In March the Telstra Corporation Ltd (ASX: TLS) share price smashed the S&P/ASX 200 index with a gain of approximately 6%.
This latest gain means the telco giant's shares are up over 16.5% since the start of the year.
Why did the Telstra share price outperform last month?
With no news out of the company, it appears as though Telstra's outperformance last month could have been driven by a broker note out of Goldman Sachs.
Although opinion in the broker community is largely divided, Goldman is certainly bullish on the telco giant's prospects.
It has a conviction buy rating and $3.85 price target on Telstra's shares at present, which implies further upside of 16% for its shares over the next 12 months excluding dividends.
If you include Telstra's dividends this potential return extends to almost 21%.
Why is Goldman Sachs bullish?
According to the note, following a positive start to FY 2019, its analysts believe Telstra is well-positioned to hit the top-end of its FY 2019 underlying guidance range.
But it isn't just this year that the broker is positive on. It believes Telstra's medium term outlook is positive due to continued subscriber momentum, improved mobile ARPU trajectory, and ongoing cost reductions.
Overall, Goldman expects this to lead to an increase in its underlying return on invested capital (ROIC) by 43 basis points in FY 2020. After which, the broker believes it will exceed 10% by FY 2023, which compares very favourably to its first half underlying ROIC of 6.3%.
Should you invest?
Until NBN margins improve and competition pressures ease, I intend to stay clear of Telstra and its peers such as TPG Telecom Ltd (ASX: TPM) and Vocus Group Ltd (ASX: VOC).
But if you're willing to be patient and make a long term buy and hold investment, then it could arguably be a decent option at this level.
