Goldman Sachs just added Telstra shares to its conviction buy list

The Telstra Corporation Ltd (ASX:TLS) share price could be on the move today after Goldman Sachs added it to its conviction buy list…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Telstra Corporation Ltd (ASX: TLS) share price will be one to watch this morning after a leading broker added the telco giant to its coveted conviction list.

What happened?

According to a note out of Goldman Sachs, its analysts have added Telstra to their conviction list with a buy rating and $4.30 price target.

Including dividends, this price target implies a potential total return of ~25% for the company's shares over the next 12 months.

Why has Goldman added Telstra to its conviction list?

Whilst Goldman Sachs has been bullish on Telstra for some time, its addition to the conviction list is largely on valuation grounds after a recent pullback in its share price.

The broker explained: "With TLS -11% over the last month (vs. ASX200 +1%) despite a solid FY19 result, we see incremental value emerging. This is supported by its 4.5% fully franked yield, with its spread (vs. 10Y AU Bond) having increased materially to 3.42%, > 1 STD above its LTM avg. When combined with GS expectations for a further 50bps of easing in CY19, and our view that there is upside risk to its 16¢ dividend (FCF per share > EPS), we believe its yield will remain supportive."

"Finally, TLS has also addressed one of our key prior concerns, being the potential impact of NBN Co. in the enterprise market – somewhat de-risking our estimates. Hence we reiterate our Buy on TLS, and add it to the ANZ CL," the broker added.

Elsewhere in the sector, the broker isn't overly positive on Telstra's rivals.

This morning it reiterated its neutral ratings on the shares of Amaysim Australia Ltd (ASX: AYS), TPG Telecom Ltd (ASX: TPM), and Vocus Group Ltd (ASX: VOC), and its sell rating on the shares of New Zealand-based telco Spark New Zealand Ltd (ASX: SPK).

Should you invest $1,000 in Telstra Corporation Limited right now?

Before you buy Telstra Corporation Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Telstra Corporation Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A woman's hand draws a stylised 'Top Ten' on a projected surface.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another tough day for investors this Tuesday.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why HMC Capital, Platinum, Sigma, and Skycity shares are dropping today

These shares are having a tough session on Tuesday. But why?

Read more »

A close-up photo of a ballot box with an Australian flag in front of it and a gentleman's hands placing his vote in the 2022 election inside the box
Share Market News

How these ASX 200 stocks are primed to gain from Labor's resounding Federal election win

With the Federal election in the rear-view, which ASX 200 stocks should I buy now?

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why Dimerix, Evolution Mining, Inghams, and NextDC shares are charging higher today

These shares are rising when many are falling today. But why?

Read more »

Smiling young woman eating chocolate outdoors.
Share Market News

The See's Candies playbook for ASX investors

Two ASX businesses that remind me of Buffett’s sweetest investment.

Read more »

Man smiling at a laptop because of a rising share price.
Opinions

My 2 favourite ASX sectors to invest in

Finding your groove can help your investing success.

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
Opinions

3 things I learned from Warren Buffett being the CEO of Berkshire Hathaway

The Oracle from Omaha is in his last year as CEO.

Read more »

A male ASX 200 broker wearing a blue shirt and black tie holds one hand to his chin with the other arm crossed across his body as he watches stock prices on a digital screen while deep in thought
Share Market News

5 things to watch on the ASX 200 on Tuesday

Here's what to expect on the local market today.

Read more »