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On Monday, Scotiabank (TSX:BNS) analysts upgraded BCE Inc . (NYSE:BCE:CN) (NYSE: BCE (TSX:BCE)) from Sector Perform to Sector Outperform, setting a new price target of Cdn$39.00. The analysts believe that wireless pricing in Canada may be approaching a turning point, potentially leading to price improvements in the coming months. According to InvestingPro data, BCE has maintained dividend payments for 55 consecutive years and currently offers a 5.85% dividend yield, making it an attractive income investment. The stock is currently trading near its 52-week low of $20.28.
The upgrade is based on several factors, including the current challenges faced by all four wireless providers in Canada, and the lack of market share gains for Freedom Mobile despite lower prices. Quebecor has managed to reduce customer churn, but further enhancements would be costly. Analysts suggest that Quebecor might benefit financially from raising prices as the industry’s gross loading slows. With a market capitalization of $20 billion and an EBITDA of $6 billion in the last twelve months, BCE remains a prominent player in the telecommunications sector. Discover more detailed financial metrics and insights with InvestingPro, which offers comprehensive analysis of BCE’s performance and industry position.
Additionally, the analysts estimate that over half of Canadian wireless subscribers have already transitioned to lower-priced plans. They anticipate that competitors will respond to any price increases by Freedom Mobile, which could influence the market dynamics.
The analysts also highlighted BCE’s management actions to adjust the dividend, protect the balance sheet from US market dilution, and the company’s attractive valuations. They mentioned the possibility of upgrading Rogers Communications (TSX:RCIa) in the future, pending further clarity on its financial strategy and leverage.
In other recent news, BCE Inc. reported its first-quarter 2025 earnings, achieving an earnings per share (EPS) of $0.63, which met analyst expectations. The company also reported revenues of $5.93 billion, aligning with predictions, although this represented a 1.3% year-over-year decline. Despite these stable financial results, BCE’s net earnings increased by nearly 50%, mainly due to gains from early debt redemption, and the company saw a significant increase in free cash flow by $713 million year-over-year. BCE reaffirmed its financial guidance for 2025 and announced a strategic partnership with PSP Investments to fund its US fiber expansion, which could involve a commitment exceeding $1.5 billion.
Additionally, BCE shareholders recently approved all director nominees at the company’s Annual Meeting of Shareholders, indicating strong support for the company’s leadership. The elected directors include Mirko Bibic, Robert P. Dexter, Katherine Lee, and others, with each nominee receiving over 95% approval. In other developments, BCE announced a reduction in its annualized dividend per common share to $1.75, effective with the July dividend payment, as part of its strategy to achieve a net debt leverage ratio of 3.5x by 2027. The company also highlighted its strategic focus on fiber deployment, cost reductions, and digital media growth, with initiatives such as the acquisition of Zipline and the launch of Ateco, a new technology solutions provider.
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