BMO: CaseyJanuary 3, 2023 | 00:00 ET~ BCE BCE-TSX BCE-NYSE
Rating Outperform Price: Dec-30 $59.49 Target ↓ $66.00 Total Rtn 17%
Slowing Growth Outlook for 2023 Bottom Line: We are revising our BCE earnings model based on company specific items and competitive activity in Q4 and implications for 2023.
In summary, we are lowering our EBITDA estimates by $90 million in Q4 (-3.5%) and ~-1% in 2023E and 2024E.
We continue to expect BCE will increase its dividend by 5% in 2023.
We remain Outperform on BCE, and we are lowering our target price to $66.
Key Points • We are making some modest revisions to BCE earnings model based on BCE specific items and competitive activity in Q4 and implications for 2023. In summary, we are lowering our EBITDA estimates by $90 million in Q4 (-3.5%) and ~$100 million in 2023 and 2024 (-1%).
• The revisions for Q4 are spread across wireline (-$40 million), wireless (-$20 million) and media (-$30 million). Wireline revisions reflect the continuing effects of inflation pressures and supply chain issues in Enterprise as well as some lingering weather-related costs. The wireless revisions reflect competitive activity in Q4 where competition was robust. We increased our subscriber loading estimates and lowered margins modestly. The media revision reflects lower margins on advertising pressure and higher rights fees.
• For 2023 and 2024, we trimmed our outlook by 1% based on slightly more competitive activity in wireless and wireline and continued margin pressure in media. We still expect a similar EBITDA growth profile (+~3.5%) in 2023.
• We continue to expect BCE will increase its dividend by 5% in 2023.