Quebecor's Strategic Momentum and Valuation Catalysts: A Case for Outperforming the Canadian Telecom Sector

In the evolving Canadian telecom landscape, Quebecor Inc. (QBR.B) has emerged as a compelling outlier, defying sector-wide headwinds with strategic agility and valuation resilience. Recent analyst upgrades from BMO Capital and National Bank Financial underscore a growing consensus that Quebecor is poised to outperform peers like BCE Inc. and Cogeco Communications Inc., driven by disciplined wireless expansion, aggressive share repurchases, and a robust balance sheet. This analysis dissects the catalysts behind Quebecor’s momentum and why investors should act now.

Analyst Upgrades: A Shift in Sentiment

BMO Capital’s recent upgrade of Quebecor to “Outperform” with a C$47 price target—up from C$40—reflects renewed confidence in the company’s ability to capitalize on cross-border expansion and wireless industry consolidation [2]. National Bank Financial echoed this optimism, raising its target to C$42 and upgrading to “Outperform,” citing Quebecor’s renewed Normal Course Issuer Bid (NCIB) and improved industry discipline in wireless pricing [1]. These moves follow a period of skepticism, with National Bank previously downgrading the stock amid concerns over media segment declines [3]. The contrast between earlier caution and current bullishness highlights a critical inflection point.

Quebecor’s strategic pivot beyond Quebec—targeting Ontario and Atlantic Canada—has already yielded results. Its Telecom segment, which accounts for 86% of revenue, saw mobile service revenue rise 6% year-over-year in Q2 2025, outpacing BCE’s 1.06% postpaid churn rate improvement [1]. Meanwhile, BCE’s recent Ziply Fiber acquisition, while ambitious, has yet to translate into earnings visibility, with analysts projecting 2025 EPS of $2.69, down from $2.89 in 2024 [4].

Financial Resilience and Valuation Advantages

Quebecor’s Q2 2025 results underscore its financial discipline. Despite a 0.5% revenue decline to C$1.4 billion, the company generated C$538 million in operating cash flow—a 37% increase—while reducing net debt to EBITDA to 3.2x, the lowest in the Canadian telecom sector [1]. This compares favorably to BCE’s 0.9% adjusted EBITDA decline and Cogeco’s reliance on a 5.8% dividend yield to sustain investor interest [4][3].

The Telecom segment’s stability is a key differentiator. While BCE’s service revenue fell 0.8% due to rising operating costs, Quebecor’s wireless division maintained pricing power, supported by industry-wide cost controls [4]. Analysts project Quebecor’s EPS to reach C$0.96 in Q2 2025, up from C$0.89 in 2024, versus BCE’s 19.2% year-over-year EPS drop [1].

Cross-Sector Comparisons: Why Quebecor Stands Out

BCE’s recent acquisition of Ziply Fiber—a $2.5 billion bet on U.S. broadband—has introduced uncertainty. While the company expects long-term growth, 2025 guidance remains muted, with free cash flow up just 5% to C$1.15 billion [4]. Cogeco, meanwhile, faces structural challenges: its “Hold” consensus rating and reliance on a 5.8% dividend yield suggest limited upside [3].

Quebecor’s NCIB renewal—a $500 million buyback program—adds a critical valuation catalyst. By reducing shares outstanding, the program directly boosts EPS, a metric where Quebecor already outperforms. With a price-to-earnings (P/E) ratio of 12x versus BCE’s 14x and Cogeco’s 16x, Quebecor offers a more attractive risk-reward profile [1][4][3].

Valuation Catalysts: The Road Ahead

Three factors position Quebecor for sustained outperformance:
1. Wireless Discipline: Industry-wide cost controls and Quebecor’s focus on high-margin mobile services are driving margins higher.
2. Shareholder Returns: The NCIB, combined with a 2.5% dividend yield, signals management’s confidence in undervaluation.
3. Cross-Border Expansion: Gaining traction in Ontario and Atlantic Canada diversifies revenue streams and reduces Quebec-centric risks.

BMO and National Bank’s upgrades are not mere optimism—they reflect a recalibration of Quebecor’s long-term potential. With BCE’s Ziply Fiber integration still unproven and Cogeco’s growth constrained by its regional footprint, Quebecor’s strategic and financial advantages are hard to ignore.

Conclusion: A Buy for Outperformance

Quebecor’s combination of disciplined execution, favorable valuation metrics, and analyst-driven momentum makes it a standout in a sector grappling with margin pressures. While BCE and Cogeco remain viable, their growth trajectories are clouded by integration risks and structural limitations. Investors seeking a high-conviction play should act swiftly: with BMO and National Bank targeting C$47 and C$42, respectively, the stock’s upside potential is both immediate and substantial [1][2].

**Source:[1] Quebecor Inc (QBR.B) Q2 2025 Earnings Call Highlights,
https://finance.yahoo.com/news/quebecor-inc-qbcaf-q2-2025-072644553.html[2] Quebecor Upgraded to Outperform, Target Raised to $47,
https://www.marketscreener.com/news/quebecor-upgraded-to-outperform-target-raised-to-47-at-bmo-ce7d59d8dc8df224[3] Cogeco Communications Inc. (TSE:CCA) Receives Consensus Rating of Hold,
https://www.marketbeat.com/instant-alerts/cogeco-communications-inc-tsecca-receives-consensus-rating-of-hold-from-analysts-2025-08-24/[4] BCE Reports Second Quarter 2025 Results,
https://www.morningstar.com/news/pr-newswire/20250807mo44866/bce-reports-second-quarter-2025-results