Telstra Group Ltd (ASX: TLS) shares have been on a tear in recent months.
So much so, since 13 February, the telco giant's shares have risen an impressive 22%.
Can the run continue? Let's see what Goldman Sachs is saying about this high-flyer.
Image source: Getty Images
What is being said about Telstra?
If you are like me (and millions more), you may have received an email this week from Telstra talking about price increases for your mobile or internet plans.
Goldman has been looking at the increases and believes they are in line with what it was expecting and, importantly, underpin its bullish view on the stock. Commenting on the increases, it said:
Telstra today announced revised pricing for its mobile and internet plans, with stronger than expected increases of $3-5/m. Key highlights: (1) This follows Optus' A$2-6 price rises in Apr-25, with both increases occurring despite ongoing promotional activity from Vodafone (i.e. 12m of $10/m discounts) – in our view this highlights Telstra's pricing power (current premium 45% vs. 32% avg.) and suggests subscriber momentum has continued despite elevated competition; (2) We estimate these price increases will contribute c.$2.40 to TLS Postpaid ARPU (c.$4 blended increase to 65% of base) – but expect ongoing competition in Enterprise and greater than usual spin-down/sub churn to partly offset the ARPU benefit;
(3) FY26 postpaid ARPU growth will also benefit from full year benefit (+2 months) from the 2024 increases; (5) Mobile prepaid pricing was left unchanged – noting sig. price increases in 2024, and that prepaid price increases are less frequent, but more significant given cost of implementation; (6) Price rises to offset cost of inclusion of Starlink messaging service, which is set to be launched in coming months; and (7) NBN residential price rises above wholesale price increases should support FY26 NBN margin expansion but at the expense of SIO growth (ABB/SLC to continue to benefit).
Can Telstra shares keep rising?
In response to the above, Goldman has boosted its earnings estimates and valuation accordingly.
The latter has seen the broker retain its buy rating on Telstra's shares with an improved price target of $4.90 (from $4.50). Based on its current share price, this implies potential upside of approximately 4% for investors.
In addition, Goldman continues to forecast fully franked dividends of 19 cents per share in FY 2025 and then 20 cents per share in FY 2026. This equates to dividend yields of 4% and 4.2%, respectively, over the next two years.
Combined, this means that a total potential return of approximately 8% is possible if buying at current levels.
