Canadian Tire, the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Etienne Ricard from BMO Capital reiterated a Hold rating on the stock and has a C$175.00 price target.
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Etienne Ricard’s rating is based on a combination of factors that suggest a balanced risk-reward profile for Canadian Tire’s stock. The anticipated deceleration in same-store sales growth, influenced by recent retail sales data and a potential decline in the Buy Canadian sentiment, plays a significant role in the Hold rating. Additionally, the company is expected to face margin pressures due to foreign exchange headwinds and ongoing investments under the True North initiatives, which could impact operating expenses.
Ricard also notes that while there is some optimism for seasonal restocking among dealers, the overall margin outlook remains cautious with an expected year-over-year contraction. The revised earnings per share estimate reflects a conservative stance on retail gross margin and financial services contributions, alongside lower gasoline revenue due to the carbon tax removal. Despite some positive consumer signals, the macroeconomic environment is perceived as stable rather than entering a new growth cycle, justifying the Market Perform rating.
In another report released on October 16, National Bank also maintained a Hold rating on the stock with a C$185.00 price target.
Based on the recent corporate insider activity of 24 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of CDNAF in relation to earlier this year.