Things seem to be going from bad to worst for shares of BCE (TSX: BCE), which are now down close to 57% from its all-time highs last seen in early 2022. Indeed, the once-beloved high-yielding blue chip is now one of the fastest-falling knives of the large-cap names. With growing uncertainty surrounding the Canadian telecom scene and massive moves going on behind the scenes, it’s tough to tell when BCE stock will return to its winning ways.
Many analysts don’t seem to want to stick around—not with all the negative momentum and the potential to return to the $20s. Analysts have been calling for the company to trim away at the dividend for a few months now. And while management recently had an opportunity to shed some light on the road ahead, it seems like investors aren’t willing to wait around, not with the dividend becoming increasingly at risk.
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BCE’s fourth quarter wasn’t great: The road ahead is going to be bumpy
For the latest (fourth) quarter, BCE saw a smaller number of wireless subscriber additions. It wasn’t a shocker by any stretch of the imagination. However, the wireless additions did come in below estimates that were already incredibly low. Either way, the company sees its full-year revenue coming in flat-to-slightly lower. Macro pressures, increased competition, and other headwinds could continue to weigh heavily. With low expectations in store for the rest of the year, questions linger as to whether this could be rock bottom for BCE. It’s been in free-fall for quite a while. And if management is guiding a tad lower, perhaps the firm could be in for a bit of a relief bounce at some point down the line.
With potential tariff threats clouding the Canadian economic picture, it’s really hard to tell if the macro climate will improve for the better. Indeed, Trump tariffs could realistically send Canada’s economy into a recession for some unknown period of time. Indeed, the last thing the ailing telecom firms need is a potentially nasty recession, the likes of which we may not have encountered since the GFC.
Lots of headwinds could weigh down the telecoms
Of course, if President Trump doesn’t end up imposing 25% tariffs on a wide range of Canadian goods moving into the U.S. market, perhaps such recession fears will be put to rest. In any case, competitive threats remain a top concern for BCE. It’s not just the peers in the Big Three that BCE needs to keep tabs on, either. As telecoms look to satellite connectivity firms (think Elon Musk’s Starlink), perhaps the telecom scene as we know it could face drastic change.
Now, cell towers probably aren’t going anywhere, even as satellite connectivity becomes more common. However, it’s something to keep tabs on as the economic moat of the big telecoms becomes a tad more challenging. Either way, one has to think that the federal government will be making moves to ensure their top telecom firms aren’t at risk of profound disruption. Indeed, it’s tough to tell what the future holds for BCE and the rest of the pack.
There are a lot of industry and macroeconomic unknowns that make it hard to value stock. Either way, nibbling on a few shares could make sense as long as you’re not expecting the hefty yield to survive. In short, BCE is a riskier bounce-back play more than anything. Personally, I’d rather wait and see how things progress through the year before even placing a tiny bet. In my view, there are less turbulent ways to get yield.
