Canaccord Financial Inc. (CF), Canada’s largest non-bank brokerage, fell the most in eight months after TD Securities analyst Graham Ryding cut his rating to hold from buy amid slumping commodities.
Canaccord slid 8.2 percent to C$5.86 at 12:01 p.m. in Toronto, its biggest intraday retreat since Aug. 9. The shares have declined 13 percent this year, compared with a 4 percent drop in the 237-company Standard & Poor’s/TSX Composite index.
“With the recent weakness in commodities and the Canadian materials sector, a key sector for Canaccord Financial’s Canadian capital markets activity, we now see a less compelling outlook,” Ryding said today in a note.
The S&P/TSX Materials Index (STMATR) has fallen 30 percent this year, and mining company takeovers and financings have stalled in Canada, according to data compiled by Bloomberg. Gold plunged the most since 1980 this week, with copper and oil prices also falling. A resource slump could hurt Canaccord’s Canadian activity since the Toronto-based firm is highly leveraged to materials-based deals, Ryding said.
Ryding reduced Canaccord’s revenue and earnings estimates for fiscal 2014 and 2015 because of “muted” brokerage activity. Ryding estimated adjusted earnings per share of 65 cents for Canaccord in 2014, down from his prior estimate of 85 cents, and 90 cents in 2015, less than his previous C$1 estimate.
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