The Globe and Mail reports in its Monday edition that Laurentian Bank analyst Elizabeth Johnston boosted Recipe Unlimited ($25.69) to "buy" from "hold" and her share target to $32.50 from $30. The Globe's David Leeder writes that analysts on average target the shares at $31.56. Ms. Johnston says in a note: "Post-Q4 results, our forecast is largely unchanged with the largest increase coming from the central segment. We have opted to remain conservative in our forecast, but have calculated a downside and upside scenario which demonstrates a far greater upside potential. In our downside scenario, we calculate a $25 target price based on negative 2-per-cent SSSG [same-store sales growth], 0.5-per-cent decline in corporate contribution margin (approx. continuation of current levels, with no additional improvement), a decline in franchise margin to the level seen in 2016 and 2017 (when franchisee rent assistance represented a larger offset to franchise revenues), and net closures of five restaurants. In our upside scenario, we calculate a target price of $39 based on improving SSSG, small improvement in corporate margin, a small but further improvement in franchise margin, and net openings of 10 restaurants."
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