Analysts Mixed On Brookfield

by: FP Trading Desk February 12, 2007 | about stocks: BAM / BPO    
  • Font Size:
  • Print
While Brookfield Asset Management Inc. (BAM) appears to be on a relentless acquisition spree, given its recent moves to take control of timber company Longview Fibre Co. (LFB), Australian construction and property business Multiplex Ltd. and U.S. mall owner The Mills Corp. (MLS), the company has also been achieving healthy financial results.

Last week, the conglomerate said fourth quarter profits rose to US$611-million, or US$1.51 a share, compared to US$151-million, or US36¢ a year earlier.

Brookfield also hiked its quarterly dividend 12.5% to 18¢ per share.

Despite these strong results, analysts remain mixed on prospects for Brookfield shares.

UBS analyst Andrew Kuske reiterated his $46 price target on the stock, which represents downside of roughly 8%.

While he does think the company is in a good position for long-term growth due to potential expansion in new areas of focus such as toll roads, pipelines, ports and rail roads, Mr. Kuske questions Brookfield’s competitive advantage versus existing industry players in these areas.

“In our view, BAM is in the early days of growing its promising asset management business,” he said in a research note.

While Mr. Kuske advises a wait-and-see approach, Desjardins Securities’ Michael Goldberg is far more bullish on Brookfield.

He has raised his price target on the stock to C$70 from C$59, representing upside of roughly 19% from current levels.

“BAM’s strong financial position and proven ability to bring investors together with attractive assets point to strong growth in assets under management,” Mr. Goldberg said in a research note, adding that he expects this progress will continue.

He also anticipates Brookfield’s acquisition frenzy will continue in 2007, noting that the company will receive at least $40-million in break fees if another bidder ends up with Mills Corp.

BAM 1-yr chart:

BAM 1-yr chart

Meanwhile, Raymond James has upped its target price on subsidiary Brookfield Properties Corp. (BPO) to $56 from $43.

This expected appreciation of roughly 21% for the stock, courtesy of analyst Gail Mifsud, is partly due to the company’s high-quality office portfolio, stable income stream due to limited lease roll-overs in the near term, and lower levels of capital expenditures and leasing costs, she said in a research note.

Ms. Mifsud also noted the positive momentum in the office market as an additional reason behind her “outperform” rating on Brookfield Properties shares.

BPO 1-yr chart:

BPO 1-yr chart

FP Trading Desk

About this author:
Become a Contributor Submit an Article

Related Articles

This article has 1 comment:

  •  
    Feb 12 06:46 PM
    BAM has terrific management that has compiled an envious track record of profitability. It is hard to bet against them.
    Reply | Link to Comment
More Comments on BAM »
More by FP Trading Desk
Investment Resources
Money Management
Research
Seeking Alpha provides these ads as a service to its leading contributors
Articles on related themes
Real Estate and REITs
Analyst Actions