Thursday , November 14 2019
Home / canada / Upgrades and decreases in analyst ratings on Thursday

Upgrades and decreases in analyst ratings on Thursday



In the Market series from some of the main analyst actions today

It will likely take another year before the strategy is behind Alimentation Couche-Tard Inc.(ATD.B-T) plans to double its business over the next five years are clear to investors, according to Desjardins Securities analyst Keith Howlett, who expects a strategy to involve a combination of further acquisitions and organic growth.

Based on the 2019 fiscal estimate, Mr. Howlett projects the Quebec base company will increase its adjusted EBITDA by US $ 2 billion from 2014 to the end of fiscal 2019 in April.

The story continues under the ad

"Now it is one of three fuel / convenience store chains in the US and Canada, along with 7-Eleven and Marathon Petroleum," he said. "This is in the midst of a global rebranding program for the new Circle K and wake up logo (color and design), changing all shops outside Quebec to Circle K (excluding automatic fuel stations in Europe, no shops and no employees). ) In a significant percentage of the sites, fuels are also branded Circle K (and in some markets under sub-brand Miles).

"The last leg of growth has been supported by seven successful acquisitions and integration. Results in Europe and Canada have been suppressed by large local currency devaluations relative to the US dollar (Couche-Tard's reporting currency). Apart from that, EPS combined growth until the end FY19 is estimated at 20 percent for five years. "

On Wednesday before the market opened, Couche-Tard reported adjusted dilution earnings per share for the second quarter 84 US cents, exceeding the projections of both Mr. Howlett (83 US cents) and Street (82 US cents). The same store sales sales trend "is good in all markets," said analysts, with a 4.4 percent increase in the US, 4.6 percent in Europe and 5.1 percent in Canada.

"During the first five weeks of 3Q FY19, fuel margins have been at an extraordinary level," said Mr. Howlett. "The national average of weekly fuel margins is 36.9 US cents, well above our previous estimate of 18.5 US cents for the quarter (16-week quarter). During the last three quarters, Couche-Tard has reported margins average fuel in the US is 17.95 US cents. If the average fuel margin is 18.5 US cents during the last 11 weeks of the quarter, the average fuel margin for this quarter will be 24 US cents. We have revising our estimate to 23.5 US cents. EPS is US $ 0.25. We have chosen to exclude what we see as 'surplus fuel profit' when setting our target prices. We do not expect margins to be is repeated. "

Analysts raised the 2019 EPS estimate to US $ 3.36 from US $ 3.07 to account for changes in fuel margins. The hope in 2020 will remain US $ 3.40.

By maintaining a "buy" rating for shares, he increased his target price for the company's shares to $ 77 from $ 74. The average on the Road was $ 80.51, according to Thomson Reuters Eikon data.

"The Couche-Tard management has continued to operate its shops at a higher level than competition in a very challenging industry," said Mr. Howlett. "This is the case when it was a small, rising entrepreneurial organization, and it remains true today. He has maintained his culture even as he climbed to the top of the North American supermarket shop. Management is now trying to improve its game once again, adopting some precision the research of leading CPG companies, while beginning to implement new technology tools available to improve decision making and reduce costs. These stores, in general, are behind other retailers on this journey. sheet and cash flow will continue to support acquisitions. "

The story continues under the ad

Elsewhere, Mark CIBC World Markets & # 39; Petrie increases its target to $ 80 from $ 75 with an "outperformer" rating.

Petrie said: "The strong Q2 results from Couche-Tard highlighted the very good momentum in the US in both fuel and merchandise. The company reaps the benefits of a favorable macro environment, integrated brands, and tobacco growth, while further opportunities lie ahead in improving and improving food services. "

=====

Ahead of the release of its third quarter financial results on December 6 before the open market, analyst Raymond James, Kenric Tyghe, simply raised his financial expectations for Dollarama Inc. (FOOL).

Mr. Tyghe is projected to increase year-on-year income 7.1 percent per year to $ 868 million, which is slightly below consensus expectations of $ 873 million. The same estimated store sales growth of 2.9 percent "was driven by expected ticket growth, partly offset by a reduction in negligible traffic."

The estimated EBITDA of $ 214.2 million was also slightly below consensus of $ 220.8 million, while the estimated 42 cents of earnings per share fell in line with Street.

The story continues under the ad

"The Halloween time shift is a material headwind in the quarter, but it supports a strong SSS F4Q19 of 5.8 percent, for fiscal 2019 it estimates SSS growth of 3.5 percent," he said. "We estimate the tough combination of gross profit, less positive mixed impact (on the Halloween shift), and potential investment in value propositions (concentrated at $ 3.50 and price points of $ 4.00), to translate into 71 basis gross margin compression points to 39.4 percent. 89 bp compression in our EBITDA margin of up to 24.7 percent (for EBITDA $ 214.2 million), reflecting marginal margin headwinds exacerbated by SG & A simple deleveraging, at wage pressure more than offset cost reduction initiatives. "

Mr Tyghe raised EPS projections for 2019, 2020 and 2021 to $ 1.69, $ 1.98 and $ 2.21, respectively, from $ 1.66, $ 1.90 and $ 2.21.

He maintains a "buy" rating and a target of $ 50, which exceeds the average on the Road $ 47.21.

=====

Although there are no surprises Vermilion Energy Inc.The Investor Day presentation (VET-T, VET-N) in Toronto on Tuesday, Desjardins Securities analyst Kristopher Zack made a "modest" increase to his financial projections, maintaining "a positive view of a disciplined operating strategy and significant commodity diversification relative to co- colleague. "

Emphasizing the diversification of "significant" commodity prices, Zack said: "Remember that almost 50 percent of 2019 cash flow will come from properties directly exposed to Brent oil and more favorable European gas prices," he said. "We also note different price gains relative to peers with the majority of Canadian light oil VET selling to LSB (ie Cromer), which continues to trade at a premium for MSW. Growth in Germany, CEE and the Netherlands must help maintain European exposure for five years forward .:

The story continues under the ad

"The company emphasizes that its first priority is to protect the balance sheet, followed by maintaining the 8.4 per cent dividend yield – one of the most interesting in our list of coverage and important, in our view, to provide stability to the current valuation. capex of 110 percent on the strip, noting that cash flows ($ 845 million) must still cover the current maintenance capex and dividends (a total of $ 800 million) It should be noted that the company also highlighted ongoing efforts in the field of environmental sustainability ( which specifically includes reducing emissions and intensity) as part of HSE practices – an increasingly important component for oil & gas producers, in our view. "

Mr. Zack increased the cash flow estimates per 2018 and 2019 shares to $ 6.04 and $ 7.16, respectively, from $ 5.99 and $ 7.03.

"The net impact is our 2019 CFP prediction to rise by only 2 percent, a modest change that does not affect our positive bias towards stocks at current levels," he said. "Our estimates can be a little conservative to the extent that companies can provide further improvements in the cost structure – especially in Canada after the integration of SPE assets. Our debt levels rose slightly due to the acquisition of the Powder River Basin in 3Q."

He continued to assess Vermilion as "buy" with a target of $ 50. The average on the Road was $ 51.20.

=====

After third-quarter profit loss and a reduction in fourth quarter guidance, RBC Dominion Securities analyst Brian Tunick lowered ratings Chico's FAS Inc. (CHS-N) for "doing sector" of "outperformers," expecting margin pressure to stay in 2019 due to "pressure" and negative omnichannel. "

On Wednesday, the Florida-based women's clothing retailer stock price plummeted 34.6 percent after the release of weaker-than-anticipated results. The company reported 5 per cent US earnings per share, down from 13 US cents a year ago and 3 US cents lower than expectations on Street.

"The original rating outperformed us based on our view that cost-saving programs buy company time for true volatility in the CHS portfolio, with TSR kickers added through dividends and repurchases," said Mr Tunick. "After missing 3Q and a 4-down guide (estimated RBC now at a loss of 9 cents) vs. consensus of $ 0.17), uncertainty over and below is more difficult to ignore. While fashion and marketing errors are blamed for the Chico brand (50 percent of sales) missed, volatility after the launch of the 2018 brand in a strong consumer environment spoke with something deeper, especially given the heavier results of Francesca's Holdings Corp, J.Jill Inc., and Ascena Retail Group Inc. While improvements to the brand are aimed at spring 2019, rotations triggered by fashion often take time and can see bumps on the road. Over deleverage on negative comps, omnichannel efforts are likely to continue their margins by 2019, at a cost – Attracting efforts to fight EBIT margin 2.6 percent from CHS While we believe the balance sheet can fund turnaround and dividends in the medium term, a little visibility a comps and a margin to the next year pushed us to the side. "

Mr Tunick dropped his target for Chico's shares to US $ 4.50 from US $ 10. The average was US $ 6.90.

=====

Looking at improved raw material prospects for 2019 and seeing it as the main beneficiary of industry consolidation, analyst Citi P.J. Juvekar is improved PPG Industries Inc. (PPG-N) to "buy" from "neutral."

"The decline in oil prices will quickly reduce some raw material inflation which is intensely pressing the company," he said. "We think PPG is accelerating the spread of cash for M & A by repurchasing shares as a fallback option, which we think will be seen as positive. Plus, with the involvement of activist investors we think the focus on execution at PPG has risen higher, which also has to help stocks outperform. "

Mr Juvekar raised his target for PPG shares to US $ 123 from US $ 103. The average on the Road was US $ 111.96.

=====

Beacon Securities analyst Gabriel Leung begins coverage Quorum Information Technologies Inc. (QIS-X), a Calgary-based company focused on automotive retail businesses in Canada and the United States, with a "buy" rating.

"In North America, we believe there are 22,165 thousand attics that can be attached to represent an annual recurring $ 700 million software revenue opportunity (based on the $ 2,500 monthly ARPU [average revenue per sure] for the Quorum base platform), "he said." If we include other add-on modules, we believe ARPU can reach $ 4,500 monthly, which will imply a $ 1.2-billion annual recurring opportunity.

"Competitive markets for DMS [dealers management system] interesting product because it is dominated by a number of larger players such as Reynolds & Reynolds (personal), CDK Global (CDK-N), which is a spin-out from ADP (ADP-N), and DealerTrack, which was taken privately by Cox Automotive (private ) of $ 4 billion in 2015. Beyond these top three, there are a number of smaller players that we believe Quorum is one of the biggest (in terms of revenue and OEM coverage), which can make it an attractive target for takeout on the road . "

Looking at "attractive" business models and entry points, based on "strong" growth leverage and recurring income base, Mr. Leung set a target price of $ 1.25 per share.

=====

In the actions of other analysts:

TD Securities analyst Tim James is upgrading AirBoss of America Corp. (BOS-T) to "buy" from "hold" with a target of $ 12.50, falling from $ 13.50. The average target on the Road is $ 12.60.

UBS is improved Emera Inc. (EMA-T) to "buy" from "neutral" with a target of $ 51, up from $ 42. The average is $ 46.57.


Source link