Is TELUS International (NYSE:TIXT) Still Undervalued After Its Recent Share Price Rally?

If you have been watching TELUS International (Cda) (NYSE:TIXT), you might be wondering about the recent bump in its share price. Although there hasn’t been a game-changing event, the move has caught the attention of investors questioning whether it signals a shift in sentiment or just short-term volatility. Without a headline driver, it is natural to wonder if the price action is justified by underlying fundamentals, or if the stock is simply moving in line with the broader market. Looking back over the past year, TELUS International has seen its stock rise by nearly 24%. That journey has not been smooth, as shown by a 55% surge over the past three months and an 18% gain in the last month alone. Despite these gains, the company is still recovering from a tough three-year period, with longer-term returns remaining deeply negative. The recent trend, however, suggests that momentum is climbing and short-term optimism is beginning to outweigh earlier concerns. The key question now is whether this turnaround offers an opportunity or if the gains indicate that the market is already factoring in stronger growth ahead.

Most Popular Narrative: 0.7% Undervalued

According to the prevailing narrative, TELUS International (Cda) is considered slightly undervalued, with the current share price just below its estimated fair value based on analyst forecasts and future growth expectations.

"The accelerating enterprise adoption of AI, automation, and advanced digital solutions is driving demand for TELUS International's AI & Data Solutions and Digital Solutions portfolio. This supports long-term revenue growth and mix shift toward higher-margin services as proof-of-concept work transitions to large-scale enterprise deployments in 2026 and 2027."

Curious how these transformation trends might fuel a valuation surge? There is one powerful growth assumption behind this fair value that could change the game for TELUS International. Want to know which big future shift analysts expect to dramatically boost margins and propel earnings higher? Dive into the full narrative to uncover the numbers and drivers analysts believe justify today's price target.

Result: Fair Value of $4.52 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent margin pressure and continued high client concentration could quickly dampen the optimism behind these bullish forecasts.

Find out about the key risks to this TELUS International (Cda) narrative.

Another View: The SWS DCF Model

While analyst price targets suggest TELUS International is undervalued, our DCF model tells a similar story. The current share price is well below what we estimate as fair value. Does the DCF provide a more realistic picture, or is the market seeing risks the model cannot capture?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out TELUS International (Cda) for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own TELUS International (Cda) Narrative

If you see things differently, or simply want to dig into the numbers yourself, you can assemble your own narrative and reach your own conclusions in just a few minutes. Do it your way

A great starting point for your TELUS International (Cda) research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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