Is Cogeco Communications stock a buy?

RBC Dominion Securities analyst Drew McReynolds says he likes some of the things he sees, but not quite enough to recommend Cogeco Communications (Cogeco Communications Stock Quote, Chart, News, Analysts, Financials TSX:CCA).

As reported by the Globe and Mail, McReynolds April 11 maintained his “Sector Perform” rating on Cogeco and cut his price target from $78.00 to $76.00.

On April 9, CCA reported its Q2, 2025 results. The company posted Adjusted EBITDA of $356.5-million on revenue of $732.4-million, a topline that was up 0.3%, year-over-year.

“Our results for the second quarter of fiscal 2025 demonstrate that our new operating model, focused on increasing our agility and competitiveness, is gaining traction,” CEO Frédéric Perron said. “We are particularly pleased with the progress we are making on our transformation initiatives, leading to increased customer satisfaction, while alleviating industry revenue headwinds with ongoing cost reductions. Our Internet subscriber growth in Canada remained strong, driven by both our Cogeco and oxio brands. We continued to see modest sequential improvements in Internet subscriber metrics in the U.S., began scaling up our U.S. wireless sales, and kept our Canadian wireless launch preparation on schedule.”

McReynolds gave his overview of the quarterly results.

“In Q2/25, underlying consolidated revenue growth (excluding FX and acquisitions) was an estimated down 3 per cent year-over-year,” the analyst wrote. “While not unexpected, management attributed continued revenue headwinds mainly to competitive intensity (FWA, FTTH) and television and telephony cord-cutting/shaving. Although a number of initiatives are underway to improve the revenue trajectory (including price increases, footprint expansion/extensions, brand expansion and improved sales and marketing and customer service), unless competitive dynamics improve, we see an increased tactical reliance on wireless. With respect to wireless, management indicated: (i) cable churn reduction is the primary objective; (ii) U.S. wireless net additions are beginning to ‘ramp up’ following an initial launch period; (iii) wireless pre-registration demand among existing wireline customers in Canada is exceeding management’s internal expectations; and (iv) post-launch in Canada, incremental wireless revenue is not expected to be material in the near term but there will be no step-up in opex.

McReynolds says there are some green shoots appearing for the company.

“Despite competitively intense operating environments in Canada and the U.S., management continues to execute on multiple growth initiatives that include rural broadband expansion, entry into North American wireless markets, digitization, and Canadian Broadband and American Broadband integration,” he added. “While we remain on the sidelines given the more challenged revenue environment, we continue to see value in the stock and look for better visibility on potential catalysts that could include an eventual uptick in revenue growth (driven by rural broadband expansion, price increases and/ or wireless entry), the eventual realization of greater-than-expected synergies, and/or any potential easing in U.S. competition/concerns.”