TORONTO (Reuters) - Shares of Canadian media company Cogeco Inc rose on Thursday after the company reported a sharp rise in quarterly profit due to strength at its cable-TV unit, Cogeco Cable Inc.
Shares of Cogeco, which reported its third-quarter results late on Wednesday, were up C$1.17, or 3.9 percent, at C$31.28 early on Thursday afternoon on the Toronto Stock Exchange.
The Montreal-based radio, TV and communications company said it earned C$9.5 million, or 57 Canadian cents a share, in its third quarter, ended May 31, up from C$3.1 million, or 18 Canadian cents a year, in the year-before quarter.
After the results, Rob Goff, analyst at Haywood Securities Inc, said he is maintaining his "sector outperform" rating on Cogeco stock, but cut his target share price by C$2 to $47.
"We are bullish on cable fundamentals," Goff said in a research note. "Valuations are attractive, forecasts leave modest upside for outperformance."
Goff said the reduction in his target share price reflects caution resulting from competitive price pressures on Cogeco Cable's Portuguese subsidiary, Cabovisao.
"Near-term forecasts unchanged but long-term forecasts may be impaired," Goff wrote.
Cogeco revenue rose by 13.8 percent to C$283.9 million from C$249.4 million. Operating income before amortization rose to C$117.2 million from C$95.8 million.
The company said its revenue forecast for the 2009 financial year is C$1.19 billion, which it said is up C$108 million from its forecast for the current financial year.
It said operating income before amortization should increase to about C$500 million, up C$55 million from its forecast for the current year.
Cogeco Cable's third-quarter profit was C$31.1 million, or 64 Canadian cents a share, up from a profit of C$20.4 million, or 45 Canadian cents a share, a year earlier. Revenue rose to C$274.9 million from C$240.6 million.
Cogeco Cable's shares were up 2.3 percent at C$37.24 on the Toronto Stock Exchange.
Greg MacDonald, analyst at National Bank Financial, said in a research note that Cogeco Cable's bullish operating outlook remains intact, and its forecasts are favorable.
"Cogeco Cable remains the least expensive cable stock in the group and in our view is very attractively priced given its growth profile," MacDonald wrote. "Subsequently, we believe that multiple-expansion is still likely while long-term strategic value also remains quite attractive."
Cogeco Cable said it expects revenue of C$1.17 billion for the 2009 financial year, an increase of C$105 million from its forecast for the current financial year.
It said operating income before amortization should increase to about C$495 million, an increase of C$55 million from its forecast for the current year.
Editing by Peter Galloway