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BMO Capital Markets upgrades CI Financial on attractive valuation

BMO Capital Markets analyst Tom MacKinnon has upgraded CI Financial Corp.'s stock to "outperform," citing attractive an valuation and good prospects for the company.

The analyst in a Feb. 16 research note said the company remains a leading operator in the Canadian mutual fund industry, where it has achieved scale and broad distribution relationships. He added that because of a better-than-expected EBITDA contribution from Sentry Investments, cost synergies that are ahead of schedule, and a solid share buyback program, the company will receive plenty of support going forward. CI Financial completed its acquisition of Sentry in October 2017.

MacKinnon believes that despite weak asset flows in the fourth quarter of 2017, the company has a clear strategy to stem outflows in the Sentry business by the end of 2018.

The analyst also increased his 2018 and 2019 EPS estimates on the company to $2.60 and $2.80. He also raised his price target to $32.