RE:Have people reduced their SNC position?I had previously mentioned a $42.50 ish medium term target. So between there and $44.00 i've sold 30% of my shares. For sure the easy gains are behind us. The days of rallying 5% on an earnings day just beacuse the results weren't as bad as expected are over. Having said that, it has momentum. After raising guidance along with Stantec and WSP, it would be strange to not at least meet expectations for Q3 earnings. The sector is in good shape, better than most, with multiples above long-term averages. Also, we should experience a tailwind from analysts marking their ratings to market. On the way down, they kept downgrading their target in line with the market price. We should now experience the opposite on the way up.
My next target is $48-$49 (10.8x to 11.0x EV/EBITDA excluding concessions). Still a discount to its peers, but probably about right if STN and WSP trade around 13x.
I think the biggest headwind right now is the broader market itself. The S&P 500 @ 4,450 is just too expensive at 20x NTM EPS. The recession that should have begun already has been delayed by Covid savings and some labor hoarding. All signs point to the economy rolling over as we speak. The market has now priced in a soft to no landing, with a healthy increase in earnings going forward. A recession, which I believe is inevitable, would merit at LEAST a 20% correction for the market. Thats the biggest issue I see and I hope I get a chance to lighten up some more before that happens.