Telstra Group Ltd (ASX: TLS) shares rocketed higher at the start of the year, climbing around 18% to an all-time high in mid-May.
But as quickly as the telco's shares spiked, they cooled back down again.
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What has happened to Telstra shares?
The telco's share price has been incredibly volatile recently, swinging between $5.41 and $4.97 over the past couple of months. At the time of writing, Telstra shares are trading at $5.14 a piece.
By early June, Telstra shares had fallen 11% from their peak. It looks like much of the shift in sentiment was investors taking their gains off the table after a huge rally.
The downturn also accelerated when a flurry of brokers updated their outlooks on the stock.
A broad softening in defensive shares, including telcos, and valuation concerns have also acted as headwinds.
Another headline that has weighed on sentiment is Telstra's announcement of job cuts late last month. The company said it plans to cut 111 jobs as part of a restructuring of its technology division 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.
It looks like investor confidence is still under pressure and the share price has struggled to rebound through June.
The question now is, what's next?
Are the telco's shares a buy, sell or hold?
The outlook over the next 12 months is split.
Market Index data shows the majority of brokers have a buy rating on Telstra shares. The $5.50 average target price implies a potential 7% upside ahead.
But analysts on TradingView data are a lot more reserved. All 10 analysts have a hold rating on Telstra's shares, but their target prices vary significantly. The average $5.25 target price implies a potential 2% upside at the time of writing.
But some forecast the shares to rise 8% to $5.57, and others expect them to fall further by around 11% to $4.60 apiece.
Macquarie thinks Telstra shares are trading close to fair value. The broker downgraded its rating to a hold earlier this month and shaved its price target on Telstra shares to $5.57. Based on the current share price of $5.14, the price target suggests potential upside of around 8%.
The team at Shaw and Partners give Telstra a sell rating. The broker said it thinks the stock has been trading at elevated levels and was pushed higher by its defensive appeal. But it adds that underlying growth is limited, and the dividend yield is becoming less attractive.
