Byron Capital’s Rob Goff increases price target on Telus

Since Darren Entwistle joined Telus, in 2000, the company’s revenue has nearly doubled. On Friday, Telus (TSX:T) reported its Q2, 2012 financials. The company earned $328-million on revenue of $2.7-billion, which was a 4% increase over the same period last year.

Byron Capital analyst Rob Goff says the results were solid. He believes the company’s continued strong performance in its wireless division makes the company “best in class in that area”. What’s more, says Goff, the quarter might have been even stronger because some customers may have delayed the purchase of a handset ahead of the iPhone 5 release. In a research update to clients today, Goff reiterated his HOLD rating on Telus, but upped his target from $62 to $65.

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Founded in 1990, Vancouver-based Telus provides a range of telecommunications products and services, including wireless, wireline, data, digital television, and IP services. The company was created by the government of Alberta to facilitate the privatization of a crown corporation, called the Alberta Government Telephones Commission. The Telus we know today was created by the 1999 merger of Telus and BC Tel, a move that instantly made it Canada’s second largest telecom behind Bell Canada. The company’s stock has been a star performer; in the past decade it has moved from under $8 to more than $60.

Goff says that because Telus plays in markets that are very mature and have intense competition, growth expectations should be tempered. The Byron Capital analyst says new wireless competitors could steal business from incumbents and Telus’s strategic decision to not pursue the converged content and distribution model that has been adopted by competitors BCE, Rogers, Quebecor and Shaw) could mean a substantial competitive disadvantage. However, he says, it is quite likely that consolidation amongst new wireless entrants could result in a more “rational” pricing environment and Telus’s lack of content might be a non issue due to its active lobbying of the government.

Shares of Telus on the TSX closed today up 2.1% to $64.49

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