2023-10-13 22:26:52
Desjardins maintains that Lassonde offers reliable performance, but that it must keep an eye on its continued efforts on the side of its American private label and its potential growth initiatives. (Photo: Lassonde)
What to do with the titles of Couche-Tard, Lassonde and Boralex? Here are some analyst recommendations likely to move prices soon. Note: the author may have a completely different opinion than that expressed by the analysts.
Alimentation Couche-Tard (ATD, $74.34): ambitious, but achievable goal
Alimentation Couche-Tard is now targeting earnings before interest, taxes, depreciation and amortization (EBITDA) of $10 billion by 2028, an ambitious but achievable goal, estimates Royal Bank Capital Markets.
Management presented, during its investor day, its plan for the next five years (2023-2028). Analyst Irene Nattel explains that the path to reaching the $10 billion target (11.7% compound annual growth rate) is achievable and supported by a set of credible assumptions.
Contributions from front and back office initiatives, cost controls and full participation by TotalEnergies suggest a steeper slope than previously anticipated by Royal Bank.
The financial institution introduces a preliminary EBITDA for 2028 of $8.5 billion (compound annual growth rate of 8.2%), a more conservative estimate than the company’s estimate of $8.9 billion (if we exclude $1.1 billion from mergers and acquisitions).
That said, Irene Nattel believes Couche-Tard’s organic growth opportunity is underestimated. EBITDA of $5.8 billion for fiscal year 2023 includes $2.4 billion from organic growth.
Management also indicates that it intends to increase the offering of food and beverages as well as its private label (representing between $500 million and $600 million additional), a renewed commitment to consumers and the improvement of its operations (between $200 million and $400 million), a gradual contribution from fuel, notably thanks to opportunities on the commercial side ($400 million to $600 million), growth of its network ($400 million) as well as the management of structural costs ($800 million).
The Royal Bank maintains its forecast of outperformance of Couche-Tard’s stock compared to its sector of activity and increases its target price from $87 to $94.
Industries Lassonde (LAS.A, $127.01): a story yet to be written
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