Negative results of investor day ) -- Analysts lowered their price targets on Saputo Inc. (SAP.TO) following the company's virtual investor day.
TD Securities analyst Michael Van Aelst reduced his target on shares of the Montreal-based dairy company to $41 from $44 and maintained a Buy rating.
"EBITDA growth in year-1 now seems highly unlikely, mostly because labour shortages and supply-chain challenges are not yet improving to the extent management had anticipated," Van Aelst said in a note to clients.
"The anticipated delayed recovery could test investors' patience for another ~6 months," the analyst said.
Van Aelst said SAP shares typically bottom around 10.5x next-12-month EBITDA, so there is a possibility the stock could decline to $31 in the near term.
"Nevertheless, we see significant share-price upside over the ensuing few years as y/y earnings growth resumes in Q4/F22, labour/supply-chain challenges subside, commodity markets normalize, and foodservice volumes recover," the analyst said.
RBC Capital Markets analyst Irene Nattel lowered her target on the stock to $43 from $47 and maintained an Outperform rating.
"While management was clearly cautious on the outlook for F22, we walked away from today's event with a high degree of confidence in SAP's ability to return to growth in F23 and beyond, underpinned by a sustained focus on plant efficiency and profitable sales growth, augmented by the optionality of global M&A," Nattel said in a note to clients.
"We trim our NT forecasts against the backdrop of challenging supply chain and labour issues but maintain our view that the SAP story is ripening and offers potential for significant torque as the environment normalizes," the analyst said.
Scotiabank analyst Patricia A. Baker lowered her target to $42 from $45 and maintained a Sector Outperform rating.
"While we applaud the efforts embedded in SAP's Global Strategic Growth Plan and anticipate significant value creation as a result; we believe the current market backdrop of sustained labour and supply chain challenges, particularly in the U.S., will see the shares rangebound in the near term," Baker said in a note to clients.