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On Wednesday, RBC Capital Markets reiterated its Outperform rating on Alimentation Couche-Tard Inc (ATD/B:CN) (OTC: ANCUF), with a maintained price target of Cdn$94.00. The company’s third-quarter fiscal year 2025 results were noted to have exceeded expectations, particularly in terms of in-store performance.
Alimentation Couche-Tard, a convenience store operator, reported a quarter that surpassed forecasts, with significant improvements observed within in-store sales. The company’s operating key performance indicators (KPIs) demonstrated early success in initiatives aimed at increasing customer traffic and basket size, despite the current environment of subdued consumer spending.
RBC Capital’s analysis acknowledges the challenges faced by the convenience store sector, particularly the reliance on lower-income consumers who represent approximately half of the business. Yet, the firm sees Alimentation Couche-Tard as a compelling investment opportunity, citing the company’s history of disciplined capital allocation and its capacity to navigate difficult periods.
The financial results for the quarter showed an 11.2% year-over-year increase in adjusted EBITDA and a 4.2% rise in earnings per share (EPS). EBITDA came in 4.5% higher than both the company’s forecasts and consensus estimates. The composition of the EBITDA growth was particularly favorable, with a substantial portion being driven by in-store improvements and contributions from mergers and acquisitions (M&A) activities in previous periods.
In conclusion, RBC Capital’s commentary highlighted that Alimentation Couche-Tard delivered another robust quarter with positive developments inside its stores. The firm anticipates that macroeconomic uncertainty will persist, potentially impacting demand, especially among the lower-income demographic. Despite these headwinds, RBC Capital maintains its price target, reflecting confidence in the company’s valuation and future prospects.
In other recent news, Raymond (NSE:RYMD) James has made adjustments to its outlook on Alimentation Couche-Tard Inc. The firm reduced its price target for the company to C$83 from a previous target of C$90, although it maintained a Strong Buy rating on the stock. This revision was influenced by weaker-than-expected demand in the third fiscal quarter, which ended on February 2, 2025, attributed to winter storms in the United States and softer fuel margins on the west coast. Analyst Bobby Griffin from Raymond James indicated that consensus estimates for the quarter might need to be revised downwards due to these conditions.
Additionally, the firm has adjusted its outlook on Couche-Tard’s share repurchase activities, anticipating a pause in buybacks for the next two quarters. This pause is expected to help the company accumulate cash for a potential acquisition of Seven & I, although this strategy has not yet been finalized. The report highlights the challenges faced by Couche-Tard while reaffirming the stock’s Strong Buy rating despite the lowered price target. These developments reflect the firm’s analysis of the company’s performance and market conditions, providing updated expectations for investors.
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