BCE upgraded to “Buy” at Desjardins

Desjardins Securities analyst Jerome Dubreuil has raised his target for BCE (BCE Stock Quote, Chart, News, Analysts, Financials TSX:BCE) to $40.00 from $39.00 and upgraded the stock to “Buy” from “Hold”, saying he now sees stronger strategic value in the company’s $5-billion acquisition of Ziply Fiber.

As reported by The Globe and Mail, In his August 1 note to clients, Dubreuil said a closer review of BCE’s U.S. expansion plans shifted his view of the deal, which he believes could address several key challenges without putting the balance sheet at risk.

“We now better appreciate the merits of Ziply,” he said. “We believe Ziply would have generated greater returns in the hands of a U.S. wireless operator for the same price. However, that does not mean the deal is de facto bad for BCE. Rather, we believe the deal solves BCE’s challenge to, one, deliver sustainable EBITDA growth from core competencies; two, ensure the acquired business had sufficient scale to move the needle; three, avoid putting its balance sheet at risk; and four, keep investment requirements small enough to support a deleveraging plan that appeared credible to investors.”

Dubreuil estimates the Ziply transaction could generate a 12% internal rate of return for BCE, below management’s 20% target, but still attractive given the broader outlook. He said the market’s initial reaction to the deal was overly negative and that sentiment should improve once the deal closes and BCE provides more clarity on execution.

“Sentiment shift as a catalyst,” he added. “The market has thus far been skeptical of BCE’s U.S. plan, partly due to the deal’s complexity and high price tag. We anticipate that the closing of the deal will enable management to share more about Ziply, which we expect should help investors better appreciate the deal’s merits. A risk to our call is that BCE may reduce its 2025 FCF guidance when it reports 2Q earnings on August 7, as the initial fibre build outside the InfraCo footprint would require meaningful investment.”

He added that BCE’s current valuation, below historical averages relative to peers, along with an improving wireless landscape in Canada, adds further support to the stock.

“Stabilization in the Canadian telecom environment and an expected improvement in sentiment toward the Ziply deal lead us to recommend buying BCE shares,” Dubreuil said.

BCE financed the acquisition in part with proceeds from the sale of its minority stake in Maple Leaf Sports & Entertainment, which closed on July 1, 2025. The company described the move as a shift from a passive investment to a strategic growth initiative.

Ziply Fiber will continue to operate as a standalone business unit, based in Kirkland, Washington, with its current management and workforce. BCE said the deal supports its strategy of expanding fibre Internet infrastructure, and that both companies will deliver added value to customers in Canada and the U.S. amid growing demand for high-speed connectivity.

BCE plans to update its 2025 financial guidance to reflect the acquisition when it reports second-quarter results on August 7.

“The acquisition of Ziply Fiber marks a key milestone in our fibre growth strategy by establishing a significant foothold in the attractive U.S. market,” CEO Mirko Bibic said. “By combining Bell’s deep fibre expertise with Ziply Fiber’s experienced management team and ambitious expansion plans, we are creating a powerful platform for long-term growth, scale and geographic diversification that positions us to unlock significant value for our shareholders.”

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