Shoppers Drug: Scotia Analyst Forecasts 15% Earnings Growth in Q2

Scotia Capital analyst Ryan Balgopal is forecasting 15% earnings growth at Shoppers Drug Mart Corp. (SHDMF.PK) in the second quarter.

In a note to clients, the analyst said:

With the tailwind of an aging population base, remarkable consistency of growth, and strong execution, we believe Shoppers should be a core retail holding.

He reiterated his sector outperform rating and one-year share price target of C$67.50.

The analyst anticipates per share earnings of C$0.59, compared with C$0.52 a year ago, which is one cent above analyst consensus estimates.

Mr. Balgopal’s forecast is predicated on same-store sales growth of 3.7% (a front store rise of 2.5%, and pharmacy sales growth of 5%). He forecast 12.2% growth in EBITDA, to C$245.3-million, with a 30 basis point improvement in the EBITDA margin rate.

He said:

This improvement reflects the benefits of increased penetration of higher-margin generic drugs, prestige cosmetics and private label items, partially offset by higher expense rates due to the robust new store program.