Shares of Rogers Communications Inc. (RCI.B-T) are breaking out to the upside.
Since early 2019, the share price of this stock has been in a downward sloping trendline, making lower highs and lower lows. However, the stock recently broke above this downtrend line, and has climbed and held above a major prior resistance level that was around $60.
Additionally, the stock recently exhibited a bullish technical signal – a “golden cross.” A “golden cross” occurs when a short-term moving average, such as the 50-day moving average, crosses above a longer-term moving average, like the 200-day moving average. The 50-day and 200-day moving averages are both rising with the share price above both moving averages. When this occurs, it marks a potentially positive technical signal suggesting the upward price momentum may have traction.
Should the share price continue to climb higher, there is initial resistance around $65 and major resistance around $70.
Upcoming earnings announcement
The company will be releasing its quarterly earnings results on Thursday. According to Refinitiv, the consensus earnings per share estimate is 97 cents.
On Oct. 22, the company reported better-than-expected third-quarter financial results that sent the share price soaring nearly 12 per cent that day. The company reported adjusted earnings per share of $1.08, well above the consensus estimate of 78 cents per share.
At Barclays global technology, media and telecommunications conference held on Dec. 9, 2020, Rogers’ chief financial officer Anthony Staffieri provided a positive outlook for the fourth-quarter, “We’re seeing a lot of the good solid momentum that we saw in the third quarter.” He also made encouraging remarks on ARPU (average revenue per user) growth potential in the second half of 2021, “In the Canadian industry, generally, our ARPU is somewhat in line with our major competitors sitting at about $51…Roughly, we estimate 10 per cent to 15 per cent of the subscriber base are on unlimited plans today and so there’s still quite a bit of adoption of unlimited. There’s still quite a bit of data usage growth that needs to happen. Joe [president and chief executive officer Joe Natale] talked earlier about Canadian consumption still being in the 2 to 3 gigs per month… once we get to data consumption that is in the 10, 20, 30 gigs per month, we then see the opportunity, much like you’ve seen in other markets, including the U.S., to start to differentiate based on levels of service, front-of-the-line access on the network, tethering and a number of other factors that, within our market, still allow for room to price differentiating. So for all those reasons, we still think we’re very bullish on the opportunity for ARPU growth in the Canadian context. But it will probably happen post COVID and the resumption of growth in a robust way. We sort of see not happening necessarily in the first half of 2021 but more likely in the back half of 2021, and then continuing beyond that.”
The stock has 12 buy recommendations and five neutral calls with an average target price of $67.23.
The company pays its shareholders a quarterly dividend of 50 cents per share, or $2 per share annually, equating to a current annualized yield of 3.2 per cent.
This report is based on technical analysis. Technical analysis does not replace fundamental analysis, but can help identify companies worth having a closer look at.
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