Goldman Sachs have placed a $3.60 share price target on Telstra (ASX:TLS) shares

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Goldman Sachs have retained their conviction buy rating on Telstra Corporation (ASX:TLS) shares, placing a $3.60 share price target on the country’s leading telco.

This comes after Telstra reported full year profits for the year ended 30th June 2018 of $3.5 billion, down 8.9 per cent on the same period a year earlier.

Goldman Sachs said the highlight of Telstra’s FY18 results was accelerating subscriber momentum across each of the company’s key business lines.

The broker pointed especially to he Telstra postpaid mobile division which it estimates achieved 70 per cent of net additions in the fourth quarter, despite heightened competition from the likes of Optus and Vodafone.

Telstra’s dividend

Many investors buying Telstra shares for its fully franked dividend, and they’ll be heartened by Goldman’s expectation of a 17 cents per share dividend in FY19. That implies Telstra shares trade on a forecast fully franked dividend yield of 6.2 per cent, or 8.8 per cent when grossed up for franking credits.

It wasn’t too long ago that Citi was saying the Telstra dividend should be cut to 14 cents per share.

Writing on Livewire, Hamish Carlisle of Merlon Capital Markets said they do not regard Telstra shares as particularly cheap when they adjust for legacy fixed line cash flows and include a sensible ongoing budget for spectrum purchases. Merlon Capital Markets don’t own Telstra shares.

Here at The Capital Club, having previously said Telstra shares were pretty close to a buy when they traded as low as $2.62, we’ve said we wouldn’t be looking to hold Telstra shares much past $3.

The Telstra share price is currently trading at $3.08.

Telstra shares don’t look cheap, but these 3 shares do…

Combining countless hours of research with over 30 years of hands-on stock market investing experience, The Capital Club’s founder Bruce Jackson has just published his definitive list of 3 Cheap and Good ASX Stocks for 2018.

Telstra was not one of them, but the list does include one tiny gold mining stock, and the company one top fund manager calls the cheapest stock in the ASX 100.

Find out why these 3 Cheap and Good Stocks could be better buys than Telstra. But you better hurry… these stocks may not stay cheap for long.

See the 3 stocks

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Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at brucej@thecapitalclub.com.au