Rogers Communications (RCI-B:CA)
Rogers Communications Inc. (RCI) recently reported its fourth-quarter results, revealing the addition of 69,000 monthly bill-paying wireless phone subscribers, falling short of estimates of 72,000. The shortfall is attributed to an intense pricing war among competitors and reduced immigration rates, which have impacted subscriber growth.
Despite the lower-than-expected subscriber additions, Rogers reported a net income of C$558 million for the quarter ending December 31, 2024, up from C$328 million in the same period the previous year.
Analysts have set an average 12-month target price of CAD 64.56 for Rogers Communications Inc., with a consensus rating of “Strong Buy.” However, Stock Target Advisor’s analysis is “Slightly Bearish,” based on seven positive signals and nine negative signals. As of the latest close, the stock was priced at CAD 41.46, reflecting a 2.52% increase over the past week, a 5.30% decrease over the past month, and a 35.19% decline over the past year.
In its earnings report, Rogers also declared a quarterly dividend of 50 cents per share, payable on April 2, 2025, to shareholders of record as of March 10, 2025.
The Canadian telecommunications sector is currently facing challenges due to intense competition among major players like Rogers, BCE, Telus, and Quebecor, leading to price reductions in wireless and broadband services. Additionally, lower immigration rates are expected to impact demand in the industry.
AI-Powered Stock Analysis
Rogers Communications Inc. (TSE: RCI.B, NYSE: RCI) has received a 12-month average target price of CAD 64.56 from a consensus of 12 analysts. This target suggests a potential upside of approximately 55.7% from its last closing price of CAD 41.46. Analysts have given the stock an average rating of “Strong Buy,” indicating broad optimism about its future performance.
Stock Target Advisor-AI’s analysis presents a “Slightly Bearish” outlook, contrasting with the bullish analyst consensus. Their evaluation is based on 7 positive signals and 9 negative signals, highlighting both strengths and weaknesses in the company’s fundamentals and market conditions.
Stock Performance Trends
- Short-Term Gains: Over the past week, RCI has risen by +2.52%, signaling a potential recovery or investor interest after its earnings release.
- Recent Weakness: In the past month, the stock has declined -5.30%, reflecting short-term concerns, possibly due to competition in the Canadian telecom market.
- Long-Term Decline: Over the past year, RCI has dropped -35.19%, underperforming the broader market. This decline is likely tied to regulatory pressures, pricing competition, and macroeconomic concerns affecting subscriber growth and profitability.
Factors Driving Analyst Ratings & Target Price
Bullish Signals (Supporting the “Strong Buy” Rating)
- Attractive Valuation: Given the stock’s decline, many analysts see Rogers as undervalued, presenting a buying opportunity.
- Growth Potential Post-Shaw Acquisition: The C$20 billion acquisition of Shaw Communications in 2023 expanded Rogers’ customer base, infrastructure, and 5G network footprint, potentially boosting long-term revenue.
- Improved Profitability: The company’s Q4 net income increased to C$558 million from C$328 million year-over-year, demonstrating improving financial health despite subscriber growth concerns.
- Stable Dividend Payments: Rogers continues to offer a quarterly dividend of CAD 0.50 per share (approximately 4.8% annualized yield at current prices), making it attractive to income investors.
- Market Dominance: Rogers remains one of Canada’s “Big Three” telecom giants (along with BCE and Telus), controlling a large share of the wireless and broadband market.
Bearish Signals (Contributing to Stock Target Advisor’s Slightly Bearish Outlook)
- Subscriber Growth Concerns: Rogers missed wireless subscriber estimates in Q4, adding 69,000 postpaid users versus expectations of 72,380, due to intense competition and lower immigration rates.
- Intensified Price Wars: Competitors like BCE, Telus, and Quebecor are aggressively lowering prices and offering promotions, pressuring Rogers’ margins.
- Regulatory Uncertainty: The Canadian government continues to push for lower wireless and broadband prices, which could limit Rogers’ ability to raise prices in the future.
- High Debt Levels: Following the Shaw acquisition, Rogers took on significant debt, leading to concerns about its ability to maintain strong free cash flow and dividend payments.
- Economic Headwinds: Rising interest rates and inflation are weighing on consumer spending, potentially affecting demand for premium telecom services.
Conclusion: Contrasting Analyst Optimism vs. Market Caution
Despite a “Strong Buy” consensus from analysts, Stock Target Advisor’s “Slightly Bearish” outlook suggests caution due to ongoing competitive and regulatory challenges. The large gap between the analyst target price (CAD 64.56) and the current stock price (CAD 41.46) indicates that analysts expect a strong rebound, but investors remain wary of near-term risks.
For potential investors, Rogers could be an attractive long-term value play, especially if subscriber growth stabilizes and competitive pressures ease.
STA Research (StockTargetAdvisor.com) is a independent Investment Research company that specializes in stock forecasting and analysis with integrated AI, based on our platform stocktargetadvisor.com, EST 2007.
