BMO Capital analyst Tim Casey downgraded the rating on Telus to a Hold today, setting a price target of C$19.00.
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Tim Casey has given his Hold rating due to a combination of factors affecting Telus’s financial outlook. The company’s core telecom business is experiencing a slowdown in growth, with wireless service revenue expected to decline slightly by 2025 before recovering modestly by 2027. Additionally, the wireline service revenue is projected to remain weak compared to its historical growth rates.
Another concern is the uncertainty surrounding Telus Digital, which, despite being wholly-owned, faces challenges such as a tough macro environment and competition pressures. Furthermore, Telus’s financial leverage remains high, and while there are opportunities for monetization, such as Telus Health, the overall valuation risks and elevated payout ratios compared to peers contribute to the Hold rating. The company’s decision to phase out its discounted dividend reinvestment plan also adds to the cautious outlook.
In another report released on December 7, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a C$20.00 price target.