Telstra Group Ltd (ASX: TLS) shares have been having a rough year.
And while the telco giant's shares have rebound off their multi-year lows, they are still a long way from their recent highs.
Does this make it a good time to invest? Let's see what analysts are saying.
What are analysts saying about Telstra shares?
Opinion is divided on whether investors should be buying the company's shares at current levels.
For example, Morgans notes that the company's outlook was softer than expected and believes it made the wrong decision to not unlock value by offloading its InfraCo business.
Its analyst, Damien Nguyen, courtesy of The Bull, commented:
The positive outlook for its mobile and enterprise divisions still fell short of expectations. Retaining ownership of its fixed infrastructure business InfraCo rather than selling it prevented unlocking value in the share price. Telstra was recently trading on a higher price/earnings multiple than its 10-year average and when compared to international peers.
Morgans has a reduce rating and $3.00 price target on Telstra's shares.
The bullish view
Analysts at Goldman Sachs don't agree with this view, though. A recent note reveals that the investment bank has a buy rating and $4.25 price target on its shares.
While a touch disappointed with its recent update, the broker remains positive and sees a lot of value in its share price. It said:
Telstra is the incumbent telecom operator in Australia. 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 of strategic benefit.
This view has been echoed by analysts at Bell Potter. The broker recently upgraded Telstra's shares to a buy rating with a $4.25 price target. It said:
There is perhaps a lack of catalysts in the near term and we do not expect the company to change its view on not selling part or all of the Infrastructure business in the short to medium term. We do, however, see the FY24 result in August as a potential catalyst of sorts given we expect the company to meet – but not exceed – the guidance with the highlights being continued strong growth in the core Mobile and Infrastructure businesses and signs of some turnaround in Enterprise.
