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Telstra Group Ltd (ASX:TLS) has garnered a favorable response from the broker community following the release of its FY 2024 results. With analysts reviewing the telco giant's performance, investors are keen to know whether Telstra shares present a buying opportunity.
Broker Sentiment: A Buy Recommendation
Several brokers have expressed optimism about Telstra's latest financial results, suggesting that the company may continue to offer value to investors. For instance, Bell Potter has reaffirmed its buy rating on Telstra shares and increased its price target from AU$4.20 to AU$4.30. With Telstra's current share price standing at AU$3.95, this revised target implies a potential upside of 9% for investors.
Additionally, Bell Potter's analysts are forecasting a fully franked dividend yield of 4.8% for FY 2025. When combined with the expected capital appreciation, this brings the total potential return for investors to nearly 14%.
Bell Potter expressed satisfaction with Telstra’s FY 2024 performance and its guidance for FY 2025, noting: "We have lowered the discount we apply in the P/E ratio valuation from 15% to 10% due to the strong results, slight guidance upgrade, and the potential for a significant uplift in free cash flow (FCF) in FY26. Our other valuation assumptions remain unchanged."
The net result is a 2% increase in Bell Potter’s price target to AU$4.30, representing a 9% premium over the current share price. The firm maintains its buy recommendation, stating, "We believe Telstra offers reasonable value at an FY25 P/E ratio of around 20x, especially when most companies in the S&P/ASX 20 are trading above 20x. Additionally, the forecast fully franked yield of 4.8% is attractive, particularly when compared to Commonwealth Bank (ASX:CBA), which has a forecast yield below 4%. While the yield is similar to other banks, Telstra's dividend is expected to grow, unlike those of the banks."
Additional Support from Goldman Sachs
This positive sentiment is echoed by Goldman Sachs, which has also reiterated its buy rating for Telstra shares, accompanied by a slight increase in its price target from AU$4.30 to AU$4.35. This adjustment suggests a potential upside of 10% for the stock. Like Bell Potter, Goldman Sachs is forecasting a fully franked 4.8% dividend yield for FY 2025, which would bring the total potential return to 15%.
