On Monday, Telstra (OTC:TLGPY) Corp. (TLS:AU) received an upgraded stock rating by Jefferies from Hold to Buy, with a revised price target set at AUD4.50, up from the previous AUD4.30. The firm's analyst cited multiple reasons for the positive outlook on the Australian telecommunications company, noting that the current valuation multiple is below its historical average, which suggests potential for a re-rating due to Telstra's defensive earnings profile.
The analyst also pointed out that Tier-2 mobile brands are expected to increase prices in 2025, which could allow Telstra to raise its mobile Average Revenue Per User (ARPU). Additionally, improvements in the margins of the National Broadband Network (NBN) and anticipated announcements of further cost reduction programs across Telstra's portfolio were key factors in the upgraded rating.
In line with the positive forecast, Jefferies has also adjusted its Dividend Per Share (DPS) expectation for the fiscal year 2026 to 20 cents per share, a slight increase from the previously estimated 19.5 cents per share. This adjustment reflects the firm's confidence in Telstra's ability to generate steady returns for shareholders in the coming years.
The upgrade comes at a time when investors are looking for stable investments with resilient earnings. Telstra's strategic moves to optimize costs and the potential to leverage pricing changes in the mobile market are seen as steps that could strengthen the company's financial position and market standing.
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