What to watch at the Telstra (ASX:TLS) Strategy for the Future event this week

It could be a big week for this telco giant…

| More on:
person on old-fashion telephone, surprised person

Image source: Getty Images

The Telstra Corporation Ltd (ASX: TLS) share price will be one to watch very carefully this week.

This is because on Thursday the telco giant is holding its eagerly anticipated Strategy for the Future Investor Day event.

What should you watch out for?

Ahead of the event, the team at Goldman Sachs has listed a few things that it believes could have an impact on the Telstra share price.

The first thing Goldman thinks investors should look out for are its earnings targets. It commented: “We expect a range of earnings targets to be provided, which could include: (1) Narrowing FY23 EBITDA aspirations to $7.5 to $7.9bn (GSe $7.7bn, Visible Alpha Consensus Data $7.5bn); (2) A new cost-out program to be quantified (GSe A$500mn+); (3) Group revenue/earnings targets for FY22-25 to be provided (i.e. low single digit rev growth vs. GSe +1.7% p.a.).”

The broker also expects some commentary around its dividend policy post its T22 strategy. Goldman said: “The ongoing debate around its post T22 dividend policy will be addressed. We expect a preference for franked dividends and buybacks to remain (over un-franked).”

Another subject that could boost the Telstra share price is the company’s plan with its infrastructure assets. It explained: “We expect an update to be provided [on InfraCo], but this will be more strategy focused rather than incorporating specific commentary around the potential monetisation, given the corporate restructure is yet to be approved (vote by year-end).

Goldman Sachs also believes there could be commentary around the company’s leadership post its T22 plan. The broker commented: “With current CEO Andrew Penn in his 7th year as CEO of Telstra, we believe commentary around the company’s leadership post T22 could be provided.”

Finally, in respect to its new strategy, the broker expects “a continuation of the current strategy (simplicity and customer focus, network leadership and improved efficiency) but with a tilt towards growth (such as Energy, Health, FWA, Enterprise 5G).”

Is the Telstra share price good value?

According to the note, Goldman Sachs remains bullish on the Telstra share price.

In fact, not only have its analysts reiterated their buy rating, but they have lifted their price target to $4.40.

Based on the current Telstra share price of $3.86, this implies potential upside of 14% over the next 12 months.

Furthermore, this potential return stretches to over 18% if you include the 16 cents per share fully franked dividend the broker is forecasting in FY 2022.

Should you invest $1,000 in Telstra right now?

Before you consider Telstra, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Telstra wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes