Desjardins downgradeDesjardins expects Q1 and Q2 to dissapoint investors.
In light of Chemtrade Logistics Income Fund’s (CHE-UN-T) disappointing fourth-quarter performance, Desjardins Securities analyst David Newman said he’s “moving to the sidelines.”
Chemtrade reported fourth-quarter performance on Thursday, coming up short of estimates on earnings before interest, taxes, depreciation and amortization on all three of its business segments: sulphur products and performance chemicals, water solutions and specialty chemicals, and electrochemicals.
“While a turnaround plan is underway, we are cautious about Chemtrade’s near-term prospects given ongoing operational challenges, a lack of catalysts, limited visibility, stubbornly high Street estimates and constrained deleveraging opportunities over the next 12 months,” Mr. Newman said.
While Chemtrade’s shares are trading at a valuation that could appeal to deep-value investors, “we believe CHE’s near-term growth prospects should remain weak,” the analyst said. High earnings expectations are setting the company up to disappoint investors in the first two quarters of 2019, he added.
Mr. Newman lowered his rating on the stock to “hold” from “buy” and cut his target price to $11.50 from $14.