On Thursday, BMO Capital maintained its Market Perform rating on Canadian Tire Corp Ltd (CTC/A:CN) (OTC: CDNAF) with a steady stock price target of Cdn$152.00. The firm's analyst highlighted the integral role of Triangle credit cards in bolstering the Triangle loyalty program, which is a key component of Canadian Tire's business strategy.
The analyst expressed skepticism about the possibility of Canadian Tire completely selling its receivables while still maintaining influence over its credit card strategy. This scenario has been speculated by some investors, but the complexities involved make it a challenging proposition. The analyst suggested that a joint venture could be a more viable option, although potential partners have not been identified.
Canadian Tire is reportedly in search of a partner that is willing to be significantly involved and aligned with the company's goals. Still, finding such a partner could be difficult as some of the major Canadian banks, referred to as the "Big 6," are already engaged in multiple co-branded credit card and loyalty partnerships, which might limit their interest or ability to form a new alliance with Canadian Tire.
The analyst's remarks underscore the importance of the Triangle credit card program to Canadian Tire's overall loyalty strategy. The program's success is critical for the company, and any changes to its structure through partnerships or sell-offs could have significant implications for the business.
The ongoing considerations about the future of Canadian Tire's credit card receivables and loyalty program strategy will be an area to watch as the company explores its options. BMO Capital's reiteration of the Market Perform rating indicates a cautious outlook on the stock, maintaining the previously set price target without any adjustments.
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