SNC’s shares have plunged 40 per cent since June, but not a single one of the dozen or so analysts that follow the company has said ‘sell’
Every time MacNicol & Associates portfolio manager Ross Healy and his wife travel to Las Vegas, the couple follows one rule.
Anybody in the last two or three years that has had a buy recommendation out on SNC-Lavalin has got to be smoking something interesting SNC’s trouble began in August, when the company was caught in a diplomatic breakdown between Canada and Saudi Arabia, where it has significant operations. Another profit warning followed only two weeks later on Feb. 11, and the next day, it was reported that the company might face further fraud charges in connection to a Montreal bridge contract.At the beginning of June, all 13 analysts then covering the company had the equivalent of a buy recommendation on SNC, according to Bloomberg. Their target prices ran as high as $77.
Even Healy notes that with the shares trading at 1.5 times book value, SNC is now the cheapest it has been since 2000. “How much worse can it get when $30-$33 in SNC/share value is imbedded in hard assets?” said Sytchev, who has a buy rating on the stock. “The recommendation numbers are pretty close to pure marketing,” said Kecskes. “You can almost bet you’re never going to see unless these guys are going bankrupt.”
Norman Levine, a portfolio manager with Portfolio Management Corp., said he has stopped paying attention to recommendations and target prices altogether.
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