Why Telstra shares have 16% upside right now: fundie

The Telstra Group Ltd (ASX: TLS) share price is slightly in the green today but could it have more upside in the future?

Telstra shares are climbing 0.25% today and are currently trading at $3.95. For perspective, the S&P/ASX 200 Index (ASX: XJO) is down 0.025% at the time of writing.

Let’s take a look at the outlook for the Telstra share price.

What’s ahead?

The team at Morgans believe Telstra is in “good shape” and is tipping its share price to go higher.

Morgans has placed an add rating on the company’s share price with a $4.60 price target. This implies an upside of 16% based on the current share price.

Analysts are optimistic on the Telstra share price in light of its restructure, which could unlock value in its assets. The broker said:

After a major turnaround, TLS has emerged in good shape with strong earnings momentum and a strong balance sheet. In late CY22 shareholders vote[d] on Telstra’s legal restructure, which opens the door for value to be released.

TLS currently trades on ~7x EV/EBITDA. However some of TLS’s high quality long life assets like InfraCo are worth substantially more, in our view. We don’t think this is in the price so see it as value generating for TLS shareholders. 

Telstra’s corporate restructure will involve a legal reorganisation where multiple subsidiaries will sit under the new Telstra Corp. These will include Telstra International, Amplitel, InfraCo and Serve Co.

The legal restructure is due to be complete on 1 January 2023.

Telstra transitioned to new CEO Vicki Brady at the start of September.

Telstra share price snapshot

The Telstra share price has descended 3% in the past year, while it has fallen 6% in the year to date.

For perspective, the ASX 200 has fallen nearly 3% in the last year.

Telstra has a market capitalisation of more than $45 billion based on the current share price.

The post Why Telstra shares have 16% upside right now: fundie appeared first on The Motley Fool Australia.

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Motley Fool contributor Monica O’Shea 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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