UPDATE: BMO Capital Markets Upgrades Harry Winston Diamond to Outperform, Raises PT

In a report published Wednesday, BMO Capital Markets upgraded its rating on Harry Winston Diamond

from Market Perform to Outperform, and raised its price target from $13.00 to $16.00. BMO Capital noted, “On BMO Research's estimates, the acquisition is 26% NPV accretive and accretive to earnings from the point of acquisition. However, BMO notes that the limited amount of information available from BHP's historical results means that estimates are somewhat provisional, pending guidance from Harry Winston. This is important in relation to the debt assumed by Harry Winston to finance the transaction. On BMO's forecasts, gearing is definitely manageable (peaking at 40%), but if estimates are incorrect, then an equity raise may be required. However, comfort can be gained from the high levels of free cash flow generated by Ekati in recent years (e.g., US$308M in 2011).” Harry Winston Diamond closed on Tuesday at $13.15.