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Argus downgrades BCE stock to hold amid tough conditions

Published 2024-03-04, 08:06 a/m
Updated 2024-03-04, 08:06 a/m
© Reuters.

On Monday, Argus made a significant adjustment to its rating on BCE (TSX:BCE) Inc . (NYSE: NYSE:BCE), downgrading the telecommunications company from Buy to Hold. The decision comes as a response to the challenges facing BCE, including increased competition and an unfavorable regulatory climate.

The firm noted that BCE is currently undergoing a large restructuring effort and is bracing for a year of transition. For 2024, BCE has indicated expectations of lower revenue, earnings per share (EPS), and cash flow. While Argus recognized BCE's dedication to maintaining its dividend, it pointed out that the anticipated increase for the year would fall short of the historical average of 4.5%.

BCE's stock valuation is also a point of concern, as it hovers at or below the lower end of its historical valuation range. Argus emphasized the necessity for the company to demonstrate operational progress and signs of financial recovery before reconsidering an upgrade to its rating.

Nevertheless, Argus maintains a long-term Buy rating on BCE, acknowledging the difficult steps management is taking to navigate the challenging environment. The firm suggests that a recovery in BCE's operational momentum may take time, and it will be closely monitoring the company's performance moving forward.

InvestingPro Insights

As BCE Inc . (NYSE: BCE) navigates through a transitional period marked by Argus' recent rating downgrade, investors are closely watching the company's financial health and market position. The InvestingPro data sheds light on some key metrics that are particularly relevant given the current sentiment around BCE.

The company's market capitalization stands at 33.74 billion USD, reflecting its substantial presence in the Diversified Telecommunication Services industry. Despite facing headwinds, BCE has managed to maintain a consistent dividend payout, with an attractive dividend yield of 7.96%, underlining its commitment to returning value to shareholders. This is further supported by an InvestingPro Tip that highlights BCE's impressive track record of raising its dividend for 15 consecutive years and maintaining dividend payments for 54 consecutive years.

Moreover, the company's P/E ratio, adjusted for the last twelve months as of Q4 2023, is 19.87, which could be appealing to value-oriented investors, especially when considering BCE's low price volatility, as indicated by another InvestingPro Tip. However, it is also important to note that four analysts have revised their earnings downwards for the upcoming period, suggesting that investors should keep an eye on future earnings reports.

For those interested in further analysis and additional InvestingPro Tips for BCE, including insights on earnings predictions and the company's profitability over the last twelve months, visit https://www.investing.com/pro/BCE. There are 10 more InvestingPro Tips available, which could provide valuable guidance in assessing BCE's investment potential. Remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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