Following its second quarter results, Echelon Wealth Partners analyst Rob Goff says he likes the way things are shaping up for Rogers Communications (Rogers Communications Stock Quote, Chart, News: TSX:RCI.B).
Yesterday, Rogers reported its Q2, 2016 results. The company earned $394-million on revenue of $3.45-billion, a topline that was up 2 per cent over the same period last year.
“We posted strong results in the second quarter, delivering solid revenue growth whilst attracting more customers across our wireless and Internet businesses,” said CEO Guy Laurence. “We continued to make meaningful improvements to the customer experience, delivering our third straight quarter of wireless postpaid churn improvement. We expanded our roaming leadership with the launch of Fido Roam, continued the rollout of our gigabit Internet service to almost half our cable footprint and introduced two innovative leapfrog solutions to Canadian businesses. Over all, we’re making good headway on our Rogers 3.0 strategy.”
Goff says Rogers’ Q2 revenues was modestly below his expectations while EBITDA came in a little better than he anticipated.
“We believe the quarter represents a significant positive step forward,” sas the analyst. “Financials were largely positive and in line despite higher loadings where wireless and wired subscriber trending significantly surpassed expectations and prior trending. The strong subscriber outlook then feeds into an impressive new product roadmap for wired and also wireless where the newly launched Unison wireless line for small businesses seems impressive. The Unison product plays into Rogers’ historically strong share of the SME wireless market while it focuses on the potentially vulnerable legacy premium local wireline pricing to SMEs. The product could further act as a pull through or bundle partner for the 1Gig internet service and newly launched cloud services (although the latter is more towards medium sized businesses.) Thus, we are encouraged by recent subscriber trending leading into a period of significant product enhancements.”
In a research update to clients today, Goff maintained his “Buy” rating on Rogers Communications, but raised his one-year price target on the stock from $54.00 to $60.00, implying a return of 11.5 per cent at the time of publication.