Telus Corp. (T:CA) (TU)
Telus Corp. had its 12 month target price lowered at BMO Capital Markets to $19.00 from $23.00, and reiterating a Market Perform rating as it adopts a more cautious stance on the company’s near-term growth outlook. BMO’s revised target reflects ongoing pressures in the Canadian telecom sector, including elevated capital spending, intense competitive dynamics, and slower subscriber growth across wireless and internet segments.
BMO highlighted that Telus continues to face meaningful cost pressures as it invests heavily in network upgrades, fibre expansion, and digital infrastructure expenditures that, while necessary for long-term competitiveness, are weighing on free cash flow in the short term. The firm also noted that macroeconomic softness and heightened consumer price sensitivity are contributing to increased churn risk and muted average revenue per user (ARPU) growth.
Analysts expressed concerns around Telus International, the company’s digital customer-experience subsidiary, which has experienced earnings volatility and softer demand from technology clients. While the long-term strategic value of Telus International remains intact, the near-term earnings drag has created uncertainty around consolidated performance. Analysts also noted that the company’s focus on efficiency initiatives and targeted cost reductions could gradually help support margins as conditions stabilize.
Overall, the lowered price target reflects a view that Telus may continue to lag peers in revenue and cash flow growth over the next several quarters, but remains fundamentally sound with a stable dividend profile and long-term strategic assets that limit downside risk.
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