The Telstra Corporation Ltd (ASX: TLS) share price has been on a rollercoaster ride these past few years, rising from $2.70 in 2011 to over $6.50 in 2016 before crashing back to $2.60 ish last year.
Telstra Share Price V. ASX 200
A generous dividend is one the big reasons investors pushed Telstra shares higher a few years ago but since then it seems the demand for dividends, Labor’s franking credits policy and fears of competition in the telco space has weighed on the company. However, so far in 2019, its fortunes have reversed.
TPG Telecom Ltd (ASX: TPM) recently announced it would halt its mobile network rollout in favour of a merger with Vodafone Australia — aka Hutchison Telecommunications Australia (ASX: HTA).
That was after the Australian Government clamped down on TPG’s Chinese technology provider and the ACCC raised concerns about its impact on mobile market competition.
That was good news for Telstra.
What was also positive news was Telstra’s decision to cut its dividend. As Rask Media’s lead analyst accurately predicted here, “Telstra could cut its dividend in 2019“, Telstra cut its dividend. While it may seem like bad news, in a way this allows it to focus on reinvesting back into its business.
What Analysts Think About Telstra
According to data sourced by The Wall Street Journal, a total of 17 analysts follow Telstra and five have a buy rating on the stock. However, what’s most interesting is that only three (~17%) have a sell rating. Meaning, the bulk of analysts are at least indifferent or positive about its prospects.
Mind you, the average valuation of analysts is almost exactly the current share price – $3.32 is the valuation. What that means is the ‘average’ valuation doesn’t imply much upside or growth. As we always say, you have to be very careful about taking these price targets or valuations in your stride without first knowing how they get to their values.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).