BT (LSE:BT.A) shares has been one of the FTSE 100‘s top 10 performers so far this year. It’s up 29% since 1 January, as investors pile in for a slice of the firm and its impressive turnaround strategy.

Can the party continue, though? Analysts are split, as the table below shows:

So what can we expect over the next year?

Strong momentum

First it’s critical to consider what’s propelled BT over the last year. As I say, it’s down to the telecoms firm’s so-far successful transformation strategy. It’s already achieved £1.2bn of its £3bn cost-cutting plan, targeted through measures like switching customers to cheaper-to-run 5G and fibre broadband from traditional copper networks.

Investors are also encouraged that the company will be spending less on its fibre rollout strategy from this point. The result? As Hargreaves Lansdown analysts note, “that’s good news for future cash flows [as] a much leaner operation is needed to drive long-term growth.”

Finally, BT’s high-margin Openreach infrastructure division continues to benefit white-hot demand. It added a further 571k customers between September to December, latest financials showed. This pushed divisional adjusted EBITDA 2% higher. Openreach has considerable long-term potential as the ongoing digital revolution drives fibre broadband uptake.

What’s the catch?

The problem is, there are many threats facing BT that could send its shares lower again. Yet at current prices of 238.3p, it seems the market is giving little heed to these dangers and only reflecting on its recent successes.

Today its price-to-earnings (P/E) ratio has leapt to 15.8, far above the long-term average of 8-9.

So what are these threats to BT and its share price? One is subdued consumer spending as the Iran War fuels inflation and weighs further on economic growth. The firm’s already struggling to turn around its bottom line — a situation made worse by the enormous competitive pressures it faces — with revenues dropping 4% in the December quarter. This dragged adjusted EBITDA 1% lower.

Rising inflationary pressures could be especially problematic for BT. It could bring the strong progress it’s been making on cutting costs to a crunching halt. But that’s not my main worry. The company’s debts are huge — its net debt was £20.8bn in December, and rising — and Bank of England action to curb inflation could drive its repayment costs sky high.

£5,000 could turn into…

So what could BT shares be worth by this time next year? Returning to those price forecasts I described earlier, a £5,000 investment today will be worth:

• £6,950, based on the most bullish City forecast.
• £3,000, according to the lowest price estimate.
• £4,650, based on analyst consensus.

However, accurately predicting near-term price movements is a difficult task, even for seasoned City brokers. Few expected BT’s share price to soar 45% over the last 12 months. These forecasts could similarly miss their target.

All I can do is take a view on the risks and potential rewards of buying BT shares today. And in my view, I think the FTSE firm’s in danger of sinking given its huge valuation and the rising pressures it faces. This is why I’d rather find other stocks to buy right now.