Scotiabank raises Telus International price target to $4.50 on acquisition deal

TELUS Corporation has finalized an agreement to acquire Telus International (TIXT) for $4.50 per share, representing a 32% premium over its initial offer. This definitive transaction has prompted analysts like Scotiabank to raise their price targets to $4.50, aligning with the acquisition price and viewing it as the optimal near-term outcome for TIXT shareholders, especially following the company's recent strong earnings beat. Stifel also adjusted its target to $4.50 while downgrading TIXT to Hold, reflecting the certainty of the deal.

Analysis

Telus International (TIXT) is the subject of a definitive acquisition agreement by TELUS Corporation at a price of US$4.50 per share. This transaction price represents a 32% premium over the initial offer and is viewed by Scotiabank as the optimal near-term outcome for TIXT shareholders, particularly in the current macroeconomic climate. Consequently, analyst ratings have been updated to reflect the deal's certainty; Scotiabank raised its price target to $4.50 while maintaining a Sector Perform rating, and Stifel also adjusted its target to $4.50 but downgraded the stock from Buy to Hold, signaling that further upside is now capped. The acquisition follows a strong second-quarter 2025 earnings report, where TIXT surpassed forecasts with an EPS of $0.06 and revenue of $699 million. The stock has already priced in the deal, gaining 16.45% in the past week to trade at $4.46, just shy of the offer price, which implies high market confidence in the deal's closure.

Key Decisions for Investors

• Given that Telus International's stock is trading at $4.46, just below the definitive $4.50 acquisition price, the upside potential is minimal and primarily represents a merger arbitrage opportunity.
• Existing shareholders have realized most of the gains from the acquisition premium and should consider the position largely de-risked, with the main remaining variable being deal-closing risk.
• The downgrade from Buy to Hold by Stifel correctly reflects the new reality that the stock's value is now anchored to the deal price, making it unattractive for new investors seeking significant capital appreciation.