Top brokers give their verdict on the Telstra (ASX:TLS) share price

Is it too late to buy this telco giant’s shares?
The post Top brokers give their verdict on the Telstra (ASX:TLS) share price appeared first on The Motley Fool Australia. –

The Telstra Corporation Ltd (ASX: TLS) share price has continued its positive run on Friday

In early trade, the telco giant’s shares are up 1% to a new 52-week high of $4.02.

Why is the Telstra share price rising?

The Telstra share price was given a boost today after brokers responded positively to the company’s full year results.

For example, analysts at Credit Suisse, Goldman Sachs, and Morgans have all retained the equivalent of buy ratings and lifted their price targets this morning.

Credit Suisse has retained its outperform rating and increased its price target to $4.25. Whereas Goldman has a buy rating and new $4.30 price target and Morgans has an add rating and new price target of $4.34.

All three price targets imply that the Telstra share price still has room to climb in the future.

What did Goldman Sachs say?

According to the note out of Goldman Sachs, its analysts were pleased with its full year results and guidance for FY 2022.

The broker commented: “Telstra reported a mixed FY21 with EBITDA/NPAT -1%/+3% vs. GSe, with a strong mobile and cash performance, offset by a weaker fixed result (particularly NAS).”

“FY22 Guidance for underlying EBITDA of $7.0 to $7.3bn was consistent with GSe prior ($7.2bn), when adjusting for the $50mn cost of retail in-sourcing (timing related, will normalize), while FCF [free cash flow] was well ahead (we had assumed a WC [working capital] drag).”

Goldman notes that Telstra is guiding to solid operating earnings growth in FY 2022 despite still facing a sizeable NBN headwind.

It explained: “The mid-point of underlying earnings implies a return to strong full year growth in FY22E of +7%, despite facing the final $350mn NBN headwind. This will be driven by accelerating mobile growth and fixed margin expansion (which will require solid execution).”

Positively, the broker expects this solid form to continue in FY 2023, particularly given how the NBN headwind will have ended.

“In FY23E, with the NBN headwinds finished, the improving mobile revenues and fixed margin expansion drive our +8% EBITDA growth to $7.7bn (vs. $7.5-$8.5bn target) implying 8.1% ROIC,” it added.

Based on the current Telstra share price, Goldman’s price target implies potential upside of 7% before dividends. This stretches to approximately 11% including them.

The post Top brokers give their verdict on the Telstra (ASX:TLS) share price appeared first on The Motley Fool Australia.

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More reading

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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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