BCE gets price target raise at Euro Pacific Canada

The space it operates in increasingly competitive, but Euro Pacific Canada analyst Rob Goff says BCE (BCE Stock Quote, Chart, News: TSX:BCE) is delivering solid execution.

Yesterday, BCE reported its Q4 and fiscal 2015 results. In the fourth quarter, the company earned $496-million on revenue of $5.6-billion, a topline that was up 1.4 per cent over the same period last year.

“The Bell team’s exceptional performance in the fourth quarter and throughout 2015 underscores the enduring strength of our strategy to lead Canada’s broadband revolution with unmatched innovation in the growth services of communications: wireless, TV, Internet and media,” said CEO George Cope. “Gaining 204,000 new broadband TV, Internet and wireless postpaid customers in the fourth quarter, Bell delivered the strong financial performance that enables both continued investment in Canada’s broadband future and growing returns to BCE shareholders, including our latest dividend increase announced today. We saw strong performance across our business segments in a highly competitive fourth quarter.”

Goff says BCE’s numbers were in-line with his forecast. He says the company’s strong execution is battling against strong headwinds in parts of its business.

“BCE’s solid execution supports leading wireless results while defending on wireline within an intensely competitive space,” says Goff. “Q415 and Full year wireless revenue/EBITDA growth of 6.3%/6.8% and 7.6%/8.3% set the mark for peers to chase. While commendable that wireline managed its first full year of EBITDA and FCF growth since cable telephony was introduced in 2015, the decade of tough work and innovation notwithstanding, it reflects an intensely competitive business facing secular headwinds. BCE’s success in wireless and stellar capital efficiency have supported strong FCF growth with 2015 ahead 14.8% y/y and 2016 guidance supporting 15.7% growth.”

In a research update to clients today, Goff maintained his “Hold” rating on BCE, but raised his one-year target price on the stock from $57.00 to $60.00, implying a return of 8.9 per cent at the time of publication.