Revised TargetsNot surprising that they are all considerably higher than where we currently sit. GLTA
Scotia’s Phil Hardie reduced his target for Trisura Group Ltd. to $52 from $55 with a “sector outperform” rating. Others making changes include: Cormark Securities’ Jeff Fenwick to $51 from $56.50 with a “buy” rating, BMO’s Tom MacKinnon to $49 from $52 with an “outperform” rating, National Bank’s Jaeme Gloyn to $62 from $69 with an “outperform” rating. and CIBC’s Nik Priebe to $55 from $60 with an “outperformer” rating. The average is $54.79.
“Following a 20-per-cent sell-off in the wake of a last-minute delay in filing its year-end results surrounding an accounting issue related to reinsurance contracts, Trisura stock enjoyed a relief rally,” said Mr. Hardie. “This likely reflects a view that the outcome of the delay was not as bad as feared, and the underlying operating results were solid and roughly 30 per cent ahead of expectations. The company took a noncash write-down that was one-time in nature, but this is likely to raise some concerns related to 1) capital adequacy to support growth, and 2) risks related to managing a high-growth company. Management believes the company is well capitalized and noted a number of levers such as internally generated capital, excess cash at the holding company and additional debt capacity as sources of additional capital to support its growth.
“We have modestly trimmed our valuation multiple reflecting what we view as a transitional de-rate as investors rebalance risks related to managing a high-growth company with upside potential. We expect consistent solid performance with no further surprises to support multiple expansion and eventual return to prior valuation levels.”