The telecoms giant shares have outperformed since its first-half update earlier this month when it said it expects full-year earnings to reach the top end of its guidance range.
In the first six months of the year, pre-tax profit increased to £1.3bn from £1.1bn a year ago as the telecoms giant cut costs as part of its restructuring and saw a higher volume and mix of high-end smartphones in the consumer business.
However, regulated price reductions in its Openreach network and a poor performance in its enterprise businesses dragged revenue lower.
“BT’s recent share price outperformance reflects a solid 2Q result, with EBITDA well ahead of expectations on solid cost execution,” said Barclays.
“This raises in our view the question of whether the steady drip of earnings cuts that have plagued the name for the past few quarters is now over.
“We argue that it is too early to call. Cost discipline looks solid - However BT is set to see a number of headwinds in the coming quarters, notably Openreach wholesale price cuts, fixed retail market share losses, and continued enterprise pressure.”
Barclays added that there is also the risk of a reset with a new chief executive joining.
Chief executive Gavin Patterson will be succeeded by Worldpay boss Philip Jansen in February 2019.
Following two quarters of positive earnings, Barclays expects the third and fourth quarters to decline 6% and 7% respectively due to tough comparatives and price cuts in Openreach.
In the longer term, the bank sees increased competition for Openreach from alternative fibre to the home providers.
Openreach is upgrading the UK’s broadband infrastructure by replacing ageing copper lines with faster and more reliable fibre optics but there are other rivals doing the same, including Vodafone and City Fibre.