Inside the Market's roundup of some of today's key analyst actions
Costs savings and efficiency will become the biggest focuses for Loblaw Companies Ltd. in coming quarters, believes Scotia Capital analyst Patricia Baker following second quarter results.
"Q2 performance, which delivered very well to plan with EPS growth up 9.9 per cent, has been completely overshadowed by the headwinds facing the company in the coming year," she wrote in a research note. "The dual pressures of minimum-wage escalation to come in January 2018 in both Ontario and Alberta and recently revealed cuts to generic reimbursement rates in Quebec that will apply across Canada mean significant added cost burdens of about $250-million by our estimates."
The analyst trimmed made minor adjustments for her earnings estimates this year, but lowered them for next to $4.69 per shares, from $4.78 per share. To value the stock, she is using her fiscal 2019 estimate of $5.10 per share. To value the stock, she lowered her earnings per share multiple and rolled the valuation forward to fiscal 2019, and therefore lowered her price target to $76 from $79. She maintained her market perform rating. The stock closed on Wednesday $68.80.
"Loblaw has been working on developing methods to better use data analytics to lower inventory and improve out-of-stock performance," the analyst wrote. "Pushing harder on this lever will see lowered inventory costs and could drive improved sales as well. The company is, in both businesses, working harder on driving improved promotional effectiveness using predictive analytics. This approach should lower overall promotional cost and drive better sales trends."
Facebook reported a strong second quarter, with improved profit margins across many lines of its business, says Canaccord Genuity analyst Michael Graham.
"We raise our estimates on more margin expansion," the analyst wrote in a research note. "We raise our price target to $190 (U.S.) (from $175), based on 28x (unchanged) our 2018 GAAP EPS of $6.79 (from $6.26)."
"While stock gains from here may be less dramatic than during the first part of the year, we continue to think the multi-faceted growth story, reasonable valuation, and margin progress all contribute to a strong outlook for the stock."
Uni-Select Inc., a distributor of auto products, reported second quarter results that were above expectations, says Desjardins Securities analyst Benoit Poirier.
"The automotive group's performance was impressive, with organic growth of 6.2 per cent and an EBITDA margin of 8.6 per cent, which far exceeded our forecast of 0.0 per cent and 5.4 per cent, respectively," the analyst wrote in a research note. "Given the recent stock price performance (down 25 per cent from its 52-week high) and potential return of 24 per cent, we are upgrading our rating to Buy."
The analyst reduced his target to $34 from $36 as Canadian dollar appreciation more than offset the stronger results. The stock closed Wednesday at $27.79. "On the bottom line, we now expect adjusted EPS of $1.42 (U.S.) in 2017 and $1.60 in 2018, up from $1.32 and $1.56, respectively."
Credit Suisse upgraded Boeing Co. to "outperform" from "neutral" and raised the target price to $300 (U.S.) from $200.
The aerospace company's stock closed at $233.45 Wednesday and is up $6.45 to $239.90 at midday Thursday.
"While the financials have already shown significant improvement (particularly cash flow) and we are clearly late to the party, we see scope for further multiple expansion as cycle concerns diminish with high traffic, and cyclicality abates with a growing service business," analyst Robert Spingarn said in a research note.
"At the same time, execution continues to impress, with additional margin upside to come from the laser-focused strategy on cost control and service/lifecycle opportunities. While we had been skeptical that the cycle would hold and that BA might not meet its commitments to investors, cycle sentiment has improved while management has delivered, especially on cash flow and an updated strategy and, therefore, has earned our confidence."
Rob Goff lowered his revenue and earnings estimates on theScore Inc. following mixed third-quarter results at the mobile sports product company.
The Echelon Wealth Partners analyst said higher user engagement was positive, but that lower user numbers offset that.
"We remain bullish on the company's ability to build out and monetize on its sports and eSports platform," the analyst said in a research note. "Our price target move to 35 cents [from 45 cents] reflects in our view that investors are likely to await strengthening user growth and clearer visibility on monetization strategies for its eSports and Facebook Messenger bot initiatives. Evidence of development on any of these fronts should support prospective price target increases."
The stock, which trades on the TSX Venture Exchange, closed at 17 cents on Wednesday and has a 52-week range of 16 cents to 31 cents.