Why these top brokers are forecasting high-speed gains for the Telstra share price

There’s bullish sentiment for the telco amid a weakening market.

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The S&P/ASX 200 Index (ASX: XJO) has started the week poorly, continuing its sudden downturn in June.

Following Monday’s session, the benchmark had fallen more than 7% over the past five trading days, marking its worst week since the March 2020 COVID-19 selloff.

Despite the weakness, several brokers are bullish on the Telstra Corporation Ltd (ASX: TLS) share price. Shares in the telco have been volatile this year to date yet they are also trading back around pre-pandemic highs.

These brokers are bullish

According to the team at JP Morgan, Telstra is a buy right now. It values the telco at $4.80 and, in a recent note, says planned increases to FY23 mobile prices are a key driver for the share.

The broker lifted its revenue forecasts on Telstra and notes many customers are “down shifting to lower priced plans which now all include 5G”. JP Mogan said:

We believe the [revenue] increases were necessary to achieve the FY2025 targets Telstra outlined at the company’s 2021 Investor Day.

After factoring in the impact of the pricing increases into our model we now forecast Telstra will achieve targeted mid-single digit Mobile services revenue growth to FY2025 with a 5.2% [annualised] growth rate.

Morgans is also positive on the share, highlighting sector tailwinds and Telstra’s potential to unlock further shareholder value.

The Morgans team is forecasting a 16 cents per share dividend payment in FY22 and FY23.

Both brokers make up the 57% coverage that rates Telstra a buy right now, according to Bloomberg data. The remainder are split to hold, with Barclay Pearce saying the company was a sell back in February.

From that list, the consensus price target is $4.48 per share, translating to around 17.5% return potential at the time of writing.

In the last 12 months, the Telstra share price has held a 9% gain after sliding around 8% into the red this year to date.

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