Telstra Group Ltd (ASX: TLS) shares are having another tough session.
In afternoon trade, the telco giant's shares are down almost 3% to $4.01.
Investors have been hitting the sell button since the release of the company's FY 2023 results on Thursday.
Should you buy Telstra shares after these declines?
The team at Goldman Sachs believes that this weakness has created a buying opportunity for investors.
According to a note, the broker has responded to the result by retaining its buy rating with a trimmed price target of $4.70.
This implies a potential upside of 17% for Telstra shares from current levels over the next 12 months.
And let's not forget the dividends. Goldman is forecasting an 18 cents per share dividend in FY 2024. This equates to a 4.5% dividend yield and boosts the total potential return to beyond 21%.
What did the broker say?
Goldman was pleased with Telstra's FY 2023 result but notes that its guidance was a touch softer than expected. It said:
Telstra reported FY23 EBITDA/EPS/DPS that were +0%/+8%/in-line vs. GSe. FY24 EBITDA guidance of $8.2-8.4bn implies +4.4% growth but was -1% below GSe at the mid-point. Mgmt. also announced they would be retaining their full ownership stake in InfraCo Fixed for the medium term.
In respect to why it is bullish, the broker explains:
We believe the low risk earnings (and dividend) growth that Telstra is delivering across FY22-25, underpinned through its mobile business, is attractive. We also believe that Telstra has a meaningful medium term opportunity to crystallise value through commencing the process to monetize its InfraCo Fixed assets – which we estimate could be worth between A$22-33bn. Although there is some debate around the strategic benefits, we see a strong rationale for monetizing the recurring NBN payment stream, given its inflation linked, long duration cash flows could be worth $14.5bn to $17.9bn, with no loss strategic benefit.
