Berenberg gives five reasons not to invest in BT

“'Buy BT at GBP1 per share and sell it at GBP2': we have been hearing this rule of thumb a lot recently from investors, and while it feels oversimplistic, it does have a logic to it," Berenberg said.

Currently, the stock looks "cheap" as it is trading close to the low-end of its historic range at just seven times earnings, compared with the wider sector-average multiple of 13.

However, there are several reasons to be cautious, the broker said.

Firstly, there is a "heightened rebase risk" with a CEO transition occurring in January, along with further potential churn in the senior leadership team.

Berenberg said it is also concerned about the sustainability of BT's retail pricing model of "CPI+3.9%", given that the Labour Party (favourites to win the next general election) might take action on mid-contract price rises and challenge Openreach's CPI-linked price increases.

Meanwhile, the broker said that consensus forecasts for BT Business profits are currently too high, while consensus estimates for net debt remain too low.

Lastly, Berenberg said that BT's strategy to spend spare cash on fibre rollout means it doesn't have the money available to do share buybacks – unlike many other UK corporates right now that are taking advantage of current cheap valuations.

The target price has been cut from 150p to 135p for the stock, which was up 0.3% at 117.09p by 1126 BST.