Telstra Group Ltd (ASX: TLS) shares have fallen further into the red in Wednesday afternoon trade. At the time of writing, the telco stock is down around 1% to $5.24 a piece.
The latest slump means the shares have now tumbled nearly 6% from a multi-year high recorded last week.
Why are the shares now cooling? Have Telstra shares now reached a ceiling, or is there potential for more upside ahead?
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What happened to Telstra shares this week?
It looks like the downturn started when investors began taking their gains off the table after the share price spiked on Tuesday last week.
This was accelerated when a flurry of brokers downgraded their outlooks on the stock. There have also been headwinds from broad softening in defensive shares, including telcos, and valuation concerns after Telstra's strong price rally.
Another headline which has weighed on sentiment this week is Telstra's latest job cuts announcement. The company announced on Tuesday that it is planning to cut around 11 jobs as part of a technology division restructure under new CEO Vicki Brady.
The restructure collapses several of Telstra's internal technology and infrastructure teams into two new divisions.
The latest headcount cut follows the telco's announcement earlier this year that it would axe up to 650 roles as part of a restructuring and AI-driven efficiency programs.
Are the shares a buy, sell or hold?
Market Index data shows brokers still rate the telco's shares as a buy, and they tip an average 1% upside to $5.32 over the next 12 months, at the time of writing.
Sentiment looks a little different over on TradingView. Of 15 ratings, only 3 have a strong buy stance, and another 12 have a hold rating on Telstra shares. The average $5.26 target price is just two cents above the current trading level.
Jed Richards from Shaw and Partners gives Telstra shares a sell rating. He thinks that the stock is currently trading at elevated levels with its defensive appeal pushing the share price higher.
He warns that underlying growth is limited and the dividend yield is becoming less attractive as the share price rises.
Elsewhere, analysts at Catapult Wealth also recently highlighted that while mobile price rises are expected to support Telstra's revenue growth this year, there is uncertainty around spectrum license fees, which could remain a medium-term headwind for the company.
