The Telstra Corporation Ltd (ASX: TLS) share price is edging higher on Friday morning.
At the time of writing, the telco giant's shares are up 0.5% to $3.48.
This latest gain means the Telstra share price is now up 16% since the start of the year.
Can the Telstra share price keep pushing higher?
According to one leading broker, the Telstra share price could continue to rise from here.
A note out of Goldman Sachs reveals that its analysts have been looking at the telco sector and have ultimately retained their buy rating and $4.00 price target on the company's shares.
Based on the latest Telstra share price, this price target implies potential upside of 15% over the next 12 months excluding dividends. If you include the 16 cents per share dividend the broker is forecasting, this potential return stretches to 19.5%.
What did Goldman say?
Goldman Sachs has been looking at current trading conditions in the mobile and fixed markets. And while it feels that the company's mobile deal with JB Hi-Fi Limited (ASX: JBH) could be limiting market repair, it isn't enough to impact its forecasts or recommendation.
Speaking about the mobile market, Goldman said: "VOD [Vodafone] extended the discounts on its Red Postpaid plans for an extra week, now expiring June 3. We expect this reflects VOD intention to see what TLS does with its JBH promotions, given that the $800 gift card / $99 TLS plan expires on June 2 (VOD & Optus have both criticized these promotions as preventing market repair)."
It also notes that the recent SingTel result appears to indicate that mobile pricing is increasing and will be sustained.
The broker said: "Commentary on SingTel FY21 result was positive, suggesting higher mobile pricing in Australia is here to stay as the business focuses on improving profitability; and Optus returned to postpaid sub growth following 12m of declines; however, we expect TPG declines have continued YTD given border restrictions."
What about the fixed market?
Goldman points out that NBN pricing has lifted modestly across the NBN 50 speed plans. Though, it feels Telstra could be more aggressive with its fixed wireless plans.
It explained: "We note rational pricing across the NBN 50 speed plans (+1% yoy) and an increased focus on the high speed plans (250mbps/1gbps) which we estimate to be more profitable and margin accretive to RSPs (i.e., increasing TLS margins from c.9% (NBN50) to 29% (NBN1GB)). Telstra also announced it will increased Fixed Wireless plans to 1TB – which although positive, is not nearly as aggressive as we believe the industry should be (we would expect meaningful promotions/discounts to accelerate migration)."
In light of the above, Goldman continues to prefer Telstra over rival TPG Telecom Ltd (ASX: TPG).
Its analysts have retained their neutral rating and cut their price target on TPG's shares by 5% to $5.90.
