Should you buy Telstra shares after the telco ‘comfortably turned the corner’?

The Telstra Corporation Ltd (ASX: TLS) share price has taken a bit of a tumble recently.

Over the last couple of weeks, the telco giant’s shares have dropped over 6% to $3.89.

This leaves the Telstra share price trading closer to its 52-week low than its 52-week high.

Is the Telstra share price in the buy zone?

While this weakness is disappointing for shareholders, it could be a buying opportunity for others.

According to a recent note out of Morgans, its analysts have an add rating and $4.60 price target on the company’s shares.

Based on the latest Telstra share price, this implies potential upside of 18% for investors over the next 12 months.

And with Morgans expecting a 17 cents per share fully franked dividend in FY 2023, this potential return is boosted by a forecast 4.4% dividend yield.

Why is Morgans bullish?

Morgans was pleased with Telstra’s performance in FY 2022 and its outlook commentary. It believes the tide has now turned for the company and it is onwards and upwards from here. The broker commented:

After years of scrambling hard to lower costs and offset declining earnings, TLS has comfortably turned the corner and guided to growth in underlying EBITDA again in FY23. Guidance is in line with consensus, 3% ahead or our forecast.

Morgans also highlights that the company has some of the strongest tailwinds behind it and a new CEO (former CFO Vicki Brady) that isn’t likely to change the company’s course. It explained:

Telco has the strongest tailwinds in a decade with an increasingly rational market, pricing rises and the criticality of telco increasingly recognised. This combines with an incoming CEO who currently seems unlikely to drastically change the business and the potential for value uplift (potential bids) following the legal restructure.

All in all, the broker feels this makes Telstra’s shares great value at the current level.

The post Should you buy Telstra shares after the telco ‘comfortably turned the corner’? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Why did the Telstra share price outperform the ASX 200 in August?
• Why did the Telstra share price beat the ASX 200 today?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Telstra shares offer a dividend yield over 4% right now. Is this as good as it sounds?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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