RBC Analyst: Weak Retail Environment Affects Estimates at Canadian Tire

A weak retail environment could take its toll on Canadian Tire Corp. (CDNTF.PK). Analyst Irene Nattel of RBC Capital Markets has slashed her earnings estimates and reduced her target price on the retailer’s shares to C$64 from C$76 given the shaky economy.

Ms. Nattel, who maintained her "outperform" rating, wrote in a note to clients:

The increasingly challenging economic environment and tight credit markets are clouding the near-term outlook for Canadian Tire’s Financial Services and Mark’s Work Wearhouse operating unit, and a more cautious consumer spending environment implies trading down within categories at the core retail unit.

The shares may trade in a narrow band until investors gain comfort with management’s ability to manage through the forecasted economic slowdown, [but] current valuation represents  an attractive entry point.

She decreased her fiscal 2008 earning estimates to C$4.82 from C$4.94; 2009 to C$4.25 from C$5.24, and 2010 to C$4.91 from C$6.04.