Canada’s winter that wasn’t will have a material (read: negative) impact on Canadian Tire's fourth-quarter results, says CIBC World Markets Corp. analyst Mark Petrie.
Slow sales will pressure margins, he explains, although the 2011 acquisition of Forzani Group Ltd (owner of the Sport Chek and Sports Experts chains) will mean that earnings are still up year-over-year.
“We have reduced our same-store sales growth estimates across each of the retail business units,” says Mr. Petrie. “We expect same-store sales growth of -1 per cent at CTR and Mark's and flat at Forzani. Revenues should hold in slightly better based on more stable dealer orders and strong fuel sales.”
He adds that receivables growth is expected to remain modest, but earnings should climb based on lower write-offs and improved yield.
Upside: Mr. Petrie is maintaining his “sector outperformer” rating and a price target of $72 (Canadian).
Metro Inc.'s share price has had a tremendous run thanks to consistent sales and earnings performance, but future growth will be hard to come by unless the Montreal food retailer makes more acquisitions, says CIBC World Markets Corp. analyst Perry Caicco.
“Metro has only modest EPS growth without acquisitions and, unless it is prepared to consider an Ontario Asian grocer, it may have to look at available drugstores to justify taking its share price to the next level,” says Mr. Caicco. “It is consolidation time in that sector and Metro has the resources to play.”
Downside: Mr. Caicco has downgraded Metro to “sector performer” from “sector outperformer” and raised his price target $2 to $55 (Canadian).
UBS Securities Canada Inc. analyst George Toriola sees no shortage of good news coming down the pipeline for Suncor Energy , but not enough to merit a ratings change.
The resumption of Suncor’s Libyan production -- offline since first quarter 2011 -- along with higher prices for the company’s oil sands products helped Suncor beat analyst’s estimates. The company also completed its $500-million share repurchase plan in the fourth quarter, buying back 17.1 million shares.
As Libyan production ramps up, capital efficiency is expected to improve significantly, says Mr. Toriola.
Upside: Mr. Toriola is reiterating his “buy” rating and $48 (Canadian) price target.
Related: Suncor expects oil sands mine costs below competitor
A weak European retail sector and an increased shift toward third-party selling pushed Amazon.com to miss fourth-quarter expectations, according to Canaccord Genuity Corp. analyst Michael Graham.
Shipping and fulfilment costs also grew faster than sales for Amazon, a trend Mr. Graham expects to continue.
“Sales shifted toward third-party sellers faster than expected, which also contributed to lower revenue as Amazon only recognizes a 5 per cent- to 15 per cent commission on these transactions rather than the retail price of the item,” he says. “We believe growth in prime customers and activity, and in particular the extension of Fulfilled By Amazon services to third-party sellers, continues to increase shipping and fulfilment costs, which we expect to keep operating margins near break-even levels throughout 2012.”
Downside: Mr. Graham is lowering his price target $15 to $210 (U.S.) and maintaining his “hold” rating.
Related: Amazon.com warns of possible loss
Fortress Paper’s Jan. 31 announcement that it intends to acquire Domtar’s idled northern bleached softwood kraft pulp mill in Lebel-sur-Quevillon, QC gives Raymond James Ltd. analyst Daryl Swetlishoff even more reason to love the company’s stock.
“With stabilizing dissolving pulp pricing, a successful ramp at the Thurso mill and identified growth potential with the LSQ mill, Fortress remains a top pick and we recommend investors further add to positions,” says Mr. Swetlishoff.
Upside: He is reiterating his “strong buy” rating and is increasing his price target $11 to $48 (Canadian) per share.