Deutsche Telekom’s 42-Euro Bull Case Battles a 27-Euro Reality as Verdi Counts Down to 26 May

Deutsche Telekom raises full-year profit target after strong Q1, but stock languishes near €27.70 amid labour unrest and slow fibre adoption. Analysts see €37–€42 upside.

The gap between Deutsche Telekom’s underlying momentum and the market’s mood has rarely yawned so wide. The Bonn-based telecoms giant delivered a first-quarter performance that prompted management to lift its full-year profit target, yet the stock continues to slog near €27.70 — a far cry from the €42 price tag Deutsche Bank has pinned on it. Adding to the disconnect is a labour dispute that is gathering pace just as the group prepares to enter a make-or-break wage round next week.

Operationally, the case for optimism is solid. Revenue inched up to €29.9bn in the first three months, while adjusted EBITDA climbed 7.5% organically to €11.5bn. The group now expects full-year adjusted EBITDA of around €47.5bn and adjusted earnings per share of €2.20 — upgrades that underscore the resilience of its core telecoms business. Net profit, however, took a 28% hit to €2.0bn, a drop analysts attribute to special charges and restructuring at T-Mobile US, in which Deutsche Telekom recently raised its stake to nearly 54%.

Back in Germany, the home market is something of a mixed bag. Mobile subscriber additions of 200,000 were respectable, and the fibre network now passes 13m households. But only 17% of those premises have signed up, a take-up rate that lags competitors such as Deutsche Glasfaser, which routinely hits 30%. The challenge of monetising that infrastructure remains a nagging drag on sentiment — and a reason why the stock has shed roughly 15% over the past twelve months.

Despite that technical weakness, the analyst community remains firmly in the bull camp. Deutsche Bank Research reiterated its “Buy” rating with a €42 target, arguing that the first quarter was “reassuring” and that free cash flow outside the US has been robust. Bernstein Research maintains an “Outperform” rating and a €37 target, with analyst Ulrich Rathe noting that the numbers came in broadly as expected. Both houses appear to view the current share price as a compelling entry point, even as the stock trades 8.15% below its 50-day moving average and 5.28% below the 200-day line.

The wild card is the labour front. After three fruitless negotiating rounds, the fourth is scheduled for 26 and 27 May, and the pressure is mounting. Verdi, the union representing around 60,000 tariff employees, is demanding a 6.6% pay rise plus an annual “member bonus” of €660, all within a twelve-month contract. The employer’s current offer has been dismissed as far too weak, and the union has already shown it can mobilise: more than 20,000 workers have participated in warning strikes since 28 April, with 2,500 rallying in Potsdam alone. Significantly, the walkouts have for the first time drawn in staff from subsidiaries such as the privatkunden sales unit and T-Systems, broadening the conflict’s reach.

The timing could hardly be more sensitive. Deutsche Telekom recently unveiled a €2bn share buyback programme for 2026 — a move that, in the middle of pay talks, gives Verdi ammunition to argue that the company has ample financial headroom. The union has also linked its wage claim to job security, citing the digital transformation that is reshaping roles across the group. The underlying tension between capital discipline and social protection will come to a head next week.

For the stock, the outcome of the 26/27 May talks could determine near-term direction. A credible improved offer might defuse the conflict and let the market refocus on the raised guidance and analyst targets. A hardened stalemate, on the other hand, would amplify scrutiny of how much social stability costs in the midst of a corporate restructuring — and could keep the share price anchored well below the €42 that the bulls are banking on.