DESJARDINS UPGRADES COGECO CABLE FROM HOLD TO BUY

A rough year for Cogeco Cable Inc.’s stock has created a buying opportunity, according to Desjardins Capital Markets.

In a note released Monday, analyst Maher Yaghi upgraded Cogeco Cable’s stock to buy from hold, while keeping its target price steady at $74. Yaghi noted the stock’s 16-per-cent price retraction over the past year puts it at a greater-thannormal discount compared to its peers. The EV/ EBITDA multiple on Cogeco Cable’s stock historically trades at a one-times discount to its competitors, but it’s now trading at a 1.8x discount.

“We believe (Cogeco’s) operations ... are still very healthy,” Yaghi said in the note. “We see the current relative valuation as offering an attractive entry point for long-term shareholders.”

Desjardins also lowered its price targets on Rogers Communications Inc. (to $52.50 from $ 54), Shaw Communications Inc. ( to $ 28 from $29) and Telus Corp. (to $44 from $47).

Desjardins expects Rogers to experience lower wireless revenue growth, thinks Shaw is likely to seek equity financing as it moves into wireless and believes Telus will reduce its stock-buyback program over the next two years as it focuses on fibre investments and growing its dividend.

Overall, Yaghi said he doesn’t foresee any major regulatory or interest rate changes on the horizon that would affect the industry’s outlook.

“Innovation and sourcing content will be key to profitability,” he said.