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Byron Capital’s Rob Goff maintains Hold on BCE, raises target

BCE CEO George Cope says the company is beginning to reap the benefits of recent multibillion-dollar investments into broadband networks.
BCE CEO George Cope says the company is beginning to reap the benefits of recent multibillion-dollar investments into broadband networks.
BCE (TSX:BCE) reported its Q2, 2012 results last week.

The company earned $773-million on revenues of $4.923-million which was down 0.6% from the $4.955-million the company posted in the same period last year. But because of tax matters settled in the company’s favour and a non-recurring charge in Q2, 2011, BCE’s earnings were 31% higher, to $773-million, or $1.00 per share.

BCE CEO George Cope said the company is beginning to reap the benefits of recent investments: “The Bell team continues to execute our customer-focused growth strategy across all services, leveraging our multibillion-dollar investments in the latest broadband networks to deliver next-generation mobile, TV and Internet services, and the best content across every screen.” Cope said, adding: “Bell is bringing broadband innovation, expanded choice and enhanced competition to Canadian communications, and these strong results — including exceptional wireless performance, continued fast growth in Bell Fibe TV and industry-leading performance at Bell Media — show it’s clearly a strategy with momentum.”

Byron Capital analyst Rob Goff says BCE’s Q2 was solid. Thought he is concerned about wireless competition and the company’s customer erosion, particularly to competitor Quebecor, Goff says BCE has demonstrated consistently strong execution. In a research update to clients Friday, Goff maintained his HOLD rating on BCE, but raised his target price by $3, to $45.

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BCE operates Bell Media, one of Canada’s largest media companies, which owns the Canadian television networks, CTV and CTV Two, plus thirty other specialty television channels, Bell Media Radio, and a chain of retail stores. BCE owns 18% of the Montreal Canadiens and, along with its competitor Rogers, now owns a majority stake in Maple Leaf Sports & Entertainment, which owns several Toronto professional sports franchises, including the Toronto Maple Leafs. BCE ranked number 262 on the 2011 edition of the Forbes Global 2000 list.

Goff says there is potential for upside in BCE because of the solid adoption of the company’s IPTV products. He says the planned acquisition of Astral Media could help it capture a larger share of the Quebec market. The Byron analyst says new competition is the biggest risk with BCE, as whether or not recent entrants in the wireless space can steal market share is still an unknown.

At press time, shares of BCE were down .2% to $44.97.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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