Deutsche Bank upgraded its rating for BT Group PLC (LSE:BT.A) to 'hold' from 'sell' after the telecoms group's shares continued to fall.
The broker's unchanged 140p target price has now been achieved despite French stakebuilding and the company raising prices.
The analysts noted BT shares are more than 20% lower than when they downgraded to 'sell' in June last year despite price rises to consumers of around 10% in April 22, a tax break on investment - BT has barely paid any tax in FY22 and FY23 - and stakebuilding by French billionaire Patrick Drahi, who now owns 18%.
"Our main concern has been the arrival of alt-nets which we expect will double their rate of fibre roll-out this year and start to see meaningful customer gain at the expense of BT retail and wholesale businesses," Deutsche Bank analysts said in a note to clients.
"The debate around the ultimate impact of this threat has been fierce but with a 5-7m FTTH build programme announced by Liberty Global and Telefonica now funded, the potential loss of TalkTalk wholesale customers (Bloomberg reports that there are a number of buyers) and Openreach broadband net adds turning negative at Q1 23, the risks are now much better understood/ discounted."
They added: "We view the shares as more expensive than telco peers (especially relative to risk) but there is now a less skewed balance of potential newsflow and indeed BT could benefit from a stay on planned tax rises, ongoing inflation feeding through automatically to prices and perhaps a stronger pound sterling which would benefit 'domestic' stocks within the FTSE.
"Against this is consumer and B2B weakness and the risk of higher churn in the face of higher prices and a recession, and ultimately alt-net proliferation will increase both B2C and B2B competition."
The analysts said their recommendation methodology for BT is "absolute rather than relative" hence the upgrade in rating.
In early morning trading on Tuesday, BT shares were 0.8% higher at 145.60p.