What’s the outlook for the Telstra share price in June?

We check whether June will be a better month for the telco.

| More on:
A woman holds an old fashioned telephone ear piece to her ear while looking unhappy sitting at a desk with her glasses crooked on her nose and a deflated expression on her face.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Telstra share price fell in May
  • Analysts think the telco looks good value at the moment
  • Telstra is expecting to grow earnings in the next few years

The Telstra Corporation Ltd (ASX: TLS) share price went backwards by 4% in May 2022. But are things looking any better for the telco in June?

Telstra has been busy over the last 12 months with acquisitions, a new T25 strategy, and a regional telco agreement with TPG Telecom Ltd (ASX: TPG).

While it’s impossible to know what the Telstra share price is going to do in any given month, or year, there are brokers that give ratings on whether they think a business is a buy, hold, or sell.

Let’s have a look at some of those ratings.

Broker views on the Telstra share price

The broker Ord Minnett has a buy rating on the business.

A price target is where the broker thinks that the share price could be in 12 months. Ord Minnett’s price target on Telstra is $4.85.

The broker thinks that Telstra will be able to succeed with its growth goals outlined in its T25 strategy.

Telstra’s customers face increasing prices for their mobile plans, as reported by various media organisations. This is expected to help Telstra’s mobile earnings. The telco reportedly said that “plan pricing will include an annual review and may increase annually” as it increases prices in line with the Consumer Price Index.

In its T25 strategy, Telstra is targeting a mid-single digit compound annual growth rate (CAGR) of underlying earnings before interest, tax, depreciation and amortisation (EBITDA).

The broker Morgan Stanley also thinks the Telstra share price is a buy, with a price target of $4.60.

Fellow broker Morgans also rates Telstra as a buy, with a price target of $4.56.

Initiatives to grow profit

Aside from increasing prices, Telstra has been doing other things to try to grow future profit.

It acquired Digicel Pacific which gives it a strong market presence in several Pacific countries.

Telstra has also acquired MedicalDirector which increases the scope and size of Telstra Health.

The telco also surprisingly announced that it would be working with TPG. A multi-operator core network commercial agreement is expected to provide “significant” value to Telstra’s wholesale mobile revenue. Telstra will also gain access to TPG Telecom’s spectrum across 4G and 5G which, in turn, will allow it to grow its network and increase capacity.

Telstra will share its radio access network for 4G and, subsequently, 5G services in the defined coverage zone across regional and urban fringe areas.

The non-exclusive agreement includes the option for TPG Telecom to request two contract extensions of five years each.

Telstra dividend

The telco has committed to try to grow its dividend in the future when cash flow and profit allow.

However, it’s going to keep paying its 16 cent per share annual dividend. At the current Telstra share price, that equates to a grossed-up dividend yield of 5.8%.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison 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 has positions in and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Two men in suits face off against each other in a boing ring.
Cryptocurrencies

The Aussie-born crypto platform taking on Ethereum

A new platform is being launched by a 25-year-old Aussie millionaire.

Read more »

A woman shouts through a megaphone.
Share Market News

Earnings preview: Here’s which ASX shares are reporting today

Wondering which ASX companies are releasing results on Friday?

Read more »

A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movements
Share Market News

5 things to watch on the ASX 200 on Friday

The ASX 200 looks likely to have a decent finish to the week...

Read more »

A group of happy office workers throw papers in the air and cheer after seeing the Latrobe Magnesium price skyrocket 38%
Share Market News

Here are the top 10 ASX 200 shares today

These ASX 200 shares outperformed all others on Thursday.

Read more »

Three male athletes sprint on an athletics track with the sun low on the horizon behind them representing the race between ASX lithium shares to outperform
Share Market News

Here are the 3 most heavily traded ASX 200 shares on Thursday

Our most traded ASX 200 share today is down by more than 5%.

Read more »

Bear market
Share Market News

Here’s why one big bad bear is suggesting the stock market could crash by 50%

One strategist thinks markets haven't bottomed.

Read more »

Investor sitting in front of multiple screens watching share prices
Share Market News

5 things to watch on the ASX 200 on Thursday

Here's what to expect on the ASX 200 on Thursday...

Read more »

A trendy woman wearing sunglasses is making it rain, spraying cash on that bargain.
Share Market News

Here are the top 10 ASX 200 shares today

It was a great day on the market for these ASX 200 shares.

Read more »