Last Update 03 Dec 25
Fair value Increased 0.20%RCI.B: Sustainable Pricing And Sports Upside Will Support Balanced Medium-Term Outlook
The analyst’s fair value estimate for Rogers Communications has inched higher by approximately $0.12 to about $59.04, as analysts lift price targets in response to sustainable pricing improvements, modestly stronger long term revenue and margin assumptions, and higher 2025 EBITDA expectations tied to lower costs and incremental sports related upside.
Analyst Commentary
Bullish analysts are generally constructive on Rogers Communications, pointing to a series of upward price target revisions in both Canadian dollar and U.S. dollar terms. The recent Q3 performance, sustained pricing momentum, and improving cost outlook have reinforced confidence in the company’s medium term earnings power.
Several firms have raised their targets incrementally over recent weeks, indicating a gradual reassessment of fair value rather than a one off reaction. JPMorgan, in particular, has increased its 2025 EBITDA estimates, highlighting additional upside tied to sports related revenue and efficiencies across the cost base.
At the same time, the persistence of Equal Weight and Sector Perform ratings from some corners of the Street underscores that not all observers see the risk reward as clearly skewed to the upside. While the direction of target changes is favorable, differing rating stances suggest an ongoing debate over execution, competitive dynamics, and valuation headroom from current levels.
Bullish Takeaways
- Bullish analysts are lifting price targets in both local and U.S. currency, signaling growing conviction that the current trajectory of revenue and margins supports a higher intrinsic value.
- Upward revisions to 2025 EBITDA estimates, including from JPMorgan, reflect confidence that lower operating costs and sports related tailwinds can structurally enhance profitability.
- Recent Q3 results and sustainable pricing improvements are cited as evidence that Rogers is executing effectively on monetization, supporting a more favorable long term growth and cash flow outlook.
- The clustering of multiple target hikes in a short period suggests a broadening consensus that prior expectations were too conservative relative to the company’s earnings power.
Bearish Takeaways
- Despite higher targets, some Bearish analysts are maintaining more neutral ratings, implying that the current share price already discounts much of the improved earnings outlook.
- Incremental target increases, rather than dramatic upward resets, indicate lingering caution around competitive pressure and the durability of pricing gains over a full cycle.
- Sector Perform and Equal Weight stances highlight concerns that execution risks and integration or cost management challenges could cap further multiple expansion.
- The reliance on sports related upside for part of the EBITDA lift introduces event driven risk, as performance and viewership trends may not be consistently repeatable year over year.
What's in the News
- Launch of Rogers Xfinity Pro add on, featuring a WiFi 7 enabled gateway, device prioritization, and Storm Ready WiFi backup to provide next generation in home connectivity on Canada's most reliable internet (Product Related Announcement).
- Reaffirmation of 2025 full year financial guidance, with total service revenue still expected to grow 3% to 5%, signaling management confidence in the existing outlook (Corporate Guidance).
- Superior Court of Quebec authorizes a national class action related to the April 19, 2021 wireless service interruption, potentially exposing Rogers, Fido and Chatr brands to compensatory, moral and punitive damage claims (Lawsuits and Legal Issues).
- Expansion of Rogers Satellite, a satellite to mobile texting service that now delivers approximately three times more coverage than other Canadian wireless providers, extending connectivity across remote parks, communities and waterways (Business Expansion).
Valuation Changes
- Fair Value Estimate has risen slightly to approximately CA$59.04 from about CA$58.93, reflecting modestly higher long term assumptions.
- Discount Rate is effectively unchanged at roughly 6.12%, indicating no material shift in perceived risk profile.
- Revenue Growth has edged up marginally to about 3.91% annually from approximately 3.91%, signaling a very small increase in long term growth expectations.
- Net Profit Margin is essentially flat at around 11.56%, with changes too small to be economically meaningful.
- Future P/E multiple has risen slightly to about 14.13x from roughly 14.10x, suggesting a modestly higher valuation multiple on expected earnings.
Key Takeaways
- Expanded rural wireless coverage and advanced infrastructure investments position Rogers to capture new subscribers and drive growth through innovative services and connectivity.
- Cost efficiencies, disciplined deleveraging, and potential sports/media asset monetization support higher earnings, margin improvement, and investment capacity for future opportunities.
- Regulatory risks, market saturation, ARPU pressure, high leverage, and ongoing cord-cutting threaten Rogers' long-term revenue growth, profitability, and financial flexibility.
Catalysts
About Rogers Communications- Operates as a communications and media company in Canada.
- Rogers' launch of satellite-to-mobile texting, with a road map to add voice and data services, greatly expands their wireless coverage across rural and remote regions, positioning the company to benefit from rising demand for reliable connectivity and to tap into new subscriber growth opportunities; this is likely to impact future revenue and ARPU positively.
- The continued deployment and expansion of 5G and Wi-Fi 7 infrastructure, along with the introduction of advanced services like fixed wireless internet and bundled offerings, allows Rogers to capitalize on increasing mobile data consumption and connected device proliferation, supporting both subscriber additions and higher margins in future periods.
- Successful cost efficiency initiatives in Cable-encompassing network integration, reduced capital intensity, and improvements in customer care-are structurally lowering expenses and supporting higher EBITDA margins, setting a foundation for more robust earnings growth as the company scales.
- The near-term integration and longer-term monetization of sports/media assets, notably MLSE, remains a significant hidden value driver; proactive moves to surface or monetize these assets could unlock value for shareholders and bolster net earnings.
- A disciplined approach to delevering following the Shaw acquisition, demonstrated by the accelerated reduction in leverage and improved free cash flow, enhances Rogers' capacity to invest in future growth trends (like AI-driven services and digital infrastructure) while protecting net margins.
Rogers Communications Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Rogers Communications's revenue will grow by 4.0% annually over the next 3 years.
- Analysts assume that profit margins will increase from 7.3% today to 10.4% in 3 years time.
- Analysts expect earnings to reach CA$2.4 billion (and earnings per share of CA$4.61) by about September 2028, up from CA$1.5 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as CA$1.8 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.4x on those 2028 earnings, down from 17.5x today. This future PE is lower than the current PE for the CA Wireless Telecom industry at 17.5x.
- Analysts expect the number of shares outstanding to grow by 1.08% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 6.91%, as per the Simply Wall St company report.
Rogers Communications Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Regulatory uncertainty-particularly the CRTC's recent decision to mandate access for competitors on large networks and the possibility of further government intervention-poses long-term risks of reduced pricing power and potential cuts to capital investment, which could compress revenues and margins.
- Slowing growth in wireless subscriber net adds-driven by reduced immigration and overall market maturation-signals that the Canadian wireless market is approaching saturation, limiting Rogers' ability to drive substantial top-line revenue expansion in the long term.
- Ongoing ARPU (average revenue per user) pressures, partially caused by intense promotional activity, competitive pricing, the proliferation of multi-line discounts, and declining roaming revenues, threaten to suppress service revenue growth and net earnings.
- High leverage following recent acquisitions (Shaw and MLSE), even after progress on delevering, raises long-term refinancing and interest rate risks that could constrain financial flexibility and weigh on net margins if organic growth and cost synergies do not fully materialize.
- Secular trends of cord-cutting and persistent video subscriber losses in the Cable segment, as well as shifting media consumption patterns to OTT platforms, continue to erode legacy revenues, challenging the sustainability of both Cable and Media profitability and overall EBITDA expansion.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of CA$55.441 for Rogers Communications based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$71.0, and the most bearish reporting a price target of just CA$40.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CA$23.4 billion, earnings will come to CA$2.4 billion, and it would be trading on a PE ratio of 15.4x, assuming you use a discount rate of 6.9%.
- Given the current share price of CA$49.27, the analyst price target of CA$55.44 is 11.1% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
