Telstra Group Ltd (ASX: TLS) shares are in the green so far in 2025, up more than 5% since January.
The stock hit fresh 52-week highs of $4.23 apiece early in the session on Wednesday, before retreating slightly to $4.22 at the time of writing.
Zooming out, the telecom giant has had a busy period the past year. So, is there still room for Telstra shares to climb? Let's see what the experts think.
Why is the Telstra share price climbing?
Telstra's H1 FY25 earning results posted in February impressed the market, with operating income up 6% year over year to $4.2 billion and net profits up 6.5%.
In other words, basically all of the growth in business operations pulled down to the bottom line for Telstra shareholders.
Its mobile segment also added 119,000 handheld customers, a 2.5% increase year over year.
Telstra duly rewarded shareholders with a nearly 6% hike in its interim dividend to 9.5 cents per share, fully franked, and outpacing inflation.
Inflation ran at 2.4% by the end of December here in Australia, per the latest statistics.
It also authorised a $750 million buyback of its own stock. Telstra shares spiked on the day of the earnings release in late February and have been up more than 7% since then.
Are Telstra shares still a buy?
Despite Telstra's recent gains, analysts believe there could still be room for more upside. According to CommSec, the stock is rated a buy from consensus estimates.
Meanwhile, broker data obtained from Trading View shows the median analyst price target is $4.39 apiece.
Brokers also forecast Telstra to deliver earnings per share (EPS) of 19.7 cents in FY25, with annual dividends of 18 cents apiece.
Goldman Sachs remains bullish on the telco, pointing to its earnings stability and dividend growth potential.
As reported by my colleague James, the broker also highlights Telstra's long-term value in monetising its infrastructure assets, estimating that its InfraCo Fixed division could be worth between $22 billion and $33 billion.
Goldman maintains a buy rating on the stock with a $4.50 price target, suggesting upside potential if the broker is right.
The company itself is projecting pre-tax income of $8.5 billion to $8.7 billion in FY25, per its half-yearly update.
After all capital expenditures, it eyes free cash flow of around $3 billion to $3.4 billion. This may or may not impact Telstra shares.
Telstra is also pushing ahead with plans to strengthen its mobile network, committing an additional $800 million in investment over the next four years.
Foolish takeout
Telstra shares have started the year well and are highly rated by brokers. The telco giant has a large year ahead if it is to hit expectations.
The stock trades at a price-to-earnings (P/E) ratio of 29.5 times, meaning investors pay nearly $30 for every $1 of earnings in the company. Time will tell what this price gets investors.
The post Telstra shares surge to fresh highs. Should investors jump in? appeared first on The Motley Fool Australia.
Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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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