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Le Château facing multiple headwinds: analyst Add to ...

Shares for Le Château are expected to remain flat for the foreseeable future as the retailer struggles on numerous fronts to produce a profit, according to Versant Partners analyst Neil Linsdell.



Le Château’s fourth-quarter 2012 results showed a 5.3 per cent decline in sales, while full year sales dropped 5.1 per cent. Comparable store sales were down 7.2 per cent in the quarter and 7.9 per cent for the full year, attributable to lower traffic and reduced discretionary spending in a weak retail environment. Unseasonably mild weather also hit demand for winter clothing in the third and fourth quarters.

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For the full year, the company lost $2.4-million compared to a $19.6-million gain last year.



“With still excessively high inventory levels, a weak consumer environment, erratic weather, increasing debt, a reduction in store count and pressure on margins, we remain cautious until the company can demonstrate several quarters of improvement,” says Mr. Linsdell.



Downside: He is maintaining his “neutral” rating and lowering his price target to $1.10 (Canadian) from $2



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Tightening lending standards by Canada’s big banks have created an opportunity for Counsel Corp. subsidiary Street Capital to offer near-prime mortgages, according to Industrial Alliance Securities Inc. analyst Fred Westra.



He estimates that the non-traditional mortgage market is worth approximately $100-billion to $200-billion, and that such loans offer better gross spreads than traditional mortgages.



Upside: Mr. Westra is maintaining his “strong buy” rating and $1.70 (Canadian) price target.



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CAP REIT’s decision to acquire 14 properties from the TransGlobe portfolio supports Desjardins Securities Inc. analyst Jenny Ma’s expectation that CAP REIT should continue to grow through acquisition.



The $455-million deal involves 3,562 rental apartment suites in Ontario, Québec and Halifax -- markets in which CAP REIT already has a presence, and should be accretive for the trust, owing to the availability of low-cost debt financing.



Upside: Ms. Ma is maintaining her “buy” rating and $24.85 (Canadian) target price.



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Lower potash production and reduced sales hit Potash Corporation of Saskatchewan Inc. shares, resulting in missed estimates and a cautious outlook from Desjardins Securities Inc. analyst John Hughes.



PotashCorp reported first-quarter earnings of $0.56 a share, lower than Mr. Hughes’ estimate of $0.70 a share and consensus of $0.64 a share.



While potash sales have sagged in the previous two quarters, management expects demand to pick up in the remainder of the year as purchasing of fertilizer products increased entering the second quarter of 2012, says Mr. Hughes.



Upside: He is maintaining his “buy -- average risk” rating and $60.20 (Canadian) target price.



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First-quarter results that matched expectations and an increased dividend portend good things for Methanex Corporation , according to UBS analyst Brian MacArthur.



While adjusted diluted earnings per share of $0.23 were in-line with expectations, results were negatively impacted by a higher mix of purchased methanol, lower realized prices and lower production, says Mr. MacArthur.



However, the company’s dividend was increased by 9 per cent and production should increase through 2012.



Upside: Mr. MacArthur is maintaining his “buy” rating and increasing his price target to $36 from $34.75.

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