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Telstra (ASX:TLS) share price gains: Is the 52-week high next?

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The Telstra Corporation Ltd (ASX: TLS) share price came one step closer to breaking its 52-week high in trading this morning. Telstra shares opened at $3.42 today and rose as high as $3.47 a share just after 11am. That puts Telstra a whisker away from its 52-week high of $3.54 that we saw last July. However, it’s still ways off of the near-$4 levels that we saw at the start of 2020, just before the pandemic hit.

Even so, it’s been a dramatic ride for the Telstra share price over the past few months. It was only back in late October last year that Telstra was getting dangerously close to an all-time low when it hit $2.66 a share. Today’s moves mean that Telstra is now up 28% from those lows. For an old blue chip share like Telstra, expanding a market capitalisation by a third in five months is no small feat.

So why have Telstra shares been climbing to new highs?

3 reasons why Telstra shares are climbing

Well, it seems a large part of the market’s optimism when it comes to Telstra shares is stemming from the company’s announcement last week. Last Monday, Telstra told investors that it would break up the company into four separate divisions by the end of the year. These divisions would still trade under a combined ‘Telstra Group’, but would be structurally and regulatorily separate.

The new structure has also opened the door to the possibility that the InfraCo Fixed division may be able to bid for the government’s NBN network when it is eventually privatised.

But institutional investor optimism may also be helping. According to the Australian Financial Review (AFR), broker Morgans has upgraded Telstra shares to ‘overweight’, with a price target of $4 a share. That price target comes from the value that the broker sees in separating out the company. It’s also a significant upgrade from the former ‘underweight’ price target of $3 a share.

A final factor that might be in play is the news that came out of Telstra competitor TPG Telecom Ltd (ASX: TPG) last week. As we reported at the time, the long-term founder and chair of TPG, David Teoh, resigned from the company with immediate effect on Friday. Teoh was regarded as a top ASX leader and a pillar of TPG’s success. So it stands to reason that his departure is good news for any TPG competitor.

It’s likely that a combination of these reasons is behind Telstra’s recent share price success. Perhaps the next stop is Telstra’s 52-week high…

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Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. 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.

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