Shaw Communications Reports Strong Earnings, Branded ‘Safe Haven’ By Top Analyst

Canadian telecom company Shaw Communications (SJR) has announced solid fiscal second quarter results in line with expectations. While F2020 guidance was withdrawn, management did note that it anticipates adjusted EBITDA growth to remain positive in F2020.

Following the news, RBC Capital analyst Drew McReynolds reiterated his SJR buy rating and C$24 price target on April 9

“In the current environment, we believe Shaw is well positioned to be a “safe haven” for investors” the analyst told investors, basing his bullish remark on the company’s “attractive dividend yield, reasonable exposure to strong demand for Internet services, and a multi-year growth runway for wireless given under-indexed market share and a market position within the more price-sensitive, lower end of the telecom market that could benefit during a recession.”

Specifically, consolidated revenue increased by 3.7% to C$1.36 billion and adjusted EBITDA increased 9.5% year-over-year to C$600 million (2% growth after removing an impact from IFRS 16), while wireless service revenue and ARPU increased 19.6% and 3.1%, respectively, year-over-year.

That’s as Freedom Mobile continues to grow its customer base, including an additional 54,000 postpaid subscribers in the quarter. Average billings per user increased 6.8%, while average revenue per user rose 3.1%.

“Our second quarter performance reflects our continued focus on execution, delivering stable Wireline results and sustained Wireless growth, supported by underlying networks that continue to prove their worth,” said CEO Brad Shaw.

Indeed all 7 analysts covering SJR rate the stock a buy, with a $20 average analyst price target. Most notably, National Bank’s Adam Shine upgraded SJR from hold to buy on March 25. (See SJR’s stock analysis on TipRanks)

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