TELUS (TU) has a premium valuation which causes some valuation risk, but it is seen as the "structural leader" within the group that can maintain the valuation if certain boxes are checked through 2026 to 2028, RBC Capital Markets said in a Friday note.

RBC said TELUS can maintain valuation if it sustains 3% or higher earnings before interest, taxes, depreciation, and amortization growth, make progress in consolidated capital expenditure objective, deliver on free cash flow growth of at least 10%, and phase out the discounted dividend reinvestment plan by 2027 end, among others.

TELUS announced Thursday that chief executive officer Darren Entwistle will retire on June 30 and Victor Dodig will succeed him as CEO, starting July 1. TELUS' CEO transition timing appears to be sooner than anticipated, but it is expected to be a smooth handover, the firm said.

For 2026, management offered consolidated service revenue growth guidance of 2% to 4%, versus RBC's 2.3% estimate.

RBC maintained an outperform rating on TELUS with an unchanged price target of 23 Canadian dollars.

Shares of the company were down about 4.2% in recent Friday trading.

Price: 13.35, Change: -0.58, Percent Change: -4.20