Byron Capital analyst Rob Goff says industry consolidation and increased data usage is improving the climate for Canada’s wireless players, and Rogers Communications (Rogers Communications Stock Quote, Chart, News: TSX:RCI.B) stands to benefit greatly from these trends.
Yesterday, Rogers Communications and Quebecor’s Videotron announced they had signed a 20-year agreement to build out and operate a shared LTE wireless network, which they say will offer the most advanced wireless technology in the world.
Rogers CEO Nadir Mohamed said a partnership makes sense for customers.
“This agreement will benefit businesses and consumers and is part of Rogers’s focused, strategic game plan,” he said. “This network and spectrum-sharing agreement, combined with the expansion of our LTE footprint, will allow even more consumers to experience the superior connectivity and incredibly fast speeds that LTE delivers.”
Goff says Canada’s wireless players are benefiting from an improving macro environment, and revenue outlooks are also improving because of accelerated data usage. He says that because mobile data usage is rising, spectrum has become increasingly valuable and yesterday’s deal builds on Rogers’ previously announced option to acquire Shaw’s AWS spectrum in Western Canada and boost its spectrum holdings ahead of the 700 Mhz auction that will take place later this year.
In a research update to clients this morning, Goff maintained his BUY rating and $58 one-year price target on Rogers Communications, a target that implies a 25% return, as shares of Rogers on the TSX closed today down .4% to $47.73.
Goff says Rogers will derive almost two-thirds of this year’s forecast EBITDA from wireless. This is on par with Telus, but much higher than competitor BCE, who will draw just 25% of this year’s EBITDA from the increasingly lucrative space.
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.
Comment
One thought on “Rogers Communications is undervalued by 25%, says Byron’s Goff”
Leave a Reply
You must be logged in to post a comment.
RELATED POSTS
Share
Tweet
ShareTRENDING
All Trending →
TTNM keeps “Buy” rating at Haywood
March 20, 2024
NEO stock has price target chopped at Paradigm
March 18, 2024
Groupon’s turnaround is accelerating, Roth says
March 18, 2024
Hey! I think it’s a great idea for you to have your own blog and rich
and I definitely will be following you. The spreadsheet is awesome and I
can tell the time you have taken to put all of this together. If you
don’t mind, I was going to link to your blog on mine that is just
getting up and going. Mine has absolutely nothing to do with finance,
but somehow I will magically make it flow . Thanks for an awesome resource, we will tell people to check out your blog for sure! If you have been interested just click http://essayhogwarts.com/.