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Power Financial PT Lifted To $30.50 By CIBC After Q1, 'Sector Performer' Maintained

 May 15, 2012 03:12 PM


(By Balaseshan) CIBC World Markets Inc. analyst Paul Holden increased his price target on shares of Power Financial Corp. (TSE:PWF) to $30.50 from $29.50, while maintaining "Sector Performer" rating.

After the company's first quarter results, the brokerage lowered its 2012 EPS estimate to $2.47 from $2.59 and its 2013 estimate to $2.76 from $2.84.

PWF reported operating EPS of $0.52, below Holden's estimate of $0.59 and consensus of $0.58. EPS were $0.52 in Q1-2011 and $0.60 in Q4-2011. The earnings miss was related to lower earnings from Great-West Lifeco Inc. (TSE:GWO). Net asset value (NAV) increased by 16% sequential, with GWO contributing most of the growth.

GWO's earning contribution increased by 8% year-over-year, while IGM Financial Inc.'s (TSE:IGM) contribution decreased by 6% year-over-year. Pargesa swung from a contribution of $4 million in Q1-2011 to a loss of $2 million in Q1-2012. Pargesa's disposition of Arkema and Pernod Ricard contributed $0.12 per share to non-operating earnings.

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Holden lowered his earnings estimates that is driven by reduced EPS estimates for GWO and IGM. He is now forecasting earnings growth of 4% for 2012 and 12% for 2013. A dividend increase in 2012 or 2013 is unlikely.

The analyst's price target increases to $30.50, primarily to account for the price target increase in GWO (from $23.50 to $25.00). The NAV discount has narrowed to 6.2% compared to the long-term average of 8.4%.

Power Financial is a diversified international management and holding company. It operates in four segments: Great West Lifeco Inc. (Lifeco), IGM Financial Inc. (IGM), Parjointco N.V. (Parjointco) and Other.

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PWF is trading up 0.37% at $26.99 on Tuesday.

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