TELUS International Maintains Buy Rating Amidst AI-Driven Growth and Market Stabilization

Aravinda Galappatthige from Canaccord Genuity maintained a Buy rating on TELUS International (CDA) with a price target of $5.25. The company demonstrated 7.2% YoY revenue growth, driven by AI data solutions and support from its parent company. Despite facing challenges, the IT services sector is showing signs of recovery, and the stock's premium over TELUS's offer price suggests potential for an upward revision. Corporate insider sentiment is positive, with 63 insiders buying their shares over the past quarter.

TELUS International (CDA) reported its second-quarter earnings, which surpassed analyst expectations. Revenue grew 7% year-over-year, reaching $699 million, while earnings per share (EPS) beat forecasts, coming in at $0.06 compared to the expected $0.05 [3]. Despite this positive performance, the stock experienced a decline in pre-market trading, dropping 7.16% to $3.50. This downward movement may reflect broader market trends or investor concerns about future growth prospects.

Analysts have shown mixed sentiment towards TELUS International. Canaccord Genuity maintained a Buy rating with a price target of $5.25, citing strong revenue growth driven by AI data solutions and support from its parent company [4]. The company's revenue from the top 10 clients grew by 10%, while its own revenue increased by 12% over the same period. However, margin pressures in customer experience and content moderation sectors, as well as slower AI adoption in financial services due to concerns over personal identifiable information (PII), pose challenges [3].

TELUS International's stock has been relatively stable compared to its 12-month high of $23.43, indicating potential for growth. Recent analyst ratings show a mix of buy and hold recommendations, with a consensus target price of approximately $23.13, suggesting that analysts see value in the stock [1]. The company's strong market capitalization of around $32.99 billion reflects its significant presence in the telecommunications sector. However, some analysts have downgraded their ratings, reflecting a cautious outlook on the company's future performance.

The stock has experienced fluctuations, with a 12-month low of $19.10, suggesting potential instability in its price movements. Corporate insider sentiment is positive, with 63 insiders buying their shares over the past quarter [4]. The company's strong free cash flow yield of 33% stands out as a notable metric for value investors.

TELUS International projects revenue growth of approximately 2% for the full year 2025, with adjusted EBITDA reaching around $400 million and adjusted diluted EPS being approximately $0.32. The company expects investments to be around $67 million, with efficiency targets set at $50 million [3].

References:
[1] https://www.marketbeat.com/stocks/TSE/T/forecast/
[2] https://www.marketscreener.com/news/telus-international-inc-reports-earnings-results-for-the-second-quarter-and-six-months-ended-june-3-ce7c5fd3d88af625
[3] https://www.investing.com/news/transcripts/earnings-call-transcript-telus-international-q2-2025-earnings-beat-expectations-93CH-4166470
[4] https://www.marketbeat.com/stocks/TSE/T/forecast/