The Telstra (ASX:TLS) share price has jumped 14 cents or 5.1 per cent higher to close at $2.90 on Thursday after two brokers upgraded the shares.
In advance of its investor day next week, Ord Minnett has upgraded Telstra shares from a hold rating to accumulate, with a share price target of $3.30.
The broker believes Telstra management could use the event to announce further cost savings of up to $1 billion and product bundling initiatives.
Acccording to a report in The Australian, J.P. Morgan upgraded the company to outperform. The broker also gave Telstra a share price target of $3.30.
Telstra shares hit a low of $2.72 last month in the wake of its profit downgrade.
Even after today’s bounce, the Telstra share price is down over 20 per cent so far in 2018.
Earlier this week, Citi said Telstra must layout whether it is focused on its current fully franked dividend or maximising its long term profitability.
The broker suggested Telstra should aggressively cut the prices of mobile phone plans, something that would hurt Telstra earnings in the short term, but set the company up for growth over the longer term.
Citi said the Telstra fully franked dividend should be cut to just 14 cents a share, way down on the 31 cents the company paid until August last year.
Competition is about to heat up, with TPG Telecom (ASX:TPM) planning on launching a mobile plan with unlimited data, which subscribers will get for free for the first six months. The TPG offering won’t have voice call functionality at launch.
The TPG share price has fallen over 15 per cent so far in 2018.