CIBC World Markets’ diversified financials analyst Nik Priebe made a series of target price adjustments to stocks in his coverage universe on Tuesday.
“Overall, we don’t foresee the Q2 reporting cycle being quite as noisy as the preceding quarter (e.g., CIX, GSY, AD.UN) and are expecting mostly straightforward results, with the potential exception of ECN Capital,” he said.
He raised his targets for these stocks:
* Fairfax Financial Holdings Ltd. ( “outperformer”) to $1,300 from $1,200. Average: $1,371.74.
Analyst: “When Fairfax reports Q2 results, we expect the company to announce a modest step-up in run-rate dividend and interest income related to the recent acquisition of a real estate construction loan portfolio from Pacific Western Bank. The net pickup on the annualized runrate is expected to be approximately US$120 million (versus a previous run-rate of US$1.5 billion). Separately, on May 10, Brit completed the sale of Ambridge. We are modeling a US$255 million pre-tax gain, which is consistent with management guidance and should not be a source of an earnings surprise. Public equity and bond markets were mixed in the quarter, but Fairfax’s share price was up 13 per cent (in USD) which should drive a gain for the total return swaps on Fairfax subordinate voting shares. In our view, a key catalyst for shares of FFH in 2023 could be a benign CAT season (particularly considering the exceptionally strong pricing environment for CAT-exposed property lines).”
* Goeasy Ltd. ( “outperformer”) to $150 from $130. Average: $164.10.
Analyst: “We are not anticipating any major surprises with Q2 results. Revised commercial forecasts (incorporating the impact of a lower rate cap) were announced in May, and the company provided quarterly guidance on loan growth and credit performance nearly halfway through the quarter. The second quarter tends to be a period of elevated demand from a seasonality perspective, but this should be reflected in quarterly loan growth guidance of $175 million to $200 million. This guidance range appears reasonably conservative considering: 1) average quarterly loan growth over the past year was $209 million and 2) Q2 is a period of seasonally higher demand. The aggregate volume of consumer insolvencies in Canada continues to grind higher, but we would consider this data to be a better barometer than thermometer.”