Telstra shares slide on open amid UBS downgrade
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More news: Telstra’s share price has reversed some of the gains it made following the release of a new five-year plan at an investor day event, as UBS downgraded the stock from ‘buy’ to ‘neutral’.
The numbers: Telstra shares were down 0.53% to $4.72 at 10:47am, despite closing 0.4% higher at $4.75 yesterday.
UBS analysts issued a note on Tuesday after the investor day downgrading its 12-month rating from ‘buy’ to ‘neutral’, although it marginally increased its 12-month price target from $4.50 to $4.60.
While the note acknowledged it was a “solid investor day” the note flagged it was “time for a pause”.
The context: UBS downgraded the stock as it is now trading in line with the bank’s estimated fair value. The note also said “the jury is still out on whether the industry can lift return on invested capital”.
It added that the stock has outperformed the ASX by 15% over the last six months driven by 1H25 results and recent macroeconomic factors, but without a change in FY25 guidance.
Macquarie upgrades Telstra after new strategy launch
The news: Macquarie has upgraded its rating on Telstra after the telco giant outlined $4.5 billion in further cost cuts on Tuesday.
The numbers: Macquarie upgraded Telstra from 'neutral' to 'outperform' and hiked its target price 34% from $3.93 to $5.28.
Telstra shares closed 0.4% higher at $4.75 on Tuesday after the company presented its new five-year strategy to investors in Sydney.
The context: Telstra has identified $4.5 billion of operating and capital cost reductions via workforce reduction, process improvements and artificial intelligence.
Macquarie analysts also flagged that Telstra's Network as a Product (NaaP) offering, at the centre of the company's new 'Connected Future 30' strategy, represents a more granular focus on its core offering an positions network as a product rather than a service.
Telstra is aiming for more than 50% of connectivity revenue to be driven by NaaP, the analysts noted, supporting average revenue per user increases through mix, price and new revenue.
The sources: Macquarie research, UBS research
