Should you buy Telstra Corporation Ltd shares?

The Telstra Corporation Ltd (ASX: TLS) share price may be spending another day in the red on Wednesday, but a growing number of brokers are tipping it to climb significantly higher over the next 12 months.

The most recent broker to rate Telstra as a buy is Deutsche Bank. According to a note out of the investment bank, its analysts have retained their buy rating and placed a $4.05 price target on the telco giant’s shares.

The broker has made the move in response to news that Telstra and News Corp (ASX: NWS) have signed a definitive agreement to combine pay television entities Foxtel and Fox Sports Australia.

Under the new deal, News Corp will own 65% of the combined entity with Telstra owning the remaining 35%.

Prior to this news, fellow broker Morgans had also labelled Telstra as a buy. In fact, the telco giant was included in the broker’s latest conviction buy list.

According to that note, the broker expects Telstra to benefit from the NBN’s value be written down by the Federal Government. If this happens it is expected to result in lower access prices and better margins for Telstra.

In addition to this, a note out of Credit Suisse last month revealed that its analysts have retained their outperform rating and placed a $3.95 price target on its shares.

Should you invest?

I think Telstra is very attractive at the current share price and could be a great option for both value and income investors.

Should Telstra’s shares reach $4.00 like these brokers are predicting it would mean share price gain of approximately 20%. Add in its 22 cents per share fully franked FY 2018 dividend and the total potential return increases to almost 27%.

Overall, Telstra may have been a big disappointment for investors over the last couple of years, but things could be starting to look positive. I would class it as a buy.

As well as Telstra, I think this dividend share is in the buy zone and has plenty of growth ahead of it.

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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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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