How did the Telstra (ASX:TLS) share price fare in May?

The performance of Telstra in May, may have been attributed more to brokers than any offical announcement.

Sebastian Bowen

Author Bio Sebastian Bowen has been a Motley Fool contributor since late 2018. Sebastian found his passion for writing and educating others about shares and all things finance after completing his studies in political, economic and social science and enjoys bringing this passion to life at the Fool. His investment philosophy is a simple one – buying high-quality companies at prices that make sense. When he’s not researching his next investment at all hours of the morning, Sebastian enjoys classic movies and likes to unwind with a good book, newspaper or record. Areas of Expertise Dividend investing ETFs Education Bachelor of Political, Economic, and Social Sciences (Government and International Relations), University of Sydney Social Media X/Twitter Favorite Investment Quote "In the short run, the market is a voting machine, but in the long run, it is a weighing machine." – Benjamin Graham

Published June 1, 2021 12:31 pm AEST

Moons, Junes and Ferris wheels… Winter has finally come to the ASX, as the Starks always warned us it would. At the start of a new season, it's always a good time to look back and reflect on the month that was. Today, let's check out the Telstra Corporation Ltd (ASX: TLS) share price and see how the ASX's largest telco fared in the month of May.

So Telstra shares started May at a price of $3.39 each. Yesterday, the final day of the month, saw Telstra close at $3.52 a share. That puts the telco at a gain of 3.83% for the month of May. Not a bad result in the scheme of things. Especially considering Telstra outperformed the S&P/ASX 200 Index (ASX: XJO) rather handily. The ASX 200 managed a still-robust 1.9% gain for May, which incidentally resulted in the flagship ASX index making not one, but two new all-time highs over the month. Even so, this means that Telstra almost doubled the gains of the broader market.

It's worth noting though that Telstra shares have not had a great start to June today though. At the time of writing, the Telstra share price has given up 0.99% this morning and is now going for $3.48.

But we're here to talk about May. So why did Telstra shares have such a good month?

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Telstra share price gets a May boost

Well, it's not because there was any positive news, or any news at all, out of the ASX telco last month. It was a quiet May for Telstra on that front. In fact, the last piece of official news out of Telstra came back on 23 April. That was when Telstra announced that it had purchased 1,000 MHz of 26 GHz spectrum rights for $277 million. This is arguably good news for Telstra's 5G ambitions, but not really enough to move the company's share price around over May, one would think.

Instead, we can probably put the month's positive moves down to some love the telco received from brokers over the month. According to CommSec, investment bank Goldman Sachs reiterated its 'buy' rating and $4 per share 12-month share price target for Telstra on 27 May. Goldman reckons the telco's restructuring plans will unlock value in Telstra shares going forward. That implies a potential pricing upside of almost 15%.

It's not just Goldman that's bullish on Telstra either. As my Fool colleague James Mickleboro covered yesterday, broker Morgan Stanley has also given Telstra shares a $4 pricing target.

At the current share price, Telstra has a market capitalisation of $41.45 billion, a price-to-earnings (P/E) ratio of 23.4 and a trailing dividend yield of 4.58%.

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