RBC: Aber Diamond's Plan to Become 'Harry Winston Diamond' Part of Strategic Shift

Aber Diamond Corp.’s (ABER) desire to be known as Harry Winston Diamond Corp. is far more than a name change. It is a strategic shift from a diamond mining play to an integrated diamond marketing and specialty company, RBC Capital Markets analysts point out in a research note.

Shareholders will vote on the proposal at the companies annual general meeting on Wednesday and RBC analysts think it will be approved.

As a luxury goods company, Harry Winston hopes to attract a broader investor base than it has as a mining play.

RBC has an “outperform” rating on the stock and a US$47 price target, which represents upside of 6% from Monday’s close. The firm is forecasting a 28% increase in revenue to US$62.9-million in the first quarter of fiscal 2008, a period that its says typically accounts for 21% to 22% of annual revenues.

Meanwhile, Aber’s 40% ownership of the Diavik diamond mine continues to bear fruit, with higher grades leading to 2.59 million carats of production in the first three months of 2007, versus only 2.5 million expected by RBC.

ABER 1-yr chart: