Pedestrians cross Herald Square in front of a Verizon Wireless store in New York.

Verizon shares should outperform the market in 2018, Barclays said Monday, upgrading the stock to overweight from equal weight.

"Concerns about the carrier's ability to reignite service revenue growth should start to subside as management delivers upon its expectation for year-over-year growth by the middle of the year," analyst Amir Rozwadowski wrote to clients.

"Current valuation levels seem to overly discount any number of factors that could improve its earnings trajectory as well as penalize the company for expected increased 5G investments despite the fact that the technology is working better than expected," he added.

Rozwadowski's price target of $56 implies more than 16 percent upside over the next year. Shares of Verizon rose 1.59 percent Monday.

Barclays noted that all the major wireless subscribers stocks have been struggling during the last 12 months on concerns about slowing subscriber fee growth and new competition from cable companies.

But the analyst believes the stock is too cheap, trading at 10.4 times consensus 2019 earnings, near the low end of its valuation range for the last 12 months.