TLS – Morgans rates the stock as Add

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Telstra has reduced FY18 earnings guidance by -5% because of NBN delays. Morgans assumes the delays will have a knock-on effect in FY19 and downgrades estimates by -10% in FY18 and -6% in FY19.

Dividend guidance has been reaffirmed at $0.22 per share. The reason for the downgrade is that NBN will cease sales of its HFC technology for 6-9 months. Telstra has noted the delay will be modestly positive for its business over the full roll-out of the NBN.

Morgans maintains an Add rating and reduces the target to $4.11 from $4.15.

Sector: Telecommunication Services.

Target price is $4.11.Current Price is $3.42. Difference: $0.69 – (brackets indicate current price is over target). If TLS meets the Morgans target it will return approximately 17% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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