CIBC Capital Markets maintained its outperformer rating on the shares of George Weston (WN.TO), but at the same time reduced its price target to C$117.00 from $127.00 in a note dated May 12, after the company reported its first quarter results.
George Weston's Q1 results came with "few surprises" given the known results of both Loblaw Companies (L.TO) and Choice Properties Real Estate Investment Trust (CHP-UN.TO), said CIBC.
"Its capital allocation priorities remain unchanged, with the recent announcement of Choice acquiring First Capital alongside Kingsett not expected to alter buyback activity," said CIBC. "The implied Holdco discount sits at 14.8% today," added CIBC in the note dated May 12.
CIBC continues to forecast Weston repurchasing near $1B of shares in F2026 and F2027, in line with activity in prior years. It also expects "healthy" cash flow generation to continue, driven by Loblaw dividends, Choice distributions and participation in Loblaw's NCIB.
"Our target Holdco discount stays at 9%, and with our updated Loblaw price target of $69 and the CIBC REIT team's price target of $16.50/unit for Choice Properties, our price target for WN moves to $117 (was $127)," added CIBC. "George Weston remains Outperformer rated."
Though not specifically related to the potential First Capital transaction, CIBC highlights that its REIT team upgraded CHP to Outperformer rated effective April 30, primarily on account of current valuation levels.
Price: $93.33, Change: $-3.34, Percent Change: -3.46%