Earnings season is ramping up this week. Here is a look ahead to some of the major companies in the S&P/TSX composite index scheduled to report quarterly financial results. On Monday, there is Capital Power Corp., West Fraser Timber, and Restaurant Brands International. On Tuesday, Canadian National Railway, DH Corp., and PrairieSky Royalty are set to report. On Wednesday, earnings reports from Barrick Gold, Goldcorp, Agnico Eagle Mines, Lundin Mining, Canadian Utilities, Suncor Energy, and Canfor are expected. On Thursday, results from Potash, Teck Resources, Husky Energy, First Quantum Minerals, Superior Plus, Eldorado Gold and Yamana Gold will be released. Finally, on Friday, earnings reports from Norbord, Colliers International Group, and Imperial Oil are due out.
This morning, the price of oil is under some pressure, falling back to around the $50 (U.S.) a barrel level.
To recap, on Friday, the S&P/TSX composite index gained 91 points, or 0.61 per cent, to close at 14,939. There were 164 securities in the TSX index that advanced, 82 securities declined in value, and just one stock closed the day unchanged. In terms of sectors, 10 of the 11 sectors closed higher, led by resources with the materials and energy sector in the top positions. Only the consumer staples sector declined in value, but just slightly.
The S&P/TSX composite index is up 1.45 per cent month-to-date, and up 14.83 per cent year-to-date.
On today's TSX Breakouts report, there are 68 securities on the positive breakouts list (stocks with positive price momentum) compared to just 10 stocks on the negative breakouts list (stocks with negative price momentum).
Discussed today is a healthcare stock from the positive breakouts list that is beginning to percolate after trading relatively sideways for the past several months. The stock has great expectations by the Street with 10 'buy' recommendations and an average price return of 61 per cent anticipated over the next 12 months. The stock I am referring to is ProMetic Life Sciences Inc. (PLI-T).
A brief outline is provided below that may serve as a springboard for further fundamental research.
The company
Quebec-based ProMetic is in the business of extraction and purification of proteins from human plasma.
The company's operations can be viewed in three segments. First, the company provides pharmaceutical companies with bioseparation of therapeutic proteins from human plasma with its superior technology. Second, ProMetic is evolving into a vertically integrated specialty biopharmaceutical company by developing its own plasma-derived therapeutics and orphan drugs used to treat rare and unmet medical conditions. Third, is the company's small-molecule drug development platform.
The stock has a market capitalization of $1.9-billion.
Dividend policy
The company is focused on growth and currently does not pay its shareholders a dividend.
Valuation
Analysts frequently value the stock using discounted cash flow models. Target prices will vary depending on analysts' assumptions, and currently range from a low of $2.20 to a high of $10. Individual target prices provided by 11 firms in numerical order are as follows: $2.20, $4, two at $4.50, $4.70, $4.85, $4.90, $5, $5.50, $6.74, and $10. The average one-year target price is $5.17, implying there is 61 per cent upside potential from Friday's closing share price of $3.22.
Analysts' recommendations
The company is well covered by the Street. There have been 11 research reports issued on the company since the beginning of the year by the following firms in alphabetical order: Beacon Securities, Bloom Burton & Co., Canaccord Genuity, CIBC World Markets, Echelon Wealth Partners, National Bank Financial, Panmure Gordon & Co., Paradigm Capital, RBC Capital Markets, Scotia Capital, and TD Securities. There are 10 'buy' recommendations and one 'hold' recommendation. Revenues are anticipated to ramp over the next few years. The consensus revenue forecast is $30-million in 2016, $72-million in 2017, and $188-million in 2018. The Street is forecasting the company to report positive earnings per share by the year 2018.
Chart watch
Year-to-date, the stock price move has been uneventful and is down 4 per cent. However, month-to-date, the stock price has been strong, rallying 10 per cent. There is overhead resistance around $3.50, a level that it has failed to break above for any significant amount of time.
In terms of downside support, there is support around $3, which is near its 50-day moving average (at $2.93), as well as its 200-day moving average (at $2.94).
The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company's dividend policy, analysts' recommendations, and provides a brief technical analysis for a security to provide readers with more information.
If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue.
If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.
Securities screened are from the S&P/TSX composite index, the S&P/TSX Small Cap index, as well as Canadian small cap stocks outside of these indices that have a minimum market capitalization of $200-million.
A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.