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A little sweetener at Tim Hortons Add to ...

These are stories Report on Business followed this week.

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As it likes to remind us, there’s a fresh pot at Tim Hortons.

Its new chief executive officer is winning praise, its shares have climbed back from the lows of late last year, and its outlook is somewhat brighter among analysts.

As The Globe and Mail’s Marina Strauss reports, Canada’s coffee-and-doughnut king came in this week with a higher quarterly profit and a plan for an expanded stock buyback.

Second-quarter profit climbed to $123.7-million or 81 cents a share from $108.1-million or 69 cents a year earlier, while revenue increased 2 per cent to $800.1-million.

Tims also said it is maintaining its earnings-per-share targets for this year, though it did warn that Canadian and U.S. same-store sales, a key measure in retailing, are expected to fall below its targeted range given the year so far.

Key to the company’s announcement Thursday, following pressure from activist investors, is a plan to add $900-million in debt to fund an expanded stock buyback of $1-billion over the next year.

“Our initial impression is that new CEO Marc Caira has a healthy respect for the accomplishments of the Tim Hortons franchise system and the brand, but is squarely focused on accelerating future growth,” said Desjardins analyst Keith Howlett.

“The company has begun its strategic planning process and is addressing the hard questions of how to keep the brand fresh and vibrant in Canada, and how to grow faster and more profitably in the U.S.”

Tim Hortons shares have run back up from the $45 range last December to the $61 area, and analysts have boosted their price targets on the stock.

Mr. Howlett, for example, raised his target to $60 from $57, while boosting his forecasts for earnings per share to $2.93 this year, up from $2.87, and $3.32 next year, up from $3.18.

“Tim Hortons is entering a new era, with its first CEO from outside of its culture,” Mr. Howlett said of Mr. Caira, a former executive at Nestlé SA.

Derek Dley of Canaccord Genuity went further, upgrading his recommendation on the stock to “buy” from “hold” and his price target to $67 from $52.

“We are becoming more constructive on the stock following the announcement of shareholder friendly initiatives, despite still challenging fundamentals in Canada, which we believe will be overshadowed by the company’s increased share buyback and reduction in U.S. spending,” he said.

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