The Telstra Group Ltd (ASX: TLS) share price closed the session yesterday at $3.76, down 0.13% for the day and down 10.8% over the past year.
The Qantas Airways Limited (ASX: QAN) share price closed at $5.35, down 0.56% for the day and down 17.7% over the past 12 months.
Both stocks are considered ASX blue chips, but which one will rise in value faster over the next year?
We canvas the views of top broker Goldman Sachs, which has a buy rating on both stocks.
Telstra share price to ring in 21% upside, says broker
Goldman Sachs has a 12-month share price target of $4.55 on Telstra.
This implies a potential upside of 21% for investors who buy Telstra shares today.
In a note released this month, the broker says Telstra is its preference among Australia/New Zealand telcos.
However, the ASX telecommunication share is not without downside risks.
Goldman explained:
Key downside risks: (1) higher competition in mobile/fixed from Optus/TPG or from smaller players using the NBN to loss lead, both of which would reduce our earnings & dividend growth; (2) disappointing cost out performance, meaning TLS is unable to offset wage cost inflation; (3) unfavorable regulation in fixed & mobile, including NBN pricing; and (4) delays to infrastructure monetisation or lower than expected realised value.
What do other analysts think?
The consensus among analysts on CommSec is for Telstra to improve its earnings over the next few years.
The consensus on earnings per share (EPS) is 18.1 cents in 2024, 19.5 cents in 2025, and 21.8 cents in 2026.
The analysts expect Telstra to pay dividends of 18 cents per share in 2024, 19 cents in 2025 and 20 cents in 2026.
Based on yesterday's closing share price, this means Telstra will pay dividend yields of 4.78%, 5.05%, and 5.32%, respectively.
The consensus rating on Telstra shares among the 18 analysts is a moderate buy. Twelve say Telstra is a strong buy and three say a moderate buy. Two say hold and one gives the telco a moderate sell rating.
What about the Qantas share price?
Goldman Sachs has a 12-month share price target of $8.05 on Qantas.
This implies a potential upside of 50.5% for investors who buy Qantas shares today.
In a note last month, the broker said 1H FY24 earnings provided "another proof point on reset earnings capacity".
The broker said:
… we note that our FY24 EPS remains 52% above pre-COVID levels even as the business faces higher (vs pre COVID) fuel prices, elevated current customer investment and a 10% yoy GSe decline in unit revenue (FY24 RASK is 24% above pre-COVID equates to average 4.4% per annum). Despite this, QAN is trading 17% below its pre-COVID market capitalization with the enterprise value 24% lower.
Goldman said that, like Telstra shares, Qantas also has downside risks.
These include slower-than-expected traffic recovery; a structurally reduced travel demand post-pandemic; irrational domestic market pricing; higher-than-expected fuel prices, and unfavourable exchange rates.
What do other experts think?
The consensus is for Qantas to grow its EPS from 90.2 cents in 2024 to 99 cents in 2025 and $1.01 in 2026.
The analysts expect Qantas to pay no dividend in 2024, 20 cents per share in 2025 and 27 cents in 2026.
Based on yesterday's closing share price, this means Qantas will pay yields of 3.74% in 2025 and 5.05% in 2026.
The consensus rating on Qantas shares among 16 analysts on CommSec is a strong buy. Eleven say the flying kangaroo is a strong buy, two say a moderate buy, and three say hold.
Qantas or Telstra share price: Which wins?
Qantas, easily.
Goldman Sachs is expecting an uplift of 50.5% in the Qantas share price this year.
By comparison, the broker expects the Telstra share price to rise by 21%.
