Inside the Market’s roundup of some of today’s key analyst actions
Shares of the Calgary-based company dropped 5.6 per cent after it announced that it hasof the project in northern British Columbia to $14.5-billion. That’s up nearly 30 per cent from the previous estimate last year of $11.2-billion and up 134 per cent from the original price in 2018 of $6.2-billion.
“We expect the company to scale up its $5+ billion asset monetization program to meet the incremental funding needs, while also addressing its plan to accelerate deleveraging, which leads us to believe the asset monetization target may be in the $7–8 billion range,” he said. “Based on our discussions with management, we expect the company to pursue numerous smaller transactions versus a single large transaction.
“While we prefer cleaner midstream stories, we think patient, long-term focused investors will eventually be rewarded given the current valuation and likely catalysts in the form of asset sale announcements,” he said. “CGI reported strong FQ1 results with constant currency revenue growth of 12.3 per cent, continuing the momentum from the previous three quarters ,” he said.” And while acquisitions continue to be a contributor to that growth – organic growth has been even more impressive – in the quarter, we estimate organic growth was 7.4 per cent year-over-year with underlying profitability support - ROIC [return on invested capital] increasing 20 basis points year-over-year to 15.5 per cent.
“Bottom line, while macro headwinds continue to have the potential to moderate investment, we believe CGI’s market position and cost savings / efficiency service offerings combined with its operating prowess offers resilience with growth and less volatility,” he said.* Desjardins Securities’ Jerome Dubreuil to $140 from $136 with a “buy” rating.
In a research note released Thursday, Mr. Anand resumed the firm’s coverage of the Montreal-based company with a “strong buy” recommendation, expecting its current trading discount to larger royalty peers to narrow as production intensifies moving forward.
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