Ahead of Thursday’s second quarter results, Echelon Wealth Management is maintaining its “Buy” rating and target price of $67.00 on Rogers Communications (TSX:RCI.B), implying modest upside of 10.3 per cent.
Echelon analyst Rob Goff says there are several reasons to like Rogers right now, and adds that he prefers the stock to peers BCE, Telus, and Shaw.
“We prefer Rogers across our large capitalization coverage names given its relative valuation, wireless exposure, and competitive balance,” the analyst says.
Goff says he will be watching the results closely in what has become a more favourable environment.
“With industry-wide wireless results in recent quarters necessitating a positive recalibration of postpaid expectations, its sustainability has become somewhat less of a focus with a bit more attention now on competitive dynamics, particularly in relation to wireline,” he says. “Rogers benefits now that Shaw has delivered on its objectives about “winning” on video by reporting extremely strong wireline subscriber results for their FQ317 in June. We expect commentary on the call to include discussion on Rogers’ product roadmaps for video and broadband, as well as any updates on the timeline for introducing Comcast’s X1 platform. While we did note at the time that it is difficult to parse out the extent to which Shaw’s results reflected pent-up demand, we will be interested to see the wireline subscriber trends for Rogers amid Shaw’s X1 rollout.”
Goff expects Rogers will earn $0.91 a share and post EBITDA of $1.385-billion on revenue of $3.58-billion in the second quarter, just slightly more pessimistic than the street consensus of $0.93 in earnings and EBITDA of $1.396-billion on a topline of $3.59-billion.
Goff thinks Rogers will generate EBITDA of $5.31-billion on revenue of $14.19-billion in fiscal 2017. He expects those numbers will improve to EBITDA of $5.47-billion on a topline of $14.58-billion the following year.