The Telstra Corporation Ltd (ASX: TLS) share price has continued its solid run on Thursday and pushed higher again. In morning trade the telco giant’s shares rose approximately 1% to hit a new 52-week high of $3.50.
This latest gain means that Telstra’s shares have risen a massive 23% since the start of the year.
Why is the Telstra share price at a 52-week high?
A number of factors have led to the Telstra share price reaching this new high on Thursday.
One key catalyst was the recent decision by the ACCC to block the proposed merger between TPG Telecom Ltd (ASX: TPM) and Vodafone Hutchinson Australia.
The competition regulator advised that it blocked the merger because it believes it will reduce competition and contestability in the fixed broadband services market and “substantially lessen competition in the supply of mobile services because the proposed merger would preclude TPG entering as the fourth mobile network operator in Australia.”
And while TPG Telecom and Vodafone Australia will be appealing the decision in the Federal Court, a decision is unlikely to be made for some time.
This, according to Goldman Sachs, is likely to be a big positive for Telstra as it will mean another year of distraction for two key competitors.
And if the Federal Court ultimately rules in favour of the ACCC, the broker believes Telstra will benefit greatly.
Its analysts said: “Should the Federal Court appeal be unsuccessful, TLS will no longer face a stronger number 3, and will continue competing with the standalone fixed/mobile operations of TPM/VHA.”
In light of this, the broker retained its conviction buy rating and lifted the price target on Telstra’s shares to $3.90 last week.
Even after today’s gain, this price target implies potential upside of over 11% for its shares over the next 12 months, excluding dividends. Including them, this gain stretches to in excess of 16%.
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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.