The Telstra Group Ltd (ASX: TLS) share price has done well for shareholders. Since 30 June 2024, the Telstra share price has climbed approximately 8%, compared to a rise of around 6% from the S&P/ASX 200 Index (ASX: XJO).
During that time, the business reported its FY24 result, which largely delivered what was expected.
We'll quickly recap those FY24 numbers, but the future may be more important for the direction of the Telstra share price. For the telco's outlook, we'll refer to the forecast of a leading broker.
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FY24 earnings recap
In the 12 months to 30 June 2024, Telstra reported income growth of 1%. Underlying operating profit (EBITDA) grew 3.7% to $8.2 billion and net profit grew 7.5% to $2.3 billion.
Within the mobile division, income grew 5% to $10.7 billion, and operating profit (EBITDA) increased 9% to $5 billion. Its mobile handheld users grew by 4.1% (562,000). The average revenue per user (ARPU) increased by 2.7% (excluding the prepaid one-off from product migration).
In FY25, the company expects to grow its underlying profit (EBITDA) to between $8.5 billion and $8.7 billion.
Telstra said in its outlook commentary:
In FY25 we must remain focussed on lifting customer experience; continue delivering financial growth and value from our world-leading mobile network and high-quality infrastructure; continue the reset of our Enterprise business; and, keep delivering on our commitment to simplify our operations and improve our productivity.
These actions are essential to support our sustainable growth and to put us in a position to deliver for customers now and in the long run.
We are optimistic about the opportunities ahead. Telstra's digital infrastructure and network will be increasingly central to how Australians live and work, and we are focussed on investing sustainably to deliver for our customers and our shareholders.
Forecasts for the Telstra share price
UBS has a price target on Telstra shares of $4.40. This is where the share price could be in 12 months from the time of the investment call.
Therefore, the broker is suggesting the Telstra share price could climb another 12% from where it is today. I think that would be likely to be a market-beating performance, considering the ASX share market has returned an average annual return of 10% over the ultra-long term and less than that in the past decade.
UBS is forecasting that Telstra could generate $2.15 billion of net profit and 19 cents of earnings per share (EPS) in FY25 and it might pay an annual dividend per share of 19 cents. That means the current Telstra share price is valued under 21x FY25's estimated earnings and a grossed-up dividend yield of 6.9%.
