Here’s what TD thinks of BCE stock right now

TD Cowen analyst Vince Valentini has raised his price target on BCE (BCE Stock Quote, Chart, News, Analysts, Financials TSX:BCE) to $41.00 from $40.00 while maintaining a “Buy” rating, citing the potential returns from the company’s planned artificial intelligence data centre project in Saskatchewan.

In a March 17 report, Valentini said BCE’s proposed 300-megawatt AI data centre near Regina offers an “attractive” return profile and supports higher long-term financial forecasts.

“We are positive on this under promise and overdeliver execution,” he said.

Following the March 16 announcement, BCE updated its outlook to include $1.3-billion in incremental capital spending, with expectations for the project to generate $500-million in annual revenue and $400-million in EBITDA on a run-rate basis by the end of 2027.

Valentini said the new project prompted him to raise his 2028 revenue, earnings and free cash flow estimates, with the valuation impact reflected in his updated price target.

He said the expected $400-million in EBITDA, valued at approximately 7.6 times, implies about $3.0-billion in enterprise value, which after accounting for roughly $1.7-billion in capital spending and associated debt, results in an estimated $1.3-billion in equity value creation.

“Our target remains based on 2028 estimates… so adding both the incremental EBITDA and the incremental debt has pushed our target up $1.00,” Valentini said.

He added that while improved growth visibility from data centre investments could justify a higher valuation multiple, he is maintaining a more conservative approach for now given ongoing competitive pressures in the wireless sector.

Valentini said BCE’s broader strategy continues to support steady growth, with expectations for revenue growth of 2.5% to 4.5% and EBITDA growth of three to 4% from 2025 through 2028.

“We see ample upside to support our ‘Buy’ recommendation,” he said, adding that the company’s dividend yield may continue to attract investors despite a recent reduction.

-30-