Despite concerns over rising coronavirus cases as the Delta variant spreads, along with falling bond yields, stocks are still marching higher. Last week, the S&P/TSX Composite Index inched up 99 points or 0.5 per cent. Year-to-date, the S&P/TSX Composite Index is now up 16.4 per cent with all 11 sectors reporting positive price returns.
This week, the earnings season heats up. So far, 70 companies have confirmed that they will be releasing their quarterly financial results. In order to keep the positive price momentum going for stocks, investors will be looking for strong earnings results and guidance when companies report their quarterly results. Once companies report their financial results, earnings expectations, multiples, and target prices could be adjusted meaningfully depending on the reported earnings and management’s outlook (if provided).
Last week, 51 out of the 230 stocks in the S&P/TSX Composite Index reported their earnings results. Consequently, numerous stocks experienced material changes to their target prices over the past week. Worth mentioning are four stocks, three stocks with significant increases to their target prices and one stock whose average target price was slashed after reporting disappointing earnings results.
TFI International Inc. (TFII-T)
The average target price increased 17 per cent to $146.41 from $125.47. On July 26, the company reported second quarter earnings results that exceeded expectations. Adjusted earnings per share came in at US$1.44, well above the consensus estimate of US$1. Here are a few of the revised forecasts:
- BMO’s Fadi Chamoun raised his target price to US$110 from US$100.
- Morgan Stanley’s Ravi Shanker increased his target price to US$120 from US$110.
- RBC’s Walter Spracklin lifted his target price to US$126 from US$107.
- Scotiabank’s Konark Gupta took his target price up to $150 from $120.
- TD’s Tim James raised his target price by $10 to $150.