UPDATE: Morgan Stanley downgrades TELUS Corporation; Removes Price Target

In a note released Tuesday, Morgan Stanley analyst Simon Flannery downgraded TELUS Corporation

from Overweight to Equalweight and removed the C$40 price target. Looking to the reasons why Morgan Stanley has downgraded TELUS, Flannery noted that, although TELUS has outperformed the Bell's average price performance for the past twelve months, he believes the company's recent performance shows that shares are now fairly priced and based on his 2015 estimates, has a P/E ratio (15.4x) and a dividend yield (3.7%) that are comparable to competitors. With a final look at valuation, Flannery noted the company has committed to grow dividends 10 percent a year as well as repurchase C$500 million shares per year until 2016. Turning to industry factors, Flannery believes wireless will be the primary driver of business momentum for TELUS with support coming from wire-line due to IPTV take up. Furthermore, Flannery believes that Canada offers more promising wireless dynamics when compared to the United States due to a lower level of penetration and a three-player market. In a look at the emergence of new competition, Flannery seems confident that the respective risk of a foreign or smaller regional wireless entrant is unlikely due to the absence of a foreign telco company at the recent 700 mhz licence auction and the high cost of rolling out a national network. At last check TELUS was trading down under 1 percent at $35.04