Canadian Tire wins price target raise at RBC

Investments into tech have made a rocky road a little less rocky for Canadian Tire (Canadian Tire Stock Quote, Chart, News, Analysts, Financials TSX:CTC).

So says RBC analyst Irene Nattel who has, as reported by The Globe and Mail, raised her price target on Canadian Tire from $192.00 to $195.00 while maintaining her “Outperform” rating on the stock.

“CTC delivered strong results 2020 to mid-23 through category re-sets, strategic partnerships, and focus on building private brands to ensure a differentiated offering that resonates,” the analyst wrote. “CTC effectively captured share of wallet, and stepped up investments in data analytics to establish stronger direct to-consumer communications and promotions,” she said. “However, the macro backdrop with cost of living increases outstripping real income growth and mortgage re-sets at higher levels and spillover effect on broader shelter costs are causing extremely cautious consumer spending and pullback in spending on discretionary goods and services. While we had expected improving cadence in H2, while comps are easier consumer demand remains as cautious.”

Nonetheless, Nattell says all the bad news may already be priced into Canadian Tire’s stock.

“Our analysis indicates valuation appropriately discounts spending headwinds, valuation remains attractive,” she said. “While SSS [same-store sales] and earnings have been pressured through 2024, CTC earnings have held up better than expected. RBC Economics anticipates improving trends in consumer spending in H2/2025, Retail target multiple of 6.5x reflects the challenging demand/earnings visibility. As we move through 2025 and as we move closer to anticipated inflection on consumer spending, we should see improving share price performance.”