Why did the Telstra share price beat the market in FY22?

Telstra’s shares were on form in FY 2022…

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Key points

  • Telstra shares were positive performers in FY 2022 despite the share market meltdown
  • The telco giant's shares outperformed the ASX 200 index materially during the 12 months
  • One broker believes the Telstra share price can keep on rising from here

The Telstra Corporation Ltd (ASX: TLS) share price was a relatively positive performer during the last financial year.

The telco giant’s shares started the financial year at $3.76 and eventually closed the period 2.4% higher at $3.85.

As a comparison, the ASX 200 index lost 10% of its value during the 12 months.

Why did the Telstra share price outperform the market in FY22?

There were a number of catalysts for the Telstra share price outperformance.

This includes the telco sector’s defensive qualities, which have helped Telstra’s shares avoid the worst of the market volatility.

In addition, the company’s improving performance, its return to underlying growth, and the announcement of its new T25 strategy have given its shares a major boost.

In respect to the latter, the T25 strategy will be replacing the highly successful T22 strategy. But unlike the T22 strategy, which was based on transforming the company, T25 will be about driving growth.

Telstra’s CEO, Andy Penn, explained:

T25 marks our transition from transformation to growth, from a strategy we had to do, to a strategy we want to do to focus on growth. It is a strategy that builds on the strong foundations we have built over the last three years and remains focussed on what matters most – our customers, our people, our shareholders and on supporting the creation of a vibrant digital economy for Australia.

Through the strategy, Telstra is aiming to deliver sustained growth and value by targeting mid-single digit underlying EBITDA and high-teens underlying earnings per share (EPS) compound annual growth rates between FY 2021 and FY 2025.

Can the Telstra share price keep rising?

The good news is that Morgans appears to believe the Telstra share price outperformance can continue.

Its analysts currently have an add rating and $4.56 price target on the company’s shares. This implies potential upside of 17% for investors over the next 12 months.

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 has positions in 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 Scott Phillips.

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