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Why this top broker is tipping 17% upside for the Telstra share price

This ASX broker reckons Telstra shares have a 17% upside.

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Sebastian Bowen
Sebastian Bowen has been a Motley Fool contributor since late 2018. Sebastian found his passion for writing and educating others about shares and all things finance after completing his studies in political, economic and social science and enjoys bringing this passion to life at the Fool. His investment philosophy is a simple one – buying high-quality companies at prices that make sense. When he’s not researching his next investment at all hours of the morning, Sebastian enjoys classic movies and likes to unwind with a good book, newspaper or record.
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Key points
  • Telstra shares haven't gone too far over the past 12 months at all
  • Despite this, the telco has still outperformed the broader market in recent times
  • But one ASX broker reckons the telco's shares could be about to step on the gas

It's been a strong start to the trading week for the Telstra Corporation Ltd (ASX: TLS) share price so far this Monday. At the time of writing, Telstra shares have added a decent 0.38% and are going for $3.94.

However, if we zoom back a little, it's clear that Telstra shares have been struggling in recent months. The telco remains down by 6.75% year to date in 2022 so far. Telstra is also down by almost 8% from the 52-week high of $4.31 a share that we saw back in January. The company has gained 0.64% over the past 12 months.

Even so, it could have been worse. The S&P/ASX 200 Index (ASX: XJO) has lost an even greater 8.25% over the year to date. The ASX 200 is also still down by 6.1% over the past 12 months, so Telstra shares have actually delivered meaningful market outperformance over this period.

But we still can't say Telstra shares have done too much in recent months.

But what of the future? Could this share price stagnation lead to a good buying opportunity for the ASX 200 telco today?

Well, one ASX broker thinks it just might.

A young boy in a grey zip-up jumper has a tin can connected to a string pressed to his ear.

Image source: Getty Images

Is the Telstra share price a buy today?

As my Fool colleague James covered yesterday, ASX broker Ord Minnet thinks the best might be yet to come for Telstra. Ord Minnet currently rates Telstra shares as a buy, with a 12-month share price target of $4.60 a share. If that came to pass, it would result in a compelling upside of almost 17% on current pricing.

Ord Minnet is excited about Telstra's future dividend prospects. Telstra raised its dividend for the first time in years last month. Investors will enjoy a final dividend of 8.5 cents per share, fully franked, for FY22.

But Ord Minnet reckons the telco will be able to jack up its dividends again in FY23, estimating an FY23 total of 17 cents per share in dividends. This is expected to rise to 19 cents per share for FY24.

No doubt this will be very welcome news for Telstra investors today.

At the current Telstra share price, this ASX 200 telco share has a market capitalisation of $45.5 billion, with a dividend yield of 4.19%. 

Motley Fool contributor Sebastian Bowen has positions in Telstra Corporation Limited. 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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