Even though Rogers Wireless faced all sorts of backlash over the initial iPhone 3G plans that it offered, a notable Scotia Capital analyst is saying that now is a very good time to invest in the company. John Henderson offers 10 reasons why buying stock in Rogers is a very good idea.
The main brunt of the argument is that because of the negative backlash, prices on Rogers stock have been set at “exceptionally attractive levels” right now, but the stock has nowhere to go but up with its continuing dominance of the Canadian GSM market, as well as the exclusive Canadian rights to the iPhone 3G (and BlackBerry Bold). Henderson is looking toward a $62 target within one year for the stock.
The ten reasons that he cites are:
They are: a competitive overlap that will be limited to 6%, and won’t be reached until 2011-2012; retention tools that will keep customer churn low at Rogers; high hurdles to entry into the market, a benefit to Rogers; the inability of new entrants into the wireless market to grab much more than a “meagre” 5% shre by 2014; a decline in the intensity of capital expansion at Rogers; the likelihood that analyst downgrades will eventually become upgrades; continued sales momentum from iPhone and the BlackBerry Bold launch; new text messaging price plans; dividend increases that should be coming on the basis of strong free cash flow growth; and a price-earnings valuation that is at unprecedented levels for Rogers.