December 9 Price Targets: A Brokerage Analysis

Good morning,

Yesterday, December 9, analysts from three brokerages released price targets on five S&P/TSX Composite Stocks as follows:

I will now take a look at how each of these brokerages have performed when setting price targets for these respective stocks. Keep in mind that price targets are usually estimates of what the share price will be in one year (sometimes 18 months), but we can objectively determine whether the analyst thinks the price will go up or down from its current share price. Draw your own conclusions on how much stock you should place in each of these recommendations.

JPMorgan Chase & Co: Husky Energy

I found six price targets set by this brokerage on Husky Energy as follows:

From the table above, you can see that in every instance the price target was set above the closing price on the rating date. This implies the analyst was bullish on all six recommendations, including the latest one. In the last year, the price target has been evenly cut in half from $21.00 to $10.50.

JPMorgan Chase & Co: Imperial Oil

I also found six price targets set by this brokerage on Imperial Oil as follows:

Similar to Husky Energy, the brokerage has been bullish on this stock in the last year, with price targets falling from $49 to $37. Like the price targets, the actual share price has fallen from $43.57 down to $33.17 - a disappointing 24% drop for an investor following this call in October, 2018.

JPMorgan cHASE & CO: MEG Energy

MEG Energy hasn’t been updated as frequently as the aforementioned two other energy companies, but I found the following three price targets set by JPMorgan Chase & Co:

JPMorgan Chase & Co made a great call in December, 2018 when it set a price target of $7, lower than the current share price at the time of $8.04. Shorting this stock would have netted an investor a 28.23% gain. The brokerage lowered its price target to $6 per share in September, 2019, but since it was above the share price of $5.77 it indicated that they were bullish on the stock. Again this proved to be good advice as the share price rose to $6.28, an 8.84% gain.

bmo capital markets: stantec

Stantec is a stock covered quite often by BMO Capital Markets, with price targets being updated 7 times in the last 17 months. Below is a summary:

As you can see, the price targets have bounced around much like the share price has, with it not being much different today than what it was in July, 2018. One thing that has remained consistent is the analyst’s overall bullish view of the stock. The total price return in the last 17 months has been 5.42% (3.82% annualized).

NATIONAL BANK FINANCIAL: CANADIAN APARTMENT PROPERTIES REIT

This brokerage updates its price targets on this REIT very frequently - a total of 15 times in the last 21 months, which works out to be about twice every three months. While largely bullish on the stock, anyone following this brokerage’s recommendations would have benefited as this REIT has been an extraordinary investment as of late.

Summary

I hope you have found this analysis useful as its intention was to highlight that the price targets set by brokerages are just estimates. I recommend taking these estimates with a grain of salt, but continue to look for those analysts who outperform their peers. There are plenty out there, but they can be hard to find sometimes.

If you liked the summaries above and would like a similar one done for a particular stock and brokerage, feel free to send me an email at info@thesundayinvestor.ca. And of course, don’t forget to subscribe to gain instant access to the Subscribers Area of the website.

Happy Investing!