Why Analysts Are Bearish on BCE Inc. (BCE)?

We recently published a list of 5 Stocks That Analysts Are Bearish On. In this article, we are going to take a look at where BCE Inc. (NYSE:BCE) stands against other stocks that analysts are bearish on.

The S&P 500 is up 0.19% while the Dow index has surged up 0.31%. As the broader market booms, there are a few stocks that are lagging the market. Some of these stocks have a bearish outlook and the analysts are adjusting their ratings accordingly.

While the US economy seems comfortably on the path of recovery, certain sectors have more risks associated with them. In other cases, stocks receive a downgrade when they have already run up considerably and analysts do not see more upside despite better earnings and macroeconomic environment. For investors, it is vital to understand why stocks receive a downgrade so they can plan to shift their investments accordingly.

We looked at 5 stocks that analysts are bearish on. To come up with the list of 5 stocks that analysts are bearish on, we looked at stocks that recently received a downgrade and have a market cap of at least $1 billion.

A long-distance telecommunications tower looming large against a dawn sky.

BCE Inc. (NYSE:BCE)

BCE Inc. (NYSE:BCE) has struggled over the past year. The stock is down 47% so a downgrade by Bank of America, which lowered its Neutral rating to Underperform on the stock, doesn’t cause much more of a headache for investors. The reasons for the downgrade should worry investors though.

BofA sees growth headwinds for the stock. It is true that the industry peers also don’t have a favorable outlook but the concerns regarding BCE (NYSE:BCE) are much more pronounced. The firm’s dividend is in danger and there is high leverage that the company management is finding hard to tackle. BCE has a solid history of growth and that’s one reason why investors have preferred the stock in the past. However, the current dividend yield of over 13% isn’t sustainable and a dividend cut would spook investors. In such a scenario, an upside is unlikely to play out, even though the stock still has a price target of $36, a 55% upside from current levels.

Overall, BCE ranks 3rd on our list of stocks that analysts are bearish on. While we acknowledge the potential of BCE as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as BCE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.