09:04 AM EDT, 05/07/2024 (MT Newswires) -- Canadian Tire Corp. Ltd. (CTC-A.TO) is likely to report results that reflect another challenging quarter, Desjardins said on Tuesday.

"We believe 1Q is expected to be another tough quarter, reflecting cautious consumer discretionary spending, limited dealer inventory replenishment, and higher net impairment losses and funding costs for Financial Services," analyst Chris Li said in a note to clients. "These pressures should be mitigated by margin management and cost control."

"We believe valuation reflects these headwinds, with declining interest rates, demand improvement, dealer restocking and/or FS partnership as potential catalysts in 2H," Li said.

The Canadian retailer is set to report Q1 results on May 9.

"We expect further share price volatility until earnings visibility improves," the analyst said.

Li maintained a Buy rating and $160 price target on Canadian Tire shares.

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