Analysts at Citigroup have reaffirmed their sell rating on shares in telecommunications giant Telstra Corporation Ltd (ASX: TLS). The analysts also reduced their share price target from $3.35 to $3.25, implying approximately 8% downside (excluding dividends) from Monday's closing price of $3.53.
Earnings Downgrade
The note from Citi estimates that core earnings per share will decline by approximately 43% from the 2017 financial year to the completion of the NBN roll-out in the 2021 financial year.
The analysts forecast Telstra's 2018 financial year earnings per share at 22.70 cents. 2017 has been a terrible year for Telstra shareholders with the company's share price declining 31%.
The stock has been sold off by 18% since mid August after the company released its 2017 earnings and announced it will be cutting its FY 2018 dividend from 31 cents a share to 22 cents a share. With rival TPG Telecom Ltd (ASX: TPM) launching its very own 5G network with an aggressive strategy to capture market share along with the increased adoption of the NBN, investors may want to park their money elsewhere.
