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?
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.
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%.