RBC Capital Markets raised its price target on three Canadian grocery store companies.

Analyst Irene Nattel increased her targets on Loblaw Cos. Ltd. (L.TO) to $267 from $234 (Outperform), George Weston Ltd. (WN.TO) to $316 from $284 (Outperform), and Metro Inc. (MRU.TO) to $112 from $98 (Sector Perform).

Nattel maintained a $61 price target and Sector Perform on Empire Co. Ltd. (EMP-A.TO).

"Against the backdrop of wobbly consumer confidence near 2009 and 2020 lows, probable deterioration in economic activity, the beginning of mortgage resets for five-year terms contracted at the beginning of the pandemic, and upside bias to inflation, we reiterate our view that valuations should be sustainable toward the high-end of long-term ranges," the analyst said in a note to clients.

"Our view on the sector remains 'stronger for longer', with the expectation that secular winners continue trading at the high-end of long-term ranges as investors continue to pay a premium for sustainable, defensive, ratable growth," Nattel said.

"Accordingly, we are raising our target multiples on Loblaw and Metro by one turn to 12x EBITDA and continue to favour Loblaw for its store base that skews to discount, its exposure to the drug retail segment, its industry-leading private label program and penetration, and the depth and scale of its loyalty program."

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)