Canadian Tire (CDNAF – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Tamy Chen from BMO Capital maintained a Buy rating on the stock and has a C$170.00 price target.
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Tamy Chen has given his Buy rating due to a combination of factors influencing Canadian Tire’s stock performance. One of the primary reasons is the positive impact of favorable winter weather conditions, which likely boosted same-store sales (SSS) in the first quarter of 2025. This increase in sales led to a revision of the earnings per share (EPS) estimate from $1.27 to $1.32, despite the wide range of street estimates. Additionally, the company’s decision to divest Helly Hansen is expected to strengthen its balance sheet and has already resulted in share repurchases, indicating a strategic move towards enhancing shareholder value.
Furthermore, Canadian Tire’s retail segment is currently valued at the lower end of its historical range, suggesting potential for upward movement. Although there are concerns about discretionary spending due to tariff uncertainties, the stock’s recent sell-off and the strategic use of proceeds from the Helly Hansen sale present more potential upside than downside risk. Overall, these factors contribute to a cautiously optimistic outlook for Canadian Tire, supporting the Buy rating despite the challenges posed by the current economic environment.