Cineplex Inc. (CGX-TSX)
Shares of Cineplex Inc. could face some mediocre reviews because of weaker-than-expected box office performance in the second quarter.
“Cineplex shares may be vulnerable in the near term,” TD Securities analyst Michael Elkins warned on Thursday.
“Cineplex shares are up 19 per cent so far this year on the strength of first-quarter box office, and optimism for the second quarter and the balance of 2012.”
But disappointing box-office results will likely result in negative estimate revisions by analysts for the cinema operator over the next couple of weeks as they update their forecasts, Mr. Elkins suggested.
The Motion Picture Theatre Association of Canada has reported that Canadian box office grew 1.9 per cent in the quarter.
That figure was lower than expectations because of the success of The Hunger Games and early success of The Avengers. “Our forecast for Cineplex was calling for box office growth of 13 per cent in the quarter,” the analyst said.
There were “several high-profile flops in the last six weeks of the quarter,” he wrote.
“Prometheus and Men In Black 3 were the most significant among a broad list of disappointing films in the second quarter. In addition, the premiere of G.I. Joe Retaliation was moved to 2013 from the end of the second quarter to accommodate reshoots and 3D conversion. This negatively affected performance relative to expectations.”
Cineplex should still have a “decent quarter” even though “our estimates for the second quarter are materially lower” than forecast in May, Mr. Elkins said. He expects consolidated EBITDA [earnings before interest, taxes, depreciation and amortization] of $51.6-million versus $44.4-million in the period a year ago.
Downside: He maintains a “hold” rating with a one-year target of $29. “We consider Cineplex shares to be fully valued at current levels, and are concerned that they may be vulnerable as estimates are revised lower to reflect the disappointing second-quarter box office.”
Genivar Inc. (GNV-TSX)
Genivar’s proposed acquisition of British-based WSP Group PLC will vault the company into the league of top global engineering consulting firms, said Desjardins Securities analyst Pierre Lacroix.
Investors will be rewarded gradually, but the market is adopting a “wait-and-see attitude,” he suggested.
Downside: The analyst reduced his one-year target to $27 a share from $30, but maintains a “buy” rating.
Semafo Inc. (SMF-TSX)
The miner’s reported second-quarter gold production of 60,500 ounces from its three mines in West Africa beat Jennings Capital analyst Stuart McDougall’s estimate of 57,570 ounces.
Semafo remains on track to meet 2012 production guidance of 235,000 to 260,000 ounces of gold.
Upside: The analyst has a “buy” rating with a one-year target of $11.50 a share.
Champion Minerals Inc. (CHM-TSX)
Raymond James analyst Adam Low raised his target price for the iron ore exploration and development company after incorporating a larger-than-expected mineral resource estimate for its Oil Can project in north eastern Quebec.
Upside: The analyst, who maintains an “outperform” rating, raised his one-year target to $3.15 a share from $3.
SunOpta Inc. (STKL-Nasdaq)
The appointment of Hendrik Jacobs as president and chief operating officer reflects SunOpta’s transition from an integration, margin-improvement and turnaround focus to a greater emphasis on growth initiatives for its natural and organic products, said Canaccord Genuity analyst Scott Van Winkle.
Upside: He maintains a “buy” rating with a one-year target of $7.50 (U.S.) a share.