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Loyalty reward company Aimia gets an analyst downgrade on a modest outlook

TORONTO – A CIBC World Markets analyst has downgraded loyalty rewards company Aimia (TSX:AIM) after the company’s fourth-quarter results came up a little short of expectations.

CIBC analyst Perry Caicco has downgraded Aimia to sector performer with a price target of $16.

The company’s gross billings for its fourth quarter of 2012 were down one per cent to $615.1 million from $621.1 million in the same quarter in 2011.

Caicco said of Aimia in his research note: “Modest outlook, modest upside.”

“Two looming issues have unsettled investors: the contract negotiations with CIBC and the upcoming ruling from the Competition Tribunal,” he said.

“Our take is that a deal with CIBC will eventually get done and any ruling from the tribunal is unlikely to have a major impact on operations.”

The federal Competition Tribunal has to make a decision on an application filed by the Commissioner of Competition against Visa Canada and MasterCard, citing allegedly anti-competitive rules imposed by them on merchants. This could affect Aimia due to its business relations with CIBC, a partner for its Aeroplan loyalty program.

In its fourth-quarter results, Aimia has reported increased revenue of $678.2 million, up from $560.7 million in the same quarter of 2011.

Net income was $57.3 million, up from a loss of $142.6 million in the fourth quarter of 2011. Earnings per share were 31 cents versus a loss of 74 cents last year.