Here's the earnings forecast out to 2029 for Telstra shares

Analysts are calling this stock a buy with its projected profit in the coming years.

| More on:
A young woman wearing an Islamic tradition headscarf and jeans sits in an urban environment with an apple in one hand and her phone in the other with a smile on her face.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There are plenty of reasons to like Telstra Group Ltd (ASX: TLS) shares, which is why the broker UBS is calling the ASX telco share a buy.

UBS is positive about Telstra's "solid outlook" in the 2025 financial year. This outlook is primarily supported by mobile price rises (late August 2024 for postpaid users and late October 2024 for prepaid users) and the continued focus on the $350 million net fixed cost reduction target by FY25.

The broker currently has a price target of $4.40 on the business. As a price target is where the broker thinks the share price will be in 12 months from the time of the investment call, that suggests UBS believes the Telstra share price could rise by 9%.

UBS is forecasting that Telstra could increase prices by between 2.5% to 3% for postpaid mobiles annually after FY25 because "industry dynamics remain rational, particularly in light of Optus' 1Q25 results where postpaid prices grew $2 year over year to $43 per month, and EBIT margins have improved from 3.1% to 5.1%."

Let's examine the financial numbers that UBS is forecasting for Telstra over the next few financial years, keeping in mind those expected price increases and cost-control efforts.

First, FY25

We're already halfway through the 2025 financial year, so we'll soon get to see the Telstra FY25 half-year result.

For the full-year result, UBS expects revenue to climb to $23.86 billion, which could help net profit after tax (NPAT) grow to $2.15 billion in FY25. With that profit, the broker expects Telstra to pay an annual dividend per share of 19 cents.

Second, FY26

Next financial year, UBS predicts that Telstra could experience ongoing growth.

The broker suggests the ASX telco share could see revenue climb to $24.4 billion and this could help net profit rise more than 14% to $2.47 billion. This could pay for an annual dividend per share of 21 cents.

Then, FY27

In the 2027 financial year, UBS expects ongoing success for Telstra's growth ambitions. Revenue growth is projected to enable the underlying operating profit (EBITDA) to grow at a compound annual growth rate (CAGR) of 5% between FY24 and FY27, and for the dividend to grow at a CAGR of 8% start from FY25 to FY27 to 22.5 cents per share.

Revenue is forecast to rise to $24.9 billion in FY27, and net profit is expected to hit $2.74 billion.

After that, FY28

For Telstra share owners, there could be yet another report full of positive growth numbers in the 2028 financial year.

In FY28, UBS expects Telstra to achieve revenue of $25.5 billion and net profit of $2.96 billion.

Finally, FY29

The final year of this projection is the 2029 financial year, which could be the best year of all. In FY29, the company may achieve a net profit margin of 12.3%, compared to 9% for FY25. It could be significantly more profitable towards the end of this decade.

UBS projects Telstra could generate $26.2 billion of revenue and $3.24 billion of net profit in FY29, which could enable the ASX telco share to pay a dividend per share of 27 cents. At the current Telstra share price, the company is trading at 14x FY29's estimated earnings with a grossed-up dividend yield of 9.5%, including franking credits.

Motley Fool contributor Tristan Harrison 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.

More on Communication Shares

Two women happily smiling and working on their computers in an office
Dividend Investing

Which ASX 200 communications share will pay the best dividend yield in 2025?

Several communications stocks are expected to pay dividend yields above the ASX 200 Index average of 4%.

Read more »

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
Communication Shares

Is this my chance to buy Telstra shares?

After drifting lower, I’m considering whether this stock is an opportunity.

Read more »

Man smiling at a laptop because of a rising share price.
Communication Shares

This ASX 200 stock just hit an all-time high and UBS still tips 24% upside

Fear not buying this ASX 200 communications stock despite it trading at a record high, says UBS.

Read more »

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
Communication Shares

Are Tuas shares the next Telstra?

I think this Asian telco has an exciting future.

Read more »

Five young people celebrate outside with sparklers
Dividend Investing

1 ASX dividend stock down 47% in 12 months I'd buy right now

These stocks are a real opportunity, in my view.

Read more »

Woman and man calculating a dividend yield.
Communication Shares

3 insiders buy up shares in ASX All Ords stock following crash

Shares were bought swiftly following the crash.

Read more »

Worried unemployed woman sits on white chair waiting for job interview
Communication Shares

One beaten-up ASX stock at 'a potential turning point' in 2025

The company has shown fundamental improvements, this fundie says

Read more »

A happy man and woman sit having a coffee in a cafe while she holds up her phone to show him the ASX shares that did best today.
Communication Shares

Telstra stock: Buy, sell, or hold in 2025?

Here’s what I’d take into account with the telco.

Read more »