{"id":421340,"date":"2010-03-12T15:48:00","date_gmt":"2010-03-12T19:48:00","guid":{"rendered":"e2249889-c78b-43e3-9643-b1d7d4aa587b:407060"},"modified":"2010-03-12T15:48:00","modified_gmt":"2010-03-12T19:48:00","slug":"shoppers-drug-jean-coutu-become-defensive","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/421340","title":{"rendered":"Shoppers Drug, Jean Coutu become defensive"},"content":{"rendered":"

Dundee Securities has upgraded drug retailing, pointing to low historical valuation and higher industry margins.<\/p>\n

\u201cOwing to improved quarterly results and valuation metrics, we now believe that Canadian drug retailers such as Shoppers Drug Mart and Jean Coutu have become legitimate defensive candidates in the Canadian marketplace,\u201d analyst Martin Roberge wrote in a report to clients. <\/p>\n

The group has underperformed over the past several months even though the appetite for defensive stocks has revived, he noted.<\/p>\n

That\u2019 s despite regulatory uncertainties looming over the Ontario market<\/p>\n

Industry margins have staged a strong rebound, thanks to a recovery in drug pricing and lower drug import costs resulting from a stronger Canadian dollar.<\/p>\n

\u201cWe can see a positive correlation between relative industry margins, which recovered last year, and relative earnings-per-share strength,\u201d he wrote.<\/p>\n

\u201cWe can also see that much of the improvement in the industry net profit margin has come from Jean Coutu (from -45% in Q3\/09 to -26% in Q4\/09). Shoppers\u2019 net profit margin has remained flat (5.9%).\u201d <\/p>\n

That might explain Coutu\u2019s share price outperformance of Shoppers, he said.<\/p>\n

As for valuation, the Canadian drug retailing index is trading at the bottom of its 10-year historical valuation range from the perspective of dividend yield (2%), price to cash flows (12.7 times), and price to earnings (18.4 time).<\/p>\n

\u201cThough these stocks offer less yield than other defensive stocks, we believe their cheap valuation metrics provide much downside protection for defensive investors,\u201d he said.<\/p>\n

Hollie Shaw<\/a><\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Dundee Securities has upgraded drug retailing, pointing to low historical valuation and higher industry margins. \u201cOwing to improved quarterly results and valuation metrics, we now believe that Canadian drug retailers such as Shoppers Drug Mart and Jean Coutu have become legitimate defensive candidates in the Canadian marketplace,\u201d analyst Martin Roberge wrote in a report to […]<\/p>\n","protected":false},"author":4060,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-421340","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/421340","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4060"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=421340"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/421340\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=421340"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=421340"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=421340"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}