Telus wins price target raise at RBC

With the markets going sideways for years now, many investors are looking to an old familiar friend -Canadian telco stocks- for an entry point.

One analyst says now is the time for at least one of them to shine.

As reported by the Globe and Mail, RBC analyst Drew McReynolds has increased his twelve-month price target on Telus (Telus Stock Quote, Chart, News, Analysts, Financials TSX:T) from $29.00 to $30.00, while maintaining his “Outperform” rating on the stock. Shares of Telus closed November 3 at $24.25, so the analyst’s new target implied a return of 23.7 per cent at the time of publication.

“We believe Q3/23 results demonstrated notable resilience in a more competitively intense operating environment with strong subscriber growth across the board. Following a modest increase in the TTech margin trajectory, our price target increases,” the analyst said.

On November 3, Telus reported its Q3, 2023 results. The company earned $137-million on operating revenue of $5.0-billion, a topline that was up 7.8 per cent over the same period last year.

“For the third quarter, our Telus team once again demonstrated execution strength in our TTech business segment, characterized by the potent combination of leading customer growth, complemented by strong operational and financial results, alongside improving EBITDA [earnings before interest, taxes, depreciation and amortization] growth and margin expansion in our DLCX segment,” CEO Darren Entwistle said. “Our robust performance in our core telecom business is underpinned by our globally leading broadband networks and customer-centric culture, which enabled our strongest quarter on record, with total customer net additions of 406,000, up 17 per cent, year-over-year, driven by strong demand for our leading portfolio of bundled services across mobility and fixed services. This included strong mobile phone net additions of 160,000, our best third quarter on record and best quarterly result since the second quarter of 2008; all-time record third quarter connected device net additions of 179,000; and robust third quarter total fixed net additions of 67,000, including 37,000 Internet customer additions, powered by leading customer loyalty in combination with Telus’s PureFibre network. Our leading customer growth is reflective of our consistent, industry-best client loyalty across our mobile and fixed product lines. Our team’s passion for delivering customer experience excellence contributed to continued strong loyalty across our key product lines once again this quarter. Notably, postpaid mobile phone churn is now in the 10th consecutive year of less than 1 per cent.”