Quebecor wins price target raise at National Bank

National Bank Financial analyst Adam Shine raised his price target on Quebecor (Quebecor Stock Quote, Chart, News, Analysts, Financials TSE:QBR.B) to $45.00 from $42.00, maintaining an “Outperform” rating, but cautioned that the stock may be “due for a bit of a pause” after a sharp run to record highs.

Quebecor is a Canadian diversified media and telecommunications company serving Quebec, based in Montreal.

“We upgraded Quebecor on Aug. 11 following a pullback in the stock of more than 12% over the prior six weeks from the close of Q2 to its reporting,” Shine said. “We didn’t expect such a quick bounce back to new record highs over the past five weeks. While management has done some recent marketing and back-to-school for wireless was deemed by carriers to be relatively stable compared to the prior two years, there’s not been much other news to note.”

As reported by the Globe and Mail, the analyst pointed to signs of greater discipline across Quebecor’s operations. In cable, it has avoided chasing subscriber loading in recent quarters. In wireless, the company eased off its volume push in Q2, resulting in a smaller-than-expected year-over-year decline in ARPU, down 2.7% versus a 4.5% drop in Q1, while posting a four-cent sequential increase, which Shine described as a turning point following the Freedom acquisition.

“Inasmuch as Freedom has driven market share gains, most of this has come in Ontario, with Quebecor still not aggressively loading out West, pushing a bundle with Internet or leveraging Fizz to any degree outside of Quebec,” he said.

Shine said “more to be done” in each of these areas should stimulate evolving growth and justify an increase in his net asset value projections for both the Cable and Wireless businesses. His $45 target sits slightly above the $44.16 Street average.

Shine forecasts telecom capex will rise gradually from $650-million in 2025 to $700-million by 2029, while free cash flow remains above $1-billion and leverage declines by 20–30 basis points per year.

“If the NCIB were to repurchase four million shares per year, leverage would hit 2.5 times in 2027 and under 2.0 times in 2029,” he added.

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