Tuesday, an analyst from BMO Capital adjusted the financial outlook for Rogers (NYSE:ROG) Communications (RCI/B:CN) (NYSE: RCI), reducing the price target to C$65 from the previous C$80 while maintaining an Outperform rating on the stock. The adjustment reflects an anticipation of competitive challenges and certain one-time items impacting the Media segment.
The analyst indicated that these factors are likely to result in decreased cable revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) for the company. Despite these pressures, the analyst expects Rogers' wireless operations to continue displaying positive operational momentum.
A revision of the target price multiples across the telecommunications sector was noted, with Rogers' new price target based on a 7.5 times multiple of the projected 2025 EBITDA, a decrease from the previously used 8.0 times multiple. This change is a direct response to the heightened competitive intensity within the industry and specific non-recurring factors affecting Rogers Communications.
The maintained Outperform rating suggests that the analyst still sees potential for the stock to outperform relative to the market or its sector, despite the lowered price target. Rogers Communications investors will be watching closely to see how these revised estimates will influence the company's stock performance in the coming months.
InvestingPro Insights
With the recent price target adjustment by BMO Capital for Rogers Communications, investors are keenly observing the company's financial metrics and performance indicators. According to real-time data from InvestingPro, Rogers Communications boasts a solid revenue growth, with the last twelve months as of Q4 2023 showing a 25.41% increase, and a more impressive quarterly growth rate of 28.06%. These figures underscore the company's ability to expand its revenue streams despite competitive and operational challenges.
The company's P/E ratio adjusted for the last twelve months stands at 22.08, which may offer a more attractive valuation compared to the unadjusted P/E ratio of 34.75. Additionally, the gross profit margin of 44.44% indicates a strong ability to retain earnings after the cost of goods sold, which is essential for long-term sustainability.
InvestingPro Tips suggest keeping an eye on the EBITDA growth, which has surged by 34.36% in the last twelve months, reflecting operational efficiency and profitability. Furthermore, the dividend yield of 3.64% as of the latest data point, coupled with a history of dividend growth, could appeal to income-focused investors. For those looking to delve deeper into the financial health and future prospects of Rogers Communications, InvestingPro offers additional insights. Currently, there are 10 more InvestingPro Tips available, which can be accessed with the use of coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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