Telstra shares round 10% from a 52-week low: Is the telco stock finally back in the buy zone?

It looks like Telstra Group Ltd (ASX: TLS) shares are finally coming back in favour with investors.

At the time of writing on Thursday, the shares are flat for the day so far, at $5.05 apiece.

Earlier this week, at the close of the market on Tuesday afternoon, the ASX telco's shares pushed past the $5-mark for the first time in over two months. And at one point in Wednesday afternoon trade, they reached as high as $5.08 (before closing at $5.05).

The increase is small, but it comes as a relief for investors after the shares hit an annual low of $4.58 in late August. And they've struggled to push past $5 ever since.

Telstra shares have now rebounded around 10% from that low point, to the time of writing, and are now around 3% higher both year to date and compared to 12 months ago.

What supported the latest rebound?

Telstra shares slumped to their annual low in late August after the telco suffered a major nationwide network outage and posted a disappointing FY26 result, including a 0.8% decline in revenue and a 4.4% increase in underlying earnings.

Investors weren't impressed, and many decided to turn their back on the shares.

There hasn't been any price-sensitive news out of the company since it posted its FY26 results.

So it looks like the rebound is sentiment-driven.

A recent resurgence of inflation concerns and a November cash-rate hike has seen some investors rotate back towards the more secure, defensive assets on the share market.

And as a classic defensive stock, Telstra is a top pick.

Telstra operates Australia's largest mobile network and is also a major home internet provider. These are both essential services which will experience steady demand regardless of the health of our economy.

Its defensive nature means it can generate stable, consistent earnings and revenue, regardless of where the economic cycle is.

Are Telstra shares now a buy?

Analyst sentiment is split. 

TradingView data shows that, of 16 analysts, 7 have a buy/strong buy rating on the telco's shares. Another eight have a hold rating, and one rates the shares as a sell.

The $5.01 average target price now implies a small downside of almost 1%, at the time of writing. Although some experts think the shares have the potential to climb another 9% to $5.50 over the next 12 months.

If that maximum target price comes to fruition, it would put Telstra shares back up to around the latest annual high.

My take

I think that Telstra's share price will depend on its next earnings announcement, scheduled for Thursday the 18th of February next year. 

The company is guiding its underlying EBITDA after leases (EBITDAaL) to be in the range of $8.5 billion to $8.8 billion for FY27, up from $8.3 billion in FY26.

I think that if Telstra can meet or even exceed guidance, it will drive a spike in investor confidence and reassure institutional investors that business momentum is growing.

Between now and then, I also think a worsening economic climate will continue to support Telstra's share price growth.

In my view, at just over $5, Telstra shares are worth buying for their defensive characteristics and upside potential.

The post Telstra shares round 10% from a 52-week low: Is the telco stock finally back in the buy zone? appeared first on The Motley Fool Australia.

Motley Fool contributor Samantha Menzies 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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