Quebec stock downgraded, target price cut amid competition

BofA Securities revised its stance on Quebecor Inc. (QBR/B:CN) (OTC: QBCRF) on Wednesday, downgrading the stock to underperform from buy and raising the price target from 36.00 previously. The Canadian dollar is adjusted to 30.00 Canadian dollars. 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 previous 6.7x.

The company's decision to lower its rating and price target on the Quebec company's stock is based on recognition of continued intense competition in the wireless and broadband subscriber markets. This competitive landscape is believed to be exerting significant pricing pressure, which could hinder the company's revenue and adjusted EBITDA growth.

The new stock price target of CAD$30.00 reflects a more conservative valuation in the Quebec historical EV/EBITDA range of 5.8x to 8.1x. BofA Securities said the revised price-to-earnings ratio more accurately reflects the company's value, given the industry challenges it currently faces.

Quebec's downgrade comes as telecommunications companies grapple with a fiercely competitive environment, particularly in wireless and broadband services. This situation often results in aggressive pricing strategies and promotions to attract and retain customers, impacting overall profitability.

Investors and market watchers are likely to view the downgrade as a signal of financial headwinds Quebec may encounter in the future. The new price target of C$30.00 is a revised benchmark for the company's stock performance given the competitive pressures outlined by BofA Securities.

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