Telstra Group Ltd (ASX: TLS) shares are marching higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) telco closed yesterday trading for $4.54. In afternoon trade on Wednesday, shares are changing hands for $4.58 apiece, up 0.9%.
For some context, the ASX 200 is up 0.2% at this same time.
Telstra's outperformance today is something market watchers will have become familiar with over the past 12 months.
Since this time last year, Telstra shares have surged 25.6%, racing ahead of the 4.6% gains posted by the benchmark index.
And that doesn't include the 18.5 cents per share in fully franked dividends that eligible shareholders will have received over the year.
If we add those back in, then the cumulative value of the ASX telco's shares has gained 30.9% in 12 months.
You're unlikely to hear anyone complaining about those kinds of returns!
But casting his gaze ahead, Morgans' Damien Nguyen expects Telstra could be in for a significantly rougher period heading into 2026 (courtesy of The Bull).
Headwinds building for Telstra shares?
"Earnings growth should have been stronger in the first half of fiscal year 2025 given its dominant position in the mobile and broadband segments, in our view," said Nguyen, who has a sell recommendation on Telstra shares.
Telstra reported its H1 FY 2025 results on 20 February.
The ASX 200 telco reported a 6% year-on-year increase in underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) to $4.25 billion.
That was significantly faster growth than Telstra's income for the six months, which increased a more modest 0.9% to $11.82 billion. Management attributed the bigger boost to earnings in part to lower half-year operating expenses.
But Nguyen expects Telstra shares could come under pressure amid the company's future results.
"Market competition and margin pressure may continue to weigh on future performance," he said. "The dividend is stable, but insufficient to justify holding in a low growth environment."
Nguyen concluded:
Despite recent structural changes, the growth outlook remains modest and better opportunities exist elsewhere in the market.
Investors holding Telstra for yield may consider rotating into stocks with stronger total return potential. We suggest taking profits or reducing exposure as headwinds
At its half-year results, Telstra said it was on track to meet its full fiscal year guidance of underlying EBITDA between $8.5 billion and $8.7 billion.
What's the consensus outlook for the ASX 200 telco?
As at 30 April, the consensus view of 16 analysts on CommSec had Telstra shares as a 'moderate buy'.
Breaking that down, there are eight strong buys, two moderate buys, five holds, and one strong sell recommendation on the ASX 200 telco.
