BMO thinks Rogers (RCI-B:TSX) stock has 15% upside

Rogers Communications Inc Stock Forecast:

The average analyst target price for Rogers Communications Inc over the next 12 months is CAD 69.03 and the average analyst rating is Strong Buy. However, Stock Target Advisor’s analysis is Bearish based on 4 positive signals and 10 negative signals. Rogers Communications Inc’s stock price at the last closing was CAD 62.64, which has changed by -0.19% over the past week, -1.99% over the past month, and -12.32% over the last year.

Analysts Coverage Change:

  • BMO Capital Markets maintains an “Outperform” rating on Rogers Communications Inc with a target price of $70 on the company’s stock.
  • STA Research maintains a “Hold” rating on Rogers Communications with a target price of $58.

Rogers Communications News:

Rogers Communication’s takeover of Shaw Communications was approved by Canada last week, making it the largest telecom deal in Canadian history.

The approval of this deal was the final regulatory hurdle to overcome before it could be completed. The announcement of the acquisition was made nearly two years ago, and after a prolonged regulatory process, it has finally received all necessary approvals.

To address competition concerns, Rogers and Shaw agreed to sell Freedom Mobile for C$2.85 billion to Quebecor Inc.’s Videotron, with Champagne approving the transfer of Freedom Mobile’s wireless licenses.

Although the closing deadline for the deal has been delayed several times, with the final approval now secured, it is expected to be completed by April 7, 2023.

Positive Fundamentals:

Rogers Communication stock has some favorable characteristics that make it attractive to investors. Firstly, the company has delivered a superior return on equity compared to its peers in the most recent 4 quarters, which places it in the top quartile. Return on equity is a key metric that measures how much profit a company generates with the shareholder’s investment.

Secondly, Rogers Communication has had positive cash flow in the most recent four quarters. This indicates that the company is generating more cash than it is spending, which is a positive sign for investors.

Thirdly, the company had positive total free cash flow in the most recent four quarters. Free cash flow is the cash generated by a company after accounting for capital expenditures, and it is an important measure of a company’s financial health.

Lastly, Rogers Communication has demonstrated superior revenue growth in the previous 5 years compared to its sector. Revenue growth is an important indicator of a company’s ability to generate sales, and Rogers Communication’s strong revenue growth suggests that the company has a competitive advantage in its industry.

Negative Fundamentals:

Rogers Communications is a company with a low market capitalization, which can make it less stable in the long run unless it has a unique technology or market that can help it grow or get acquired in the future. The company is also delivering below median risk-adjusted returns in comparison to its peers, which may be unpredictable even if it is outperforming on returns. Additionally, the company’s average income yield over the past 5 years has been low compared to its peers. Moreover, the stock is trading high compared to its peers on a price to earning and price to book value basis, making it overpriced.

Furthermore, the company management has delivered below median return on invested capital and return on assets in the most recent 4 quarters compared to its peers, indicating poor capital utilization. Rogers Communications is also highly leveraged, which can be due to aggressive growth strategies, but this should be analyzed in conjunction with management statements and industry trends. Additionally, the stock is trading high compared to its peers on a price to free cash flow basis, making it overpriced. Finally, the company has shown below median earnings growth in the previous 5 years compared to its sector.

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