Cogeco Communications, the Communication Services sector company, was revisited by a Wall Street analyst today. Analyst Vince Valentini from TD Cowen upgraded the rating on the stock to a Buy and gave it a C$83.00 price target.
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Vince Valentini has given his Buy rating due to a combination of factors tied primarily to valuation and free cash flow strength. Even after applying conservative assumptions below management’s guidance and using a modest EBITDA multiple for the U.S. operations plus an additional risk discount on the whole firm, his target price still implies meaningful upside, making a neutral stance hard to justify.
He also highlights that the market appears to be overly discounting the stock, assigning little value to the company’s spectrum holdings and the substantial free cash flow that can be deployed into repurchases at depressed prices. On his estimates, the shares trade at a very elevated forward free cash flow yield that exceeds 19% on 2027 projections and reaches roughly 25% once an adjusted spectrum value is stripped out, supporting an upgrade despite recent operational softness, especially in the U.S. segment.
In another report released on April 10, Canaccord Genuity also maintained a Buy rating on the stock with a C$70.00 price target.
Based on the recent corporate insider activity of 34 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of CGEAF in relation to earlier this year.