BT Group PLC (LSE:BT.A) was one of the biggest fallers on the FTSE 100 on Wednesday after its shares were downgraded to 'sell' by Deutsche Bank.
Analyst Robert Grindle noted that BT shares have risen 19% in the year-to-date, outperforming the sector but warned that this rally is not supported by fundamentals.
BT has seemed to prove "even more defensive than peers at a time of trade war confusion, a weak economy and GBP strength", he noted, though Bharti Televentures buying Altice's stake also provided a big hand.
But Grindle highlighted ongoing challenges, including declining Openreach line volumes and continued competitive pressure from smaller 'alt-net' providers.
For investors, it seems Bharti's buying has "outweighed" weaker performance metrics and broker downgrades, but the analyst sees limited scope for market recovery as competition is "more not less likely", with UK bond yields and the end of trade buying as "material offsets".
With his target price of 140p unchanged, but the shares recently topping 170p, Deutsche's previous 'hold' rating was ditched.