The BT (LSE:BT.A) share price has fallen 10% over the past six months. At 192p, it’s a far cry from the 240p that we saw back in May. But given the outlook for the stock, I believe it’s more a question of when, rather than if, the stock will get back to 52-week highs. Here’s my current take.

Reasons for optimism

If the BT share price got back to 240p, it would represent a 25% rally from current levels. In my view, the biggest catalyst to get there is the company’s improving cash flow outlook.

BT has spent billions upgrading Britain’s broadband infrastructure through Openreach. This has weighed heavily on free cash flow, but the investment cycle’s approaching an important turning point.

Management expects capital expenditure to fall from £5.1bn in the last financial year to around £4.3bn this year. Consequently, normalised free cash flow’s forecast to rise from £1.5bn to around £2bn, potentially reaching £3bn by the end of the decade.

I think delivering on these targets could significantly improve investor sentiment. Even though we’re talking about 2030 here, the share price could reach 240p within the next year if forecasts show it’s on track to hit these targets.

Full-on full-fibre

Another catalyst is growing demand for full-fibre broadband. Openreach now reaches more than 23m premises, with the company targeting 25m by December. Higher customer take-up should support revenues and profitability as the network matures.

There’s also BT’s ongoing cost-cutting programme. Management has increased its transformation savings target to £3.7bn, which should help protect margins despite competitive pressures.

More recently, BT’s £400m acquisition of TalkTalk presents another opportunity. Integrating the struggling broadband provider could generate meaningful cost savings and strengthen BT’s position in the UK market.

Some concerns

Even though I’m upbeat about BT, the recovery isn’t guaranteed. One worry I have is that the company still carries around £20bn of net debt, making higher borrowing costs a concern. Competition from alternative broadband providers could also continue putting pressure on customer numbers and pricing.

To this end, I noticed that Openreach lost 825,000 broadband lines during the last financial year, highlighting the challenges facing the business.

Nevertheless, when we package everything together, I’m optimistic about BT’s longer-term prospects. I think it will hit and exceed 240p over the coming year, especially if capex falls, as trading updates suggest. Even if the move back takes longer than expected, the 3.36% dividend yield is higher than the index average. So an investor could pick up income while being patient on any potential share price appreciation.

Overall, I’m considering adding the stock to my portfolio in looking for a move back to 240p. For investors who agree with me, considering the stock could be a good idea.

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Jon Smith does not hold any positions in the companies mentioned.