Telstra Group Ltd (ASX: TLS) is a popular option for investors and its stock features in countless portfolios across the country.
But should you be adding the telco giant to your portfolio right now? Let's take a look at what three leading brokers are saying about this blue chip.
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Telstra stock: Buy, hold, or sell?
Let's start with analysts at Bell Potter.
The good news is that they see a lot of value in the telco's shares at current levels. A recent note shows that the broker has put a buy rating and $4.30 price target on them.
Based on the current Telstra stock price of $3.81, this implies potential upside of approximately 13% over the next 12 months. Commenting on its bullish view, the broker said:
We believe the stock looks reasonable value on an FY25 PE ratio of c.20x when all of the comps in the S&P/ASX 20 trade on >20x. We also believe the forecast fully franked yield of 4.8% is attractive when CBA's forecast yield is now <4%. The yield is comparable, however, to the other banks but Telstra's dividend is expected to grow whereas the banks are not so much.
Next opinion
Analysts at Morgans aren't feeling so positive. The broker recently put a reduce (sell) rating and lowly $3.20 price target on its shares. This suggests that downside of 16% is possible from current levels. It said:
The FY24 underlying result came in towards the lower end of expectations. NPS (customer advocacy) and return on capital continue to improve while the heavily lifters remained Mobile (61% of EBITDA and +9% yoy) and InfraCo Fixed (21% of EBITDA and +6% yoy). Growth here more than offset declines elsewhere. We recommend a REDUCE rating.
Another bull
Finally, the team at Goldman Sachs is in the bull corner and has put a buy rating and $4.35 price target on Telstra stock. This implies potential upside of 14% for investors from current levels.
Goldman believes that its valuation is attractive when factoring in its dividend growth outlook. It recently stated:
Although at a headline level, Telstra valuation appears relatively full (vs. peers and vs. 10Y yield), we note: (1) Adjusting out NBN recurring payments (a unique asset), Telstra trades at a much more compelling multiple; (2) Although its yield spread is compressed vs. history, when factoring dividend growth this is more attractive. Hence, in an uncertain 2024 we rate Telstra Buy.
