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On Tuesday, BMO Capital Markets adjusted its outlook on Power Corporation of Canada (POW:CN) (OTC:PWCDF), increasing the firm’s price target on the stock to Cdn$54.00, up from the previous Cdn$52.00. The investment firm has maintained its Market Perform rating on the shares.
The adjustment comes as a result of revised target prices for Great-West Lifeco (GWO) and IGM Financial (OTC:IGIFF) (IGM), which are part of Power Corp’s portfolio. BMO Capital’s analyst noted an updated net asset value (NAV) discount, which has been reduced to 22% from the prior 24%. This change reflects a slightly better than average discount since the February 2020 reorganization, acknowledging Power Corp’s ongoing share buyback activity.
Despite the increased price target, BMO Capital has moderated its earnings expectations for Power Corp. The analyst has trimmed the forecast for Q1/25 adjusted earnings per share (EPS) to $1.24, which is below the consensus of $1.27. This revision is attributed to a projected weaker contribution from Great-West Lifeco, IGM Financial, and GBLB for the first quarter of 2025.
The firm’s estimates for Power Corp’s future earnings have been lowered by approximately 4%. This revision is based on the recently reduced estimates for Great-West Lifeco and IGM Financial, which are expected to have a modestly negative impact on Power Corp’s financial performance going forward.
The updated target price for Power Corp reflects both the revised expectations for its subsidiaries and the ongoing strategic actions, such as share repurchases, that the company has been engaging in to enhance shareholder value.
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