RE:RE:RBC upgrades Loblaws T.L to OutperformTarget is $80
RBC Capital Markets, "November 2, 2016 Loblaw Companies Ltd. Filling the pantry: Raising to Outperform on valuation and growth outlook Our view: One year after downgrading Loblaw, we are returning to an Outperform rating to reflect valuation compression for Loblaw, relative valuation to competitor Metro (TSX: MRU) and expectations of accelerating organic growth. Our upgrade takes a contrarian view with respect to the perceived impact of decelerating inflation, with our analysis suggesting that flattening food pricing does not necessarily imply margin compression. Key points: Valuation compression, growth outlook underpin upgrade. Since November 18, 2015, Loblaw's share price has declined -6% compared to a +9% advance for Metro and +10% for the S&P TSX. With Loblaw cycling both temporary headwinds that masked prior period efficiency gains and the impact of incremental Rx regulation, we think the company should now begin to deliver sustainable margin growth, notwithstanding decelerating food CPI. Please see our Q3 sector preview for details."
All IMO.