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FY 2021 results preview: What is built into the Telstra share price?

What is the market expecting from Telstra this month?
The post FY 2021 results preview: What is built into the Telstra share price? appeared first on The Motley Fool Australia. –

All eyes will be on the Telstra Corporation Ltd (ASX: TLS) share price in just under a couple of weeks when its hands in its full year results.

The telco giant is due to release its results to the market on Thursday 12 August.

And with the Telstra share price up 26% since the start of the year, expectations certainly are high for this release.

What is the market expecting from Telstra in FY 2021?

Goldman Sachs has just released a note outlining what it expects Telstra later this month. Here’s a summary of its expectations:

Total income down 11% to $23.2 billion. This compares to its guidance of $22.6 billion to $23.2 billion.
EBITDA down 16% to $7.6 billion. This comprises underlying EBITDA down 8% to $6.81 billion (versus guidance of $6.6 billion to $6.9 billion) and NBN one-off earnings of $0.75 billion (versus guidance of $0.7 billion to $1 billion).
Net profit after tax down 27% to $1.7 billion.
A fully franked final dividend per share of 8 cents, bringing its full year dividend to 16 cents per share.

Telstra’s outlook

Something else that could influence the Telstra share price will be the company’s outlook.

According to the note, Goldman Sachs is forecasting a return to growth in FY 2022. The broker is forecasting EBITDA growth of 6% to $7.2 billion, compared to the market consensus of $7.18 billion. It is also in the middle of Telstra’s previously announced FY 2022 aspirations for mid to high single digit growth ($7 billion to $7.4 billion).

But the broker doesn’t expect Telstra to stop there and suspects that commentary could be given on its expectations for FY 2023. Once again, Goldman is more positive than the market consensus and is forecasting further EBITDA growth to $7.8 billion. This compares to the consensus estimate of $7.5 billion for FY 2023.

Finally, the broker has suggested that investors look out for commentary on the structure of its $1.35 billion buyback, its mergers and acquisition strategy, and details relating to the upcoming T25 strategy event.

Is the Telstra share price in the buy zone?

Analysts at Goldman Sachs believes the Telstra share price is in the buy zone ahead of its results.

The broker has retained its buy rating and $4.20 price target. Based on the current Telstra share price of $3.80, this implies potential upside of 10.5% over the next 12 months.

And if you include the 16 cents per share fully franked annual dividend Goldman expects to be paid through to FY 2023, this potential return stretches to 13.5%.

The post FY 2021 results preview: What is built into the Telstra share price? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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