2023-07-12 16:39:37
MTY’s growth in the second quarter stems in particular from acquisitions such as BBQ Holdings, Wetzel’s Pretzels and Sauce Pizza and Wine in the United States, but also from the end of health restrictions in Canada. (Photo: 123RF)
What to do with titles from Intact, MTY and Cineplex? Here are some recommendations from analysts likely to move prices soon. Note: the author may have a totally different opinion from that expressed by the analysts.
Intact Financial Corporation (IFC, $197.58): Canadian disasters drive up losses
Intact Financial Corporation updated its losses from natural disasters, which nearly doubled in the second quarter due to numerous disasters in Canada.
The company’s estimate of those losses is $421 million before tax (or $1.79 per share after tax), says CIBC analyst Paul Holden. This amount is far above the historical average for this quarter, and also far ahead of CIBC’s forecast ($229 million). The difference comes of course from the forest fires that ravaged part of the Atlantic provinces, but also from an ice storm and floods in Quebec.
Canadian disasters account for approximately 80% of all losses, with 75% attributable to individuals and the balance to businesses. The rest of the losses come from the United Kingdom and Ireland (15%) and the United States (6%).
This difference between the forecasts and Intact’s latest estimate represents an amount of $0.72 per share, after taxes.
By incorporating this new data, CIBC lowers its earnings per share for the second quarter from $3.21 to $2.49. Paul Holden recalls that the market consensus was $3.23, and he expects other analysts to reassess lower as well.
The good news, if there is any, is that the financial institution is not changing its scenario for Intact in the short term. It assumes natural catastrophe losses are expected to be within the ranges provided by company management for the second half of 2023 and fiscal year 2024. CIBC’s estimate for these losses is $710 million for 2024, which implies an annual increase of around 10%.
CIBC maintains its outperformance forecast for Intact’s share against its sector of activity as well as its target price of $225.
MTY Group (MTY, $61.10): The end of the pandemic has a positive impact on revenues
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