Telus, the Communication Services sector company, was revisited by a Wall Street analyst today. Analyst Aravinda Galappatthige from Canaccord Genuity maintained a Hold rating on the stock and has a C$21.50 price target.
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Aravinda Galappatthige has given his Hold rating due to a combination of factors impacting Telus. The company’s valuation remains higher than its Canadian and US counterparts, and much of its future performance hinges on the success of its growth sectors like TIXT, Health, and Agriculture. While the recent Tower deal was seen as a positive step for the balance sheet, the wireless segment continues to face challenges with negative service revenue growth and declining ARPU.
Wireline performance was slightly better than expected, but the mixed results in high-growth areas create uncertainty. The Health segment shows some promise, but Agriculture and TIXT face hurdles. Despite the positive impact of the Tower transaction on the balance sheet, the overall free cash flow yield is still low, and the wireless market remains challenging. These factors contribute to maintaining the Hold rating, with the target price unchanged at $21.50 per share.