How much could the Telstra share price rise in the next year?

The Telstra Group Ltd (ASX: TLS) share price has drifted lower in the last several weeks. This could be a good opportunity to invest in the ASX telco share at a lower price. But, where could it go from here?

The business has been on a positive trajectory in the last few years as it has grown its mobile earnings.

Rising earnings are a key tailwind for sending the Telstra share price higher. Let's take a look at where experts think the business is headed from here.

Analyst views on the Telstra share price

A price target is where analysts think the share price will be in 12 months from the time of the investment call.

The company's profit has been heading higher, and this has led analysts to think the business can deliver capital growth over the year ahead.

According to a CMC Markets collation of analyst opinions on the ASX telco share, the average price target is $5.04. That suggests a possible rise of 4% from where it is at the time of writing.

That's just the average price target; there are analysts who are both more negative and more optimistic than that price target.

The most optimistic (recent) price target is $5.46, which suggests a double-digit return of approximately 13% in the next 12 months.

Even the most pessimistic price target suggests the business won't go down over the next 12 months (just a flat capital return)

Is the ASX telco share a buy?

Of the six ratings on the Telstra share price, there are three buy ratings and three hold ratings.

I think investors should look at both the valuation and the dividend yield when deciding whether to buy the business or not – there's more to the returns than just the potential passive income.

Using the earnings projection that's currently on CMC Markets, the forecast is that the business could generate earnings per share (EPS) of 20.1 cents. That means the Telstra share price is currently trading at 24x FY26's estimated earnings.

Excitingly, for income-focused investors, the Telstra dividend per share is projected to rise 20 cents, up from 19 cents per share in the 2025 financial year.

At the current Telstra share price, that means it could deliver a grossed-up dividend yield of 5.9%, including franking credits. Excluding those franking credits, it'd be a cash yield of 4.1% if the projection becomes true.

I think the Telstra share price is one to watch over the next few years, out of the large ASX blue-chip shares.

The post How much could the Telstra share price rise in the next year? appeared first on The Motley Fool Australia.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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 Group. 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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