Go to the Globe and Mail homepage

Jump to main navigationJump to main content


Report on Business


News and analysis on Bay Street and the world of finance
available exclusively to subscribers of Globe Unlimited

Entry archive:

Love-in for Gildan purchase builds Add to ...

Analysts and investors are loving Gildan Activewear's plan to buy sock maker Gold Toe Moretz Holdings for $350-million (U.S.).

Analysts are cranking up target prices for Gildan , but investors are pushing up the share price even faster.

The stock is up 11 per cent since the acquisition was announced. After more increases Thursday, the average 12-month target of 16 analysts surveyed by Bloomberg now stands at $36.86 (Canadian), up from under $35 prior to the acquisition's announcement.

CIBC said the price paid, based on a multiple of sales and operating earnings, are attractive and the $10-million (U.S.) to $15-million of cost synergies that Gildan is targeting in the first two years "likely understate the longer-term opportunity."

CIBC analyst Mark Petrie increased his per-share earnings estimate to $2.04 from $1.88 for fiscal 2011 and to $2.62 from $2.31 in 2012. That yields a new target price of $42, up from $36.

Also on Thursday, Paradigm Capital analyst Spencer Churchill raised the company to "buy" from "hold" and put on a $44 target.

Earlier this week, TD Securities analyst Jessy Hayem put a $43 (Canadian) target on Gildan because of the acquisition's effect on earnings, up from $39 previously. That's even after reducing the multiple she uses to account for integration risk.

Report Typo/Error

Next story




Most popular videos »

More from The Globe and Mail

Most popular