Is the Telstra (ASX:TLS) share price a buy after its restructure update?

Is the Telstra Corporation Ltd (ASX:TLS) share price in the buy zone after its restructure update this week? Here’s what this broker thinks..
The post Is the Telstra (ASX:TLS) share price a buy after its restructure update? appeared first on The Motley Fool Australia. –

Telstra share price

On Monday the Telstra Corporation Ltd (ASX: TLS) share price pushed higher following an update on its proposed legal restructure. You can read about that here and also here.

This led to the Telstra share price climbing almost 1.5% to $3.25.

Is the restructure a good idea?

According to analysts at Goldman Sachs, they believe the restructure is a big positive and expect it to unlock value for shareholders.

In light of this, this morning the broker has retained its buy rating and $4.00 price target on the telco giant’s shares.

Based on the current Telstra share price, this price target implies potential upside of 23% for its shares over the next 12 months.

And with Goldman Sachs forecasting fully franked dividends of 16 cents per share for the foreseeable future, the 12-month total potential return on offer here stretches to approximately 28% if you include dividends.

What did Goldman Sachs say?

Goldman is pleased with its plans and believes the company’s shares are undervalued at the current level.

It said: “We remain positive on TLS, as this update outlines the next steps of the corporate restructure and potential asset monetization, and gives us confidence that its infrastructure value will ultimately be realized by shareholders. Based on our updated transaction multiples/illustrative SOTP valuations, TLS shares currently trade on just 4.1-4.7x ServeCo FY23E EBITDA or 5.7-6.3X at our unchanged A$4.00 12m TP, vs. SPK.NZ at 8.3x. We reiterate our Buy on TLS, our preferred ANZ Telco, ahead of its FY21 results and Nov-21 ID, both of which we view as positive catalysts.”

What are the downside risks for the Telstra share price?

While Goldman is positive on the company, it has named a few risks for the Telstra share price that investors ought to consider before investing.

It explained: “Downside risks for TLS include: 1) Increased competition, particularly in the mobile market, 2) disappointing cost out relative to its $2.7bn productivity program, 3) unfavourable regulation across its businesses; 4) asset monetisation is ultimately unsuccessful.”

Though, based on its rating and price target, the risks appear skewed to the upside at present.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

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

The post Is the Telstra (ASX:TLS) share price a buy after its restructure update? appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!