The Globe and Mail reports in its Tuesday edition that Canaccord analyst Andrew Lawlor has boosted Recipe Unlimited ($26.25) to "buy" from "hold." The Globe's David Leeder writes in the Eye On Equities column that Mr. Lawlor trimmed his share target by a loonie to $30. Analysts on average target the shares at $31.79. Mr. Lawlor says Recipe may be a "safe place to hide" for investors during a period of economic weakness. Mr. Lawlor says in a note: "Despite the discretionary nature of the restaurant industry, we believe certain aspects of Recipe's business model can provide resiliency during downturns. Specifically, (1) the high-margin Franchise segment should continue to provide strong levels of cash flow (average EBITDA growth from Franchise peers in 2008 was 2.3 per cent); (2) low-price brands (Harvey s, Swiss Chalet, etc.) tend to be more resilient as customers turn to lower-priced options; and (3) Recipe has a healthy balance sheet, with 1.7-times net debt to pro-forma EBITDA vs peers at 2.6 times. The company has stated in the past it is comfortable up to 3.0 times net debt to EBITDA. ... The upgrade follows recent weakness in the share price leading Recipe to appear undervalued relative to peers."
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