2023-11-06 23:01:48
(Photo: Roméo Mocafico)
What to do with the titles of BCE, Canadian Natural Resources and Open Text? Here are some analyst recommendations likely to move prices soon. Note: the author may have a completely different opinion than that expressed by the analysts.
BCE (BCE, $54.52): Falling bond yields enable stock price rally
The Canadian telecommunications giant disclosed last Thursday results for its 3rd quarter largely aligned with analysts’ forecasts, and management took the opportunity to reaffirm its forecasts for the whole year.
One would believe that investors received these results well, as the stock price has made gains of around 5% over the last 3 trading sessions. But we shouldn’t trust it too much, thinks Jerome Dubreuil, analyst at Securities Desjardins. This increase is rather attributable to the drop in bond yield rates caused by recent comments by the president of the American Federal Reserve, according to him. A drop in bond rates is certainly favorable for the stock, because it makes the dividend that BCE pays all the more attractive.
That said, the firm will surely have to improve its growth in the 4th quarter for management’s forecasts to prove correct, underlines the analyst.
In the 3rd quarter, the firm’s consolidated revenues reached $6.08 billion, close to analysts’ consensus of $6.15 billion. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $2.67 billion and earnings per share were $0.81, results equal to expectations in both cases.
Free cash flow for their part was $743 million, while analysts expected $890 million. This was the third consecutive quarter where free cash flow was lower than expected, notes Jerome Dubreuil.
Management expects full-year EBITDA growth to be within a range of 2% to 5%. After three quarters, growth is 1.1%. To achieve the objective, profits will have to increase by 4.8% in the 4th quarter compared to the same quarter of the previous year, estimates the analyst.
This is not impossible, because it will benefit from the effects of its cost reduction program, the impact of inflation, as well as probably warmer weather, argues the analyst.
He nevertheless prefers to remain on the sidelines by maintaining his recommendation to Retain the title. Its target price is $56.00.
Canadian Natural Resources (CNQ, $91.55): results which confirm that the valuation premium enjoyed by the stock is fully justified
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