BCE upgraded to “Buy” at TD

TD Cowen analyst Vince Valentini says the recent pullback in BCE (BCE Stock Quote, Chart, News, Analysts, Financials TSX:BCE) shares is overdone, prompting him to upgrade the stock.

As reported by the Globe and Mail, in a report released July 2, Valentini upgraded BCE to “Buy” from “Hold” while maintaining his $37.00 target.

The average target on the Street is $38.38.

“BCE shares have declined 13% since early June, a move we believe has been driven largely by headline risk around potential SpaceX/Starlink disruption,” Valentini said.

Valentini views current levels as an attractive entry point and doesn’t expect BCE’s second-quarter results, due Aug. 6, to change the company’s 2026 guidance.

The analyst said BCE’s long-term fundamentals and dividend remain intact, while additional data centre contract announcements could come over the next few months.

Valentini acknowledged that Starlink could win some incremental rural internet subscribers, mainly legacy DSL customers, and estimates Starlink has already reached about 500,000 rural homes in Canada. But he said any broadband share loss should be gradual and manageable.

He also argued that concerns about SpaceX potentially entering the U.S. wireless market are unlikely to apply in Canada because of foreign ownership rules, spectrum constraints and the structure of the mandated MVNO framework.

“In our view, this makes Canadian telecom stocks, including BCE, a relative haven from the uncertainty around potential U.S. wireless disruption,” Valentini said.

Valentini highlighted five elements of the BCE investment case: recent data centre wins, sum-of-the-parts upside, valuation multiple compression, an attractive dividend yield supported by a healthy payout ratio and BCE’s ownership of most of its telecom infrastructure.

He also pointed to improving Canadian telecom pricing, with wireless promotions more disciplined in Q2 than Q1 and wireline internet price increases appearing to gain traction in Ontario and Quebec.

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