June 7, 2019 / 12:21 PM / 4 months ago

BUZZ-Dollarama: RBC says "buck well spent"; brokerages raise PTs ahead of Q1 results

** At least six brokerages raised their PTs on discount chain operator over last 3 days ahead of its Q1 results next week

** RBC Capital Markets raises by C$5 to C$51, Canaccord Genuity by C$3 to C$40; TD Securities and Raymond James raise by C$5 to C$45

** RBC cuts Q1 same-store sales (SSS) estimate by 50 basis points to 2.5% due to a cold, wet spring and some insight from Walmart Canada’s results in the same period

** Unseasonal weather in Q1 likely moderated early sales of summer seasonal products, typically the strongest seasonal category in the quarter - RBC

** Says despite softer SSS growth in FY 2019, brokerage is confident of management’s ability to deliver on long-term strategy

** Says with an offering highly recession-resistant against backdrop of rising uncertainty economic growth in 2019/20, DOL’s success across cycles remains compelling

** Canaccord forecasts 80 basis points decline in gross margins year-over-year to 36.8% due to lack of price increases in the quarter

** While we still believe in DOL’s long-term growth profile, softer near-term outlook will allow stock to remain range-bound in coming quarters - Canaccord

** CIBC Capital Markets raises PT by C$7 to C$44 and BMO Capital Markets raises by C$10 to C$45

** DOL has missed SSS estimates thrice and matched it once in the last 4 quarters

** Of the 14 brokerages covering stock, 8 rate it “buy” or higher, 6 “hold”; median PT is C$44

** Up to Thursday’s close, stock had risen ~35% YTD (Reporting by Debroop Roy in Bengaluru)

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