Analyst Aravinda Galappatthige of Canaccord Genuity maintained a Hold rating on Telus, retaining the price target of C$21.50.
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Aravinda Galappatthige has given his Hold rating due to a combination of factors related to Telus’s financial and strategic position. One of the primary reasons is the recent move by Telus to increase its bid for full ownership of TIXT, which is expected to close successfully given the support from significant shareholders like Baring. This acquisition is seen as beneficial, offering a substantial premium and aligning with Telus’s strategic interests, although it only modestly impacts the company’s financials.
Additionally, the transaction is expected to slightly increase Telus’s leverage ratio, but the overall financial outlook remains stable with expected improvements in the coming years. The valuation of Telus’s combined segments, including TTECH and Health, remains consistent, supporting the decision to maintain the Hold rating. Overall, while the acquisition presents strategic advantages, the limited impact on financial metrics and stable valuation justifies the Hold recommendation.
Galappatthige covers the Communication Services sector, focusing on stocks such as Telus, BCE, and Rogers Communication. According to TipRanks, Galappatthige has an average return of -0.4% and a 49.18% success rate on recommended stocks.
In another report released today, J.P. Morgan also maintained a Hold rating on the stock with a C$22.00 price target.