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On Thursday, BofA Securities analyst Matthew Griffiths upgraded the rating of Quebecor stock (QBR/B-CN) (OTC: QBCRF) from Underperform to Buy, with an increased price target of C$36.00, up from the previous C$30.00. Griffiths highlighted Quebecor’s effective management in a competitive market, noting its successful growth in wireless subscribers and the defense of its valuable cable base.
The analyst praised Quebecor’s dividend, which is well covered by free cash flow at the lower end of its 30-50% payout range, and pointed out the company’s relatively low leverage at 3.3x. Griffiths stated, "In the context of an industry characterized by slow growth, high leverage, and stretched dividend payout, QBR is the best house on the block."
The new price objective is based on a forward adjusted EBITDA multiple of 6.75x, an increase from 6.50x, which falls within Quebecor’s historical range of 5.8 - 8.1x. Griffiths expressed confidence in Quebecor’s financial health, citing "QBR’s superior balance sheet, dividend coverage, wireless market share gains and lower capital intensity" as factors that support a continued narrowing of the valuation gap compared to its peers.
Griffiths’ revised price target also takes into account a slight uptick in projected EBITDA and a decrease in net debt. Additionally, fewer shares are expected due to the company’s ongoing repurchases in 2025, as per the analyst’s estimates. Quebecor’s strategic maneuvers in the market and financial prudence have led to this positive reassessment by BofA Securities.
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