In a report released today, Tamy Chen from BMO Capital maintained a Hold rating on Loblaw Companies, with a price target of C$220.00.
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Tamy Chen’s rating is based on a combination of factors that reflect Loblaw Companies’ current market position and future prospects. The company’s food segment is expected to show good quarter-over-quarter acceleration in same-store sales due to higher food inflation and better tonnage, which aligns with management’s expectations for non-same-store sales growth. However, despite these positive indicators, there are concerns about Loblaw’s internal food inflation metrics, especially when compared to industry standards.
Additionally, while Loblaw’s newly opened discount stores are performing well, and there is optimism about the company’s growth opportunities in areas like expanded pharmacy services and retail media, the stock’s valuation remains at a premium compared to its peers. This premium valuation suggests that the stock may not currently be an attractive entry point for investors seeking value. As a result, Tamy Chen has opted for a Hold rating, indicating that while the company has potential, the current stock price may not offer significant upside in the near term.