CanWel Building Gets a Buy Rating from Canaccord Genuity

By Ryan Adsit

CanWel Building (TSX: CWX), the Services sector company, was revisited by a Wall Street analyst today. Analyst Yuri Lynk from Canaccord Genuity remains bullish on the stock and has a C$7 price target.

Lynk said:

“We are reiterating our SPECULATIVE BUY rating and C$7.00 target price on CanWel shares ahead of Q2/17 results on July 27th. Our positive bias on CanWel is based on (1) its 8.3% dividend yield, (2) its high degree of insider ownership with President & CEO, Amar Doman, controlling 19% of the stock, and (3) the upside potential afforded by management’s plans to consolidate the highly fragmented treated wood industry. Investment highlights We are reducing our Q2/17 EBITDA estimate to $19.5 million from $22.9 million previously but leaving our full year estimate little changed. The reduction reflects the likelihood logging activity in BC remained depressed due to adverse weather conditions continuing from the prior quarter. Separately, we allow for slight margin compression as it may take CanWel time to pass higher lumber prices on to its customers. The corollary of this is that margins expand when prices deflate.”

According to TipRanks.com, Lynk is a 4-star analyst with an average return of 6.5% and a 55.2% success rate. Lynk covers the Basic Materials sector, focusing on stocks such as Badger Daylighting Ltd, Aecom Technology Corp, and North American Energy.

CanWel Building has an analyst consensus of Moderate Buy, with a price target consensus of C$7.25.

The company has a one year high of C$7.09 and a one year low of C$5.23. Currently, CanWel Building has an average volume of 186.6K.

CanWel Building Materials Group Ltd. engages in the distribution and trade of construction materials. It operates through the following divisions: CanWel Building Materials, CanWel Treating, California Cascade, and Jemi Fibre.

The company’s shares closed on Wednesday at $6.73.