Why Telstra shares have 16% upside right now: fundie

What's ahead for the Telstra share price?

| More on:
A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.

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 is slightly outperforming the ASX 200 today 
  • One broker is tipping a 16% upside on the Telstra share price 
  • Telstra shares have fallen 3% in the last year

The Telstra Group Ltd (ASX: TLS) share price is slightly in the green today but could it have more upside in the future?

Telstra shares are climbing 0.25% today and are currently trading at $3.95. For perspective, the S&P/ASX 200 Index (ASX: XJO) is down 0.025% at the time of writing.

Let's take a look at the outlook for the Telstra share price.

What's ahead?

The team at Morgans believe Telstra is in "good shape" and is tipping its share price to go higher.

Morgans has placed an add rating on the company's share price with a $4.60 price target. This implies an upside of 16% based on the current share price.

Analysts are optimistic on the Telstra share price in light of its restructure, which could unlock value in its assets. The broker said:

After a major turnaround, TLS has emerged in good shape with strong earnings momentum and a strong balance sheet. In late CY22 shareholders vote[d] on Telstra's legal restructure, which opens the door for value to be released.

TLS currently trades on ~7x EV/EBITDA. However some of TLS's high quality long life assets like InfraCo are worth substantially more, in our view. We don't think this is in the price so see it as value generating for TLS shareholders. 

Telstra's corporate restructure will involve a legal reorganisation where multiple subsidiaries will sit under the new Telstra Corp. These will include Telstra International, Amplitel, InfraCo and Serve Co.

The legal restructure is due to be complete on 1 January 2023.

Telstra transitioned to new CEO Vicki Brady at the start of September.

Telstra share price snapshot

The Telstra share price has descended 3% in the past year, while it has fallen 6% in the year to date.

For perspective, the ASX 200 has fallen nearly 3% in the last year.

Telstra has a market capitalisation of more than $45 billion based on the current share price.

Motley Fool contributor Monica O'Shea 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.

More on Communication Shares

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Dividend Investing

Investing for passive income? Keep any eye out for that boosted Telstra dividend today!

If you own Telstra shares, keep an eye out for that juicy dividend payout today.

Read more »

Buy, hold and sell ratings written on signs on a wooden pole.
Communication Shares

Is Telstra stock a buy, sell, or hold?

Do experts rate Telstra as a buy or a sell?

Read more »

A young couple look upset as they use their phones.
Communication Shares

Aussie Broadband share price whipsaws as company denies rumours

Aussie Broadband shares are having a wild month indeed.

Read more »

A woman standing in a blue shirt smiles as she uses her mobile phone to text message someone
Dividend Investing

How are these ASX investors earning an almost 7% dividend yield on their Telstra shares?

Telstra increased its interim dividend payout by 6% from the prior year.

Read more »

A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.
Communication Shares

Aussie Broadband share price falls as legal proceedings commence against Superloop

Aussie Broadband is seeking an injunction against Superloop's instruction to sell 37 million shares.

Read more »

A businesswoman exhales a deep sigh after receiving bad news, and gets on with it.
Communication Shares

Aussie Broadband share price tumbles after telco told to sell $47 million stake in a competitor

The telco has been left in a sticky situation.

Read more »

Young woman using computer laptop with hand on chin thinking about question, pensive expression.
Communication Shares

What might an Optus sale mean for Telstra shares?

Should I, as a Telstra shareholder, be worried about an Optus sale?

Read more »

a close up picture of a man's face with an expression of dumbfounded surprise as he holds his hand to his chin as if thinking further about what has just been revealed to him.
Communication Shares

Why are Superloop shares jumping 34% and Aussie Broadband shares sinking 25%?

Origin has caused these big moves today. But how?

Read more »