Wednesday, January 10, 2007

Lower Dollar Seen as Boon for Great-West

The Globe and Mail, 10 January 2007

Buy Great-West Lifeco Inc. said Mario Mendonca, an analyst with Genuity Capital Markets, who previously rated it "hold."

Genuity has a 12-month share price target on Great-West of $38, compared with its previous target of $33.

"With the recent weakness in the Canadian dollar relative to the U.S. dollar, the pound and the euro, currency could add as much as $65-million in 2007, resulting in reported earnings per share growth of 15 per cent," Mr. Mendonca said. Genuity Capital increased its share profit forecast for Great-West to $2.43 in 2007 from its previous estimate of $2.37 a share. The share profit in 2008 is estimated at $2.68 a share.

"In the context of earnings momentum, dividend track record and defensive characteristics, we believe Great-West will migrate closer to its long-term premium," he said. "The stock currently trades at a 2-percent discount to Manulife Financial Corp., down from a 4-percent premium late in 2006."