Why did the Telstra share price crack new multi-year highs in April?

Telstra certainly was a share to own in April! But why?

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The Telstra Group Ltd (ASX: TLS) share price was on form in April.

Not only did it record a decent 3.6% gain for the month, which doubled the market return, the telco giant's shares cracked a number of new multi-year highs in the process.

This means that the Telstra share price is now up almost 11% year to date, much to the delight of its shareholders.

Why did the Telstra share price scale new heights last month?

There were a few factors giving the Telstra share price a lift last month.

One was increased volatility and concerns over a global recession, which fuelled demand for defensive shares. Given how telecommunication shares are seen as some of the more defensive options out there, nervous investors were quick to snap up Telstra's shares.

In addition, news that Telstra had increased its mobile prices also went down well with investors and brokers.

In respect to the latter, last month Macquarie retained its outperform rating on the telco giant's shares with an improved price target of $4.68.

It was pleased with the mobile price increases and sees this industry rationality as a big positive for Telstra. So much so, it suspects that the company could be on course to deliver stronger than expected earnings in the coming years.

Over at Goldman Sachs, its analysts were equally positive. They responded to the increases by reiterating their buy rating with an improved price target of $4.70.

The broker also doesn't expect the increases to stop there. It added:

Following recent (and significant) mobile prices changes from Telstra (Prepaid, JB-HiFi), we now believe they are more likely to fully utilize CPI (GSe +7% in Mar-23) at the upcoming postpaid mobile price review – raising plan pricing by c.$4-6/m. This is ahead of our prior forecast for a c.$2-3/m, so drives our FY24-25E EBITDA +1.6%/+1.1% and EPS +4%/+2% (higher pricing, partly offset by lower postpaid sub growth).

Like Macquarie, Goldman believes the market is underestimating Telstra's earnings growth. It said:

Ultimately, we continue to believe consensus mobile forecasts look conservative, and now sit +3% ahead of FY24 postpaid ARPUs. We expect updated mobile pricing expected to be announced in coming weeks (to give sufficient notice to the Jul-23 introduction), which should be positively received.

Based on the above, it wouldn't be overly surprising to see the Telstra share price building on April's heroics and hitting new multi-year highs this month.

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 Group. 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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