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I am a long suffering Telstra share holder. The shares crashed under the Labor government and GFC, They then climbed back into the $5.50 range and as the NBN has come on line the shares have sunk back to the $3 to $4 range with a corresponding drop in the dividend. Should I take my $15K loss and move on or hang on?
A: I would probably hang on to Telstra. I think it is relatively defensive, and around $3.00, reasonable value. It is probably not going to be a performer, so if you need the money or are looking for outperformance, you may want to rethink.
In the short term, Telstra is wearing a little bit of pain as it provides rebates/fee relief to customers impacted by Covod-19. In the medium term, it has probably cemented its position as the leading Telco.
Overall, the brokers are positive with a consensus target price of $3.81 (5 buys and 1 sell recommendation). Range is a low of $3.30 from Morgan Stanley to a high of $4.10 from Credit Suisse. The dividend of 16c per share is reasonably secure, although Macquarie forecasts a cut to 14c.
On the value curve, I think it looks reasonable. I would say a hold.
