On Wednesday, BofA Securities revised its stance on Quebecor Inc. (QBR/B:CN) (OTC: QBCRF), downgrading the stock from Buy to Underperform and adjusting the price target to C$30.00 from the previous C$36.00. The adjustment follows a reassessment of the company's enterprise value to EBITDA (EV/EBITDA) target multiple, which has been reduced to 6.5x from the former 6.7x.
The firm's decision to lower Quebecor's stock rating and price target is based on the recognition of ongoing intense competition in the markets for wireless and broadband subscribers. This competitive landscape is believed to be exerting significant pricing pressures, which could potentially hinder the company's revenue and adjusted EBITDA growth.
The new stock price target of C$30.00 reflects a more conservative valuation within Quebecor's historical EV/EBITDA range of 5.8 to 8.1 times. BofA Securities suggests that the revised multiple is a more accurate representation of the company's value given the current industry challenges it faces.
Quebecor's downgrade comes at a time when telecom companies are grappling with a fiercely competitive environment, especially in the segments of wireless and broadband services. Such conditions often lead to aggressive pricing strategies and promotions to attract and retain customers, impacting overall profitability.
Investors and market watchers may view the downgrade as a signal of the financial headwinds that Quebecor might encounter going forward. The new stock price target of C$30.00 serves as a revised benchmark for the company's stock performance in light of the competitive pressures outlined by BofA Securities.
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