Rogers Communications Crushes Revenue And Profit Estimates In Q1

Rogers Communications’ revenue and profit increased in its first quarter as its cable and media operations saw improvements.

Rogers Communications’ (RCI.B) total revenue came in at C$3.49 billion in the quarter ended March 31, an increase of 2% from the first quarter of 2020. Cable and media revenue grew by 5% and 7%, respectively, in the quarter.  There was an increase of 44,000 net wireless postpaid customers while 56,000 prepaid subscribers were lost during the quarter.

Meanwhile, 1Q 2021 profit was C$361 million (C$0.70 per share), compared to a profit of C$352 million (C$0.68 per share) in 1Q 2020. On an adjusted basis, Rogers earned C$0.77 per share in the first quarter, up 8% from C$0.71 per share a year ago. Analysts on average expected adjusted earnings of C$0.66 per share and C$3.35 billion in revenue.

Rogers’ President and CEO Joe Natale said, “We saw total revenue growth led by improvements in our Cable and Media businesses, and in our Wireless business, saw low churn and strong postpaid subscriber growth. We are confident in our long-term growth strategy and are well-positioned as the economy continues to recover. We remain focused on making generational investments in our networks, our customers, and our country, including expanding Canada’s largest 5G network and connecting even more rural, remote, and Indigenous communities.”

Rogers is in the middle of a proposed acquisition of Shaw Communications (SJR.B) for C$26 billion. The deal is expected to be completed in the first half of 2022.

On April 20, RBC Capital Markets analyst Drew Mcreynolds reiterated a Buy rating on the stock with a C$74.00 price target (19.5% upside potential).

Mcreynolds said, “While we believe wireless concentration and the reduction from four to three wireless players in Western Canada and Ontario represents the highest hurdle for the current deal as structured, we do see a number of potential remedies should one be required.”

Overall, the consensus is that RCI.B is a Strong Buy, based on 8 Buys and 2 Holds. The average analyst price target of C$72.29 implies an upside potential of about 16.8% to current levels.  (See Rogers Communications stock analysis on TipRanks)

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