Shaw Communications posted better-than-expected revenue and profit in the second quarter driven by the addition of new wireless customers.
Shaw Communications (SJR.B) reported a 34.4% year-over-year increase in EPS of C$0.43 per share,topping consensus estimates of C$0.34 . In addition, total revenues increased 1.8% to C$1.39 billion, beating analysts’ estimates of C$1.38 billion.
On March 15, 2021, Shaw announced that it had reached an agreement with Rogers Communications (RCI.B) to acquire all of Shaw’s issued and outstanding Class A Shares and Class B Shares for C$40.50 per share.
Shaw Communications’ CEO Brad Shaw said, “Under a combined Rogers and Shaw entity, we will enable the scale, assets and capabilities to accelerate unprecedented investment, to help close the connectivity gap faster in rural, remote and Indigenous communities, and to deliver new technology and more choice for consumers and businesses, more quickly than either could achieve on its own. All Canadians deserve world class connectivity.”
Following the 2Q results, BMO Capital analyst Tim Casey reiterated a Hold rating on the stock with a C$50.66 price target (47.4% upside potential).
Last month, Desjardins analyst Jerome Dubreuil initiated coverage of Shaw Communications with a $C40.50 price target (17.8% upside potential). In a research note, Dubreuil told investors he believes the stock is trading primarily on the likelihood that regulators will approve the takeout by Rogers. He views the deal as “quite likely” given the limited regulatory risk and the possible divestment of Shaw’s wireless assets by Rogers.
Overall, Shaw Communications stock scores a Moderate Buy analyst consensus rating based on 4 Buys and 2 Holds. The average analyst price target of C$43.89 implies upside potential of about 27.5% to current levels.