Dollarama Inc. is enjoying a raft of price target hikes today after the discount retailer Wednesday crushed analyst expectations in reporting fourth-quarter profits that soared more than 50 per cent.
Dollarama's net profit in the three months ended Jan. 29 was $63.6-million, or 84 cents per diluted share, giving management enough confidence to boost the stock's dividend by 22 per cent to 11 cents per share.
While the company benefited from Halloween falling in the fourth quarter this year as it shifted its fiscal reporting period, and from other factors such as warm weather, "the quarter was still great," commented CIBC World Markets Inc. analyst Perry Caicco.
He raised his price target by $11 to $59 and reiterated a "sector outperformer" rating. If that sounds pricey based on valuations, he notes that the Canadian dollar store sector still has low penetration when compared to the United States. "There are at least five to six more years of sector growth to catch up to the U.S., but the U.S. is still adding units at a 6 per cent clip," he said.
Desjardins Securities Inc. analyst Keith Howlett raised his price target to $58 from $46.50 while maintaining a "buy" rating. "Dollarama has a well-honed and highly successful consumer proposition, a clearly articulated growth plan and a highly capable management team," Mr. Howlett commented. "While the exceptional results of fourth-quarter fiscal 2012 may be at the outer bounds of performance, we continue to forecast strong growth in sales and earnings ahead."
More cautious was Raymond James Ltd. analyst Kenric S. Tyghe. He notes the company is seeing strong same-store sales growth in part because consumers are hunting for deals in a weak economic environment. He also points out that average fourth-quarter inventories were up 20.3 per cent. Mr. Tyghe raised his price target by $4 to $46 and maintained a "market perform" rating.
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While First Quantum Minerals Ltd. is "a quality miner" with a strong growth profile and a diversified base of nickel and copper assets, its stock price now reflects these positives, said UBS analyst Matt Murphy. He believes First Quantum could be an attractive takeover target for any major mining company wanting to establish a footprint in the African copperbelt - but he isn't factoring a takeover into his valuation projections for now.
Downside: Mr. Murphy downgraded the stock to "neutral" from "buy" and maintained a $23 price target.
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Bed Bath & Beyond has risen about 21 per cent year-to-date, but further upside potential appears limited, said Canaccord Genuity analyst Laura Champine. She downgraded the stock to a "hold," citing her calculations that it lost market share in the fourth quarter for the first time this decade. She sees further market share losses to come, given its "meager" online presence at only 1 per cent to 2 per cent of sales.
Downside: Ms. Champine has a $73 (U.S.) price target.
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Canaccord Genuity analyst Yuri Lynk has yanked SNC-Lavalin Group Inc. off its "focus list" - a handful of stocks that are its best investing ideas - and replaced it with Finning International Inc. . "We still like SNC's long-term prospects and are encouraged by the recent slew of new [contract]awards, but, given the apparent lack of near-term catalysts and a potentially soft Q1/12, we do not believe it is best positioned as a focus list pick," he said. He's concerned that costs associated with the recently launched investigation into $56-million in improper payments may act as a drag on first-quarter earnings.
Upside: Mr. Lynk maintained a "buy" rating on SNC-Lavalin with a $49 price target. He raised his price target on Finning by $3 to $36, citing checks that indicated demand for construction and mining equipment remains strong.
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The Maine Public Utilities Commission has voted in favour of approving a transaction that will see Emera Inc. take a 49 per cent stake in 370 megawatts of wind generation facilities in the U.S. Northeast. While the deal is still contingent on a final written order, "this is a positive development for Emera as it appears that one of its major projects is moving forward," commented CIBC World Markets Inc. analyst Paul Lechem.
Upside: Mr. Lechem maintained a "sector performer" rating and $33.50 price target.
Darcy Keith