Telstra Corp believes the worst is behind it, with earnings bottoming out in FY20, and the company is now guiding to a reasonable pace of growth through to FY25.
Morgans notes the company has some bold medium-term targets, providing guidance of mid-single digit underlying earnings and high-teens underlying earnings per share compound annual growth rate from FY21 to FY25.
The broker also highlights the supportive backdrop behind Telstra’s targets is based on an assumption of continuing rational industry pricing and telcos being able to increase charges for services, which is not guaranteed.
The Add rating is retained and the target price increases to $4.44 from $4.34.
Sector: Telecommunication Services.
Target price is $4.44.Current Price is $3.96. Difference: $0.48 – (brackets indicate current price is over target). If TLS meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).