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Investing.com - National Bank Financial downgraded Cogeco Communications Inc. (TSX:CCA) from Outperform to Sector Perform and reduced its price target to C$69.00 from C$80.00.
The downgrade comes as the Canadian telecommunications company faces growth challenges and increased competitive pressures. National Bank Financial cited Ottawa’s decision not to change the CRTC’s TPIA regime as a key factor, allowing Telus (NYSE:TU) to push bundled services in Central Canada.
This regulatory environment may undermine Cogeco’s return on network expansion investments already made in Quebec and ongoing in Ontario, according to the research firm. It also creates implications for Cogeco’s MVNO launch in its cable footprint, which will face additional competition from Telus.
National Bank Financial’s revised price target is based on an average of fiscal 2026 DCF and fiscal 2027 NAV, with EV/EBITDA of 5.6x for fiscal 2025 and 5.4x for fiscal 2026. The firm lowered the multiple in its NAV for Cogeco’s U.S. business by 50 basis points due to declining U.S. peer multiples after second-quarter results.
The research firm also reduced the Canadian multiple by 25 basis points due to uncertainty about the competitive dynamics Telus may bring as it leverages TPIA for bundled services in Central Canada, and decreased the terminal growth rate in its DCF by 75 basis points.
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