On Monday, BMO Capital Markets adjusted its outlook on Toromont Industries (TIH:CN) (OTC: TMTNF), increasing the stock price target to Cdn$133.00 from the previous Cdn$130.00. The firm upheld its Outperform rating for the company's stock.
The adjustment follows a review of Toromont's first quarter of 2024, which was noted as a somewhat uneven beginning to the year. Despite this, the demand within the company's operational regions is expected to stay strong. The analyst predicts that as equipment availability improves, the markups on these items should continue to return to normal levels.
Toromont Industries is anticipated to experience some pressure on its gross margins. Still, the firm expects that this will be partially mitigated by advantageous changes in the company's revenue mix. This strategy is believed to help balance out the margin pressures.
The company's strong financial position, with approximately $1 billion in cash reserves, was highlighted as a key factor. This substantial cash balance is seen as providing Toromont with considerable flexibility in capital deployment. The analyst suggests that this could lead to potential upside beyond the current forecasts.
In summary, BMO Capital Markets holds a positive stance on Toromont Industries, citing a favourable demand outlook and the company's financial strength as grounds for maintaining an Outperform rating and a higher stock price target.
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