On Thursday, BMO Capital maintained its Market Perform rating on Loblaw Companies (L:CN) (OTC: LBLCF), with a shares target of Cdn$160.00. The firm's outlook suggests a steady consumer behavior pattern, with expectations for Loblaw to have sustained positive implied tonnage in the second quarter of 2024.
BMO Capital has adjusted its inflation expectations slightly downwards, referencing recent data from Statistics Canada, while slightly increasing its tonnage estimates. Despite these adjustments, the firm's total food same-store sales (SSS) estimate of 2.5% remains the same.
The analyst from BMO Capital anticipates that the Canadian consumer's cautious spending and trade-down behavior observed in the first quarter of 2024 has not significantly altered.
BMO Capital also addressed the potential for the market to underestimate Loblaw's performance. The firm suggests that consensus estimates may be too conservative regarding the year-over-year food gross margin, hinting at the possibility of stronger financial outcomes for the company.
The report includes insights into recent developments at Loblaw, without specifying the nature of these developments or their impact on the company's performance. Notably, the analyst mentioned a boycott and the launch of a new No Frills format among the developments considered in their assessment.
Loblaw's stock rating and price target by BMO Capital are based on the firm's analysis of the company's recent performance and market conditions, without indicating any significant changes in the company's business strategy or market dynamics. The firm's stance remains neutral with a Market Perform rating as it monitors Loblaw's progress and the broader retail environment in Canada.
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