- TELUS Corporation (NYSE: TU) was downgraded to Neutral by CIBC (NYSE: CM) due to performance concerns.
- The downgrade followed disappointing Q2 financial results, with earnings per share and revenue missing estimates.
- TELUS Corporation is addressing high leverage and an unsustainable dividend yield through strategic plans, including a dividend reset and DRIP discount removal.
TELUS Corporation (NYSE: TU) is a major Canadian telecommunications company. Beyond its core mobile and internet services, the company has expanded into other sectors. These include healthcare technology, agriculture technology, and artificial intelligence, as it seeks new areas for growth.
On July 31, 2026, the investment firm CIBC (NYSE: CM) downgraded TELUS Corporation to a Neutral rating when the stock price was $9.56. This change in rating reflects concerns about the company's recent performance and financial stability amid a competitive market and internal pressures.
The downgrade follows disappointing second-quarter financial results. As highlighted by Zacks, TELUS Corporation reported earnings of $0.12 per share, missing the estimated $0.16. Its revenue of $3.55 billion also fell short of expectations and was lower than the $3.67 billion from the same period a year ago.
Underlying these results are significant financial challenges. As highlighted by Seeking Alpha, the company is managing high leverage, which is a large amount of debt. Its dividend yield of over 11% is seen as unsustainable, and some analysts believe a dividend cut of 35-40% may be necessary.
In response, TELUS Corporation announced new strategic plans. The company is resetting its quarterly dividend to help with deleveraging, which is the process of paying down debt. It also plans to remove its dividend reinvestment plan (DRIP) discount to reduce the dilution of existing shares.