Personally, I was bullish at £1, but at the current share price, I’m just not sure.

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James Fox has no position in any of the shares mentioned. 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.