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On Thursday, BMO Capital Markets revised its price target on Alimentation Couche-Tard Inc (ATD/B:CN) (OTC: ANCUF) shares, reducing it from Cdn$85.00 to Cdn$82.00. Despite this change, the firm maintained its Outperform rating on the stock. BMO Capital’s analysis suggests that while the macroeconomic environment remains challenging, the impact on Couche-Tard’s results has been more favorable than anticipated.
BMO Capital’s commentary on the company’s outlook indicates a belief that the U.S. consumer’s financial health is generally stable. However, there is acknowledged risk tied to potential changes in the tariff landscape. The firm also notes that Couche-Tard’s efforts to enhance the value proposition of its U.S. convenience stores are in the early stages, which is a factor in the current assessment of the company’s stock.
The revised price target of Cdn$82.00 is accompanied by a change in the target multiple, which has been adjusted to approximately 11 times from the previous 11.5 times. This adjustment reflects BMO Capital’s forward-looking EBITDA estimates for Couche-Tard’s fiscal year 2026. The stock is currently trading at 10 times the revised F2026E EBITDA, which is within the historical trading range of 9 to 11.5 times.
BMO Capital’s stance on Couche-Tard is influenced by the potential for same-store sales (SSS) improvement or strategic mergers and acquisitions (M&A) as material catalysts. Until such developments provide clearer visibility, Couche-Tard will remain lower in the firm’s pecking order of recommended investments.
The commentary from BMO Capital concludes with the acknowledgment that while the macroeconomic conditions are tough, the performance of Alimentation Couche-Tard has been more resilient than initially feared, which has been factored into the maintained Outperform rating despite the reduced price target.
In other recent news, Alimentation Couche-Tard Inc reported third-quarter fiscal year 2025 results that exceeded expectations, particularly in adjusted EBITDA and in-store performance. Raymond (NSE:RYMD) James noted that the company’s adjusted EBITDA surpassed both their and consensus expectations, driven by strong U.S. merchandise margins and growth in the food service sector. RBC Capital also highlighted a 4.5% increase in EBITDA compared to forecasts, attributing the growth to in-store improvements and previous mergers and acquisitions. Despite the positive results, Raymond James adjusted its price target for Couche-Tard to Cdn$83, reflecting recent trends and foreign exchange rates, while maintaining a Strong Buy rating.
RBC Capital maintained its Outperform rating with a Cdn$94 price target, emphasizing the company’s disciplined capital allocation and ability to navigate challenging periods. Both firms acknowledged the impact of macroeconomic factors, such as winter storms and softer fuel margins, on the company’s performance. Couche-Tard’s management is expected to pause share buybacks for the next two quarters to accumulate cash for a potential acquisition of Seven & I. The firm’s long-term growth prospects remain favorable, with expected benefits from upcoming mergers and acquisitions, including the closure of 270 GetGo Stores in 2025.
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