Telstra shares gain as analysts lift expectations
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More news: Telstra shares gained on the ASX as Macquarie and Goldman Sachs analysts lifted their outlooks on the stock, a day after the telco announced price increases for its postpaid and prepaid mobile plans.
Shares were up 2.4% to $3.82 by 1:15pm AEST.
The telecommunication services sector was leading the ASX by early afternoon, up 1.24%, during a weak trading day.
Analysts bullish on Telstra after mobile plan price hike
The news: Analysts were bullish on Telstra after the telco said it would increase prices for its postpaid and prepaid mobile plans on Tuesday.
The numbers: Macquarie analysts upgraded their rating on the stock from 'neutral' to 'outperform' and lifted their price target 19% from $3.70 to $4.40.
They also raised their earnings per share estimates 8% in FY25, reflecting the larger-than-expected price increase, and 14% in FY26, reflecting the full period benefit of this increase and the expectation of one more price increase.
Goldman Sachs analysts retained their 'buy' rating on Telstra and raised their 12-month target price 1% to $4.30. They raised their earnings per share estimates 1% in FY25 and 3% in FY26.
On Tuesday, Telstra said it would raise prices on postpaid mobile plans from 27 August and on prepaid plans from 22 October, with prices to lift by $2 to $4 per month. Shares closed 2.6% higher at $3.73.
The context: Macquarie downgraded Telstra to 'neutral' in May, with expectations the telco would remove its CPI-based price increases. However, analysts now said they "misinterpreted the step-away of inflation-linked pricing as an industry negative". They noted that the medium-term outlook is more positive with Telstra demonstrating "new agility" in its mobile pricing strategy.
Meanwhile, Goldman analysts said Telstra remained their "preferred telecom". They said the pricing plan changes highlights remaining mobile market rationality, flexibility benefits of a non-CPI linked pricing mechanism, and that Telstra mobile earnings growth remains strong.
The sources: Macquarie research, Goldman Sachs research
