AGF Management (AGF.B) – $16.03 – Cost Cuts: Check. Next Up: Revenue Growth and Margin Expansion

admin — Thu, 28 Jan 2010 19:16:16 +0000

AGF Management AGF.B Cost Cuts Check Next Up Revenue Growth and Margin Expansion
Sector Perform, Above Average Risk, Price Target: $18.00 (prev. $17.00)
Normalized EPS of $0.40 was ahead of RBC CM’s $0.35 forecast and well ahead of consensus at $0.32. The beat was primarily due to lower-than-forecast SG&A expense at the investment management division. Loan loss provisions, although in line with RBC CM’s forecast, was down significantly again Q-o-Q. RBC CM is increasing 12-month target to $18/share (was $17), and maintaining Sector Perform. RBC CM still sees positive valuation upside (total return of 19%), but this is in line with the median return of its coverage universe, hence the Sector Perform rating. Three catalysts RBC CM is looking for to become more positive again on AGF’s shares: (1) improving net sales performance [improving fund performance relative to peers is likely a leading indicator]; (2) signs of sustained improvement in investment management EBITDA margins; and (3) stronger signs of subsiding risks in AGF Trust’s loan book.

TSX Commentary » AGF Management

AGF Management (AGF.B) – $16.03 – Cost Cuts: Check. Next Up: Revenue Growth and Margin Expansion