Telus stock downgraded at National Bank

National Bank Financial analyst Adam Shine sees headwinds for Telus (Telus Stock Quote, Chart, News, Analysts, Financials TSX:T).

As reported by the Globe and Mail, Shine downgraded Telus from “outperform” from “Sector Perform” while cutting his price target from $24.00 to $22.00.

The analyst says the backdrop has been changing while Telus’s stock has been falling.

“Since Shaw/Freedom deals closed 4/3/23, Telus stock has dropped about 22 per cent and nearly $9-billion of market cap has been lost ($0.4-billion per month) amid steadily rising investor concerns regarding how wireless competition has evolved with ballooning data buckets and falling prices that have pressured ARPU [average revenue per user & service revs growth and seemingly undermined industry economics,” Shine wrote.

The analyst says his target cut comes primarily due to ““evolving competitive pressures, especially in wireless, and elevated risks associated with immigration changes post-2024″.

“Despite much talk this year, changing immigration policy becomes more real post-2024 and adds to risk in terms of future volumes (subscriber loading expectations may need to be revisited) and how this will further affect weakening 2023-2024 price trend. Complementing penetration gains in wireless in recent years has been population growth above more normalized 1 per cent due to materially stepped-up immigration,” he said. “Changes to the latter, however, are expected to result in Canada’s population contracting 0.2 per cent in 2025 and 2026 before returning to projected 0.8-per-cent growth in 2027.”