BCE Inc. (BCE.TO, BCE) was upgraded to Buy from Hold at Desjardins on Tuesday.

Analyst Jerome Dubreuil raised his price target on shares of the Canadian media and telecom company to $40 from $39.

"We are upgrading BCE to Buy (from Hold) following a thorough analysis of its US plans, which we estimate will drive a ~12% IRR over the duration of the endeavour," Dubreuil said in a note to clients. "This return, while lower than management's 20% objective, implies that the stock's strong negative reaction to the Ziply announcement was in large part unwarranted."

"There are significant risks in embarking on an out-of-footprint journey in an industry experiencing land grab dynamics, but the deal checks too many boxes for us to remain negative on it," the analyst said.

"The market has thus far been skeptical of BCE's US plan, partly due to the deal's complexity and high price tag," Dubreuil said.

"We anticipate that the closing of the deal will enable management to share more about Ziply, which we expect should help investors better appreciate the deal's merits," the analyst said.

"A risk to our call is that BCE may reduce its 2025 FCF guidance when it reports 2Q earnings on August 7 as the initial fibre build outside the InfraCo footprint would require meaningful investment."

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)