With the key catalysts to UBS’ Buy rating having played out through rational competition in mobile, the TowerCo sale, and no further dividend cut, the broker has lowered the rating on Telstra Corp to Neutral.
Telstra plans to return half the proceeds to shareholders, invest $75m in regional connectivity, with the remainder earmarked to pay down debt.
Key upside risks noted by UBS include even more favourable mobile market conditions, 5G use case upside, further corporate activity around Telstra’s Infrastructure assets, and more cost initiatives.
The TowerCo sale drives earnings per share upgrades of around 1%, and the price target increases to $3.90 from $3.70.
Sector: Telecommunication Services.
Target price is $3.90.Current Price is $3.76. Difference: $0.14 – (brackets indicate current price is over target). If TLS meets the UBS target it will return approximately 4% (excluding dividends, fees and charges – negative figures indicate an expected loss).
