Scotia Analyst Offers Ten Reasons to Buy Rogers Stock

Jul.20.08 | About: Rogers Communications (RCI)

While Rogers Communications Inc. (NYSE:RCI) shares have recently being downgraded by a few Street analysts, John Henderson at Scotia Capital offers ten reasons to buy the communications giant’s stock.

In a note to clients, Mr. Henderson said:

The analyst downgrades and recent slide in share price have presented investors with an opportunity to buy Rogers shares at exceptionally attractive levels. We believe wireless and cable assets are great places to be invested in uncertain economic times, pointing out that economic softness south of the border has shown “little or no discernible impact on those bellwether U.S. Wireless carriers and cable operators, let alone in Canada.

He has a one-year target of C$62 on the stock.

So what are his ten reasons that make the stock a winner? They are:

  1. A competitive overlap will be limited to 60%, and won’t be reached until 2011-2012.

  2. There are retention tools that will keep customer churn low at Rogers.

  3. High hurdles to entry into the market are a benefit to Rogers.

  4. New entrants into the wireless market are unable to grab much more than a “meager” 5% share by 2014.

  5. There is a decline in the intensity of capital expansion at Rogers.

  6. There is the likelihood that analyst downgrades will eventually become upgrades.

  7. There is continued sales momentum from iPhone and the BlackBerry Bold launch.

  8. The new text-messaging price plans.

  9. There are dividend increases that should be coming on the basis of strong free cash flow growth;

  10. A price-earnings valuation is at unprecedented levels for Rogers.

Mr. Henderson concluded:

Having traded sideways for over a year despite strong operating performance, Rogers’ stock is building pressure for a strong upswing.