TD Upgrades MTS to Stron BuyTD Securities has upgraded Manitoba Telecom Services (MTS) from Buy to Strong Buy.
Here is an excerpt from TD's four page report on MTS, published today:
"We maintain our forecasts and target price for MTS (MBT) shares, but our rating goes to Action List BUY from Buy owing to the material underperformance of the stock versus other telcos with a similar profile. Exhibit 1 shows that MBT shares are down 10% since December 12, while BCE shares are up 24% and Bell Aliant units are up 10% (this date is used because it coincides with our addition of BCE shares to our Action List - we are removing BCE shares today to make room for MBT). This is a significant divergence in performance for high yielding telcos with similar balance sheet strength and similar wireline exposure. MBT shares are now the least expensive in the group, and they offer the highest dividend yield at 8.2%. Despite the weak macro environment, we see stable results being likely for MTS in 2009, and we see virtually no risk of a dividend cut in the foreseeable future. Without assuming any strategic catalysts (takeover, leveraged recap, or sale of Allstream), we forecast a 44% annual return from current levels, which we view as excessive given the low risk profile and high dividend yield for this name, so MBT is now our top defensive/income pick in the Canadian telecom & cable sector..."