Telus sees price target cut at Scotia

Nothing personal.

It’s just that Canadian telecom stocks all face an uphill battle, says Scotia analyst Maher Yaghi.

That’s the reasoning for the analyst cutting his price target on Telus (Telus Stock Quote, Chart, News, Analysts, Financials TSX:T), which he did in a research update to clients November 26.

As reported by the Globe and Mail Tuesday, Yaghi says Telus is facing the same headwinds affecting BCE, Rogers, and Quebecor.

“Current consensus estimates imply a view that wireless pressure should peak late this year with the rate of decline improving in 2025 with wireless ARPU [average revenue per user] only declining by 0 to 1 per cent year-over-year in 2025 on average for incumbents,” he wrote. “In a market where the CRTC continues to scrutinize wireless pricing and Freedom Mobile calling out incumbents in public such as their petition last week, we see little probability of a quick improvement in pricing. Our consolidated EBITDA forecasts imply 1 to 3-per-cent lower growth for 2025 vs consensus. This lower growth expectation is due to lower wireless ARPU and loading forecasts. We have lowered some of our valuation multiples and short/medium term DCF growth assumptions leading to lower target prices. We continue to believe that a more grounded street expectation on pricing is needed to put a long term bottom on stock valuations.”

On November Telus reported its Q3, 2024 results. The company posted Adjusted EBITDA of $1.84-billion on revenue of $%.04-billion, a topline that was up 1.0% year-over-year.

“In the third quarter, our team’s dedication to operational excellence led to industry-leading customer growth and robust financial results, harnessing our premier asset portfolio and focused commitment to cost efficiency and effectiveness,” CEO Darren Entwistle said. “Our results demonstrate our ability to deliver sustainable profitable growth, anchored by our strategic emphasis on margin-accretive customer expansion, globally leading broadband networks, and a customer-centric culture. This enabled industry-best total customer net additions of 347,000, including robust mobile phone customer additions of 130,000, strong gains in connected devices with 159,000 net additions, and total fixed net additions of 58,000. Our team’s passion for delivering customer service excellence contributed once again to leading loyalty across our key product lines. Notably, postpaid mobile phone churn was 0.90 per cent, while churn for TELUS-branded mobility and home households nationally was below one per cent, underscoring the consistent strength of our unmatched bundled product offerings across Mobile and Home, over our industry-leading PureFibre and wireless broadband networks.”