A stock market analyst predicts modest growth for Agricore United in 2005-06 and leaves the target price for the company’s stock unchanged.
David Newman, who tracks AU for National Bank Financial, is forecasting a nine percent increase in grain handlings over last year due to increased grain supplies and better quality.
The firm is also projecting a good year for AU’s crop production business, based on excellent soil moisture, depleted soil nutrients and a possible decline in natural gas prices.
That should translate into earnings per share of 39 cents, up from 25 cents in 2004-05, and earnings before interest, taxes, depreciation and amortization of $139 million, up from $129 million.
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The target price for the company’s publicly traded shares remains unchanged at $7.50, based on seven times the company’s average projected earnings for 2006 and 2007.
AU’s shares have been trading in the range of $6.50 to $7 in recent months.
Newman said the company’s performance was better than anticipated.
While the outlook for the coming year is generally positive, he said, there are a couple of concerns.
Sales of Canadian Wheat Board grains have gotten off to a slower start.
Also, the import tariff on U.S. corn entering Canada could mean higher costs for AU’s feed operations.
