On Thursday, BMO Capital Markets adjusted its outlook on North West Co Inc. (NWC:CN) (OTC: NNWWF), raising the price target to Cdn$44.00, up from the previous Cdn$41.00 while maintaining a Market Perform rating. The revision follows the company's first-quarter results for the fiscal year 2024, which showed an 11% increase in adjusted EBITDA, attributed to stronger-than-expected same-store sales growth (SSSG) and gross margin.
The positive adjustment by BMO Capital is based on a generally favorable forecast for North West Co, reflecting in the higher estimates for the year 2025. The analyst noted that anticipated Water Settlement payments, expected in late 2024 or early 2025, could boost demand for general merchandise in approximately 30 communities, although the exact timing of these payments is currently unclear.
Further contributing to the positive outlook for North West Co is the potential impact of Child Welfare settlements, anticipated to occur in 2025 and 2026. These settlements, along with community-support spending, are expected to provide a broad-based, long-term demand tailwind that could extend through to 2030, potentially enhancing out-year earnings for the company.
BMO Capital has increased its earnings estimates for the year 2025, which underpins the new price target of Cdn$44. The Market Perform rating suggests that the analyst views the stock as likely to perform in line with the broader market. North West Co's recent performance and the analyst's outlook indicate a stable trajectory for the company's financials in the coming years.
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