National Bank lowers BCE; adjusts Telecom stock price targets

EATON CENTRE, TORONTO, ONTARIO, CANADA - 2015/05/13: Entrance to Bell Store in the Eaton Centre: Bell Telephone Company remains a modern company providing telecommunications products for more than a hundred years. (Photo by Roberto Machado Noa/LightRocket via Getty Images)

National Bank telecom analyst Adam Shine has downgraded BCE Inc stock recommendation and lowered his 12-month price target. (Photo by Roberto Machado Noa/LightRocket via Getty Images

National Bank telecom analyst Adam Shine is making a number of changes to his price targets and has downgraded his recommendation on Canada’s biggest telco company.

Shine has decreased his rating on BCE Inc.BCE.TO BCEIn a note to clients, he changed his sector perform target from outperform to sector perform and dropped his 12-month price target to $63.00 per shares.

He said Bell has enjoyed some tailwinds within its wireless segment, and has gained market share with home wireline service thanks to its ongoing fibre network improvements.

Shine predicts that BCE’s revenue will rise slightly this year compared to 2022. However, the company’s dividend should continue to grow.

If Shaw Communications and Freedom Mobile are renegotiated, the wireless competition will intensify.

“We expect the eventual closing of the Shaw and Freedom deals, subject to the Competition Bureau’s appeal(s) and ISED approval, to add to competitive intensity in Ontario, Alberta, and British Columbia,” he said.

Rogers Communications Inc. was the biggest concession.RCI.B.TO RCI() offered to take Shaw’s proposed acquisition to the final hurdle. sell Freedom Mobile to Quebecor. Rogers-Shaw still faces challenges by regulators.

Despite the uncertainty around the deal, he said he’s factoring in Shaw to his financial forecasts for Rogers as of early 2023.

Shine kept Rogers’ rating at outperform, and raised his 12-month price target from $75.00 to $78.00 per share.

Similar to BCE Telus Corp.T.TO TUHe said that he could be subject to increased wireless competition from Freedom Mobile and Shaw sales.

Shine retained his outperform stock rating, but he lowered his 12-month price target for Telus shares from $34.00 to $31.00.

He highlighted several achievements and upcoming tailwinds that the company has achieved.

“Telus has enjoyed a premium valuation given its verticalization strategy in Wireline as a point of differentiation and given relatively less competition faced out West,” he said.

“After the successful IPO of Telus International whose valuation has since materially reset, we await future monetization opportunities related to Health and Agriculture.”

The company will see an increase in its free cash flow after it has completed its fibre network buildouts and any pending cost savings. LifeWorks acquisition.

A second risk to the telecom industry is the appointment of Vicky Eatrides as the new chair Canadian Radio-television and Telecommunications Commission

“Look for the new CRTC chair to pursue a more pro-consumer tack than the pro-industry skew of her predecessor,” Shine said.

Michelle Zadikian, a senior reporter at Yahoo Finance Canada, is Michelle Zadikian. Follow her on Twitter @m_zadikian.

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