Telus Corporation has seen its share price tumble to levels not witnessed since 2016, making it one of the worst performers on the TSX Index this year. The stock has declined for four consecutive weeks and now sits approximately 54% below its all-time high. With the shares deeply oversold, investors are weighing whether a technical rebound is imminent or if further downside lies ahead.
Growth slowdown and operational challenges
Telus, one of Canada's three major telecommunications providers alongside Bell and Rogers, has faced mounting headwinds in recent months. The company's latest quarterly results revealed a 2% year-over-year decline in operating revenue to C$4.92 billion, while operating expenses surged 32% to C$6.5 billion. This led to a net loss of C$1.83 billion for the June quarter, a stark contrast to the C$235 million loss recorded in the same period last year. Adjusted EBITDA also fell 5% to C$1.58 billion.
In response to these pressures, management announced a strategic reset, most notably slashing the dividend to preserve cash and fund growth initiatives. The company also eliminated its dividend reinvestment plan (DRIP) discount, which had allowed shareholders to purchase additional shares at a reduced price. These measures are intended to strengthen the balance sheet and reduce net debt to adjusted EBITDA to 3.0 times or lower.
Additionally, Telus is redirecting capital toward areas with higher return potential, including investments in its wireless and PureFibre networks. The company is also exploring the sale of non-core assets, particularly within its health division, as part of its streamlining efforts.
Analyst sentiment and technical outlook
Following these developments, analysts have revised their price targets downward. Barclays, for instance, cut its target on Telus from C$12 to C$11, reflecting a more cautious stance on the company's near-term prospects.
From a technical perspective, the weekly chart shows Telus stock in a persistent downtrend, with buyers largely absent. The decline accelerated after the shares broke below the key support level of C$16.70, a level that had held since September 2023. This breakdown signaled that bearish momentum has taken control.
However, there are signs that the stock may be oversold. The Relative Strength Index (RSI) has fallen to 17.40, its lowest reading on record, which historically suggests that selling pressure may be exhausted. Additionally, the price remains well below its 50-week exponential moving average (EMA), increasing the likelihood of a mean-reversion bounce.
While technical indicators point to a potential rebound, the fundamental challenges facing Telus—including weak revenue growth, elevated expenses, and a dividend cut—may continue to weigh on investor sentiment. The company's ability to execute its turnaround strategy and stabilize its financial performance will be critical in determining whether the stock can recover or if further declines are in store.
This article is for informational purposes only and does not constitute financial advice.
