On Wednesday, BMO (TSX:BMO) Capital Markets updated its evaluation of George Weston (TSX:WN) Ltd., raising the company's price target to Cdn$196.00, up from the previous Cdn$185.00. The firm maintained a Market Perform rating on the stock. This adjustment follows the release of George Weston's first-quarter adjusted earnings per share (EPS), which fell short of expectations, primarily due to a significantly higher tax rate impacted by temporary non-core items.
The analyst noted that the holding company discount for George Weston is currently around 16%, which is a slight decrease from approximately 20% in April. However, it remains wider than the low-to-mid teens percentage observed last year. The current discount could be a factor of interest rates influencing Choice Properties Real Estate Investment Trust, which is partially owned by George Weston.
Investors have shown a recent preference for George Weston shares over those of Loblaw Companies Limited (TSX:L), which is also owned by George Weston, seeking exposure to Loblaw and potentially benefitting from a rally in Choice Properties' stock if interest rates are cut. This investor sentiment is based on the notion that George Weston's broader discount offers a more attractive entry point.
George Weston's financial performance and the market dynamics around its subsidiaries, including Choice Properties REIT (TSX:CHP_u) and Loblaw, continue to be closely monitored by investors, as these factors play a significant role in the company's stock valuation and investment appeal.
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