Paw Patrol is a Canadian-made animated TV show for pre-schoolers about a team of dogs protecting the seaside town of Adventure Bay.The Globe and Mail
Inside the Market's roundup of some of today's key analyst actions.
Ahead of Spin Master Corp. (TOY-T) earnings release on March 7, Raymond James is positive on the stock.
Analyst Kenric Tyghe has kept his "outperform" rating on the stock but boosted his price target to $57 from $55. The median price target is $58, according to Zack's Investment Research.
"While we recognize the Toys "R" Us headwind (with management expecting some level of sales disruption to continue into 4Q17), we believe that the sell through of key products (Paw Patrol Life Size Tower, Paw Patrol Sea Patroller, Luvabella and Hatchimals CollEGGtibles, to name a few) support our above consensus revenue growth estimate of 31.1 per cent to $443.6-million. However, we believe that the incremental costs (Toys "R" Us headwind) of generating these revenues was lower than we are modelling (demand pull from online outweighed the headwind) and are therefore increasing both our EBITDA [earnings before interest, taxes, depreciation and amortization] and EPS [earnings per share] estimates to largely reflect lower than expected SG&A [selling, general and administrative] costs. Given Spin Master's impressive pipeline (as highlighted at the recent New York Toy Fair investor day, which we attended), recent Toy of The Year (TOTY) wins, and expected improved inventory management heading into the holiday season, we remain buyers of Spin Master," he said.
"Our new $57 target price is based on the average of our DCF [discounted cash flow] and EV [enterprise value]/EBITDA valuations, which applies a 13.0 times target multiple to our 2018E EBITDA. Our target multiple is at a premium to the peer average of 11.2 times. We believe the premium multiple is warranted given Spin Master's industry-leading growth profile."
**
Raymond James upgraded its rating on Whitecap Resources Inc. (WCP-T) as it has all the variables in place for a strong 2018.
"Although Canadian E&P [exploration and production] sentiment remains low as AECO [Alberta Energy Company] and heavy oil differentials languish, Canadian light oil prices are still showing strength at about C$70/bbl. For Canadian energy investors, there are very few light oil, high capital return operators where valuation still remains attractive. As the reserve report shows, there are a number of positive nuances that should help regain confidence with investors. Add in low debt and attractive valuation and the company has all the variables in place to be a top tier performing name for 2018," said analyst Jeremy McCrea.
He upgraded the company to "strong buy" from "outperform" and raised his price target to $12.50 from $12. The median target price is $13.
His updated sum-of-the-parts NAV [net asset value] is at $10.90. "With larger cap names typically using a lower WACC [weighted average cost of capital] (8 per cent versus our standard 10 per cent), the move in our NAV (up $0.50) has us moving our target up similarly."
**
Canaccord Genuity cut its price target on Laurentian Bank of Canada (LB-T) after it was the "only bank to miss earnings this quarter and the only bank we have made downside revisions to annual earnings thus far."
Analyst Scott Chan maintained his "speculative buy" rating but cut his price target to $57 from $58. The media is $62.
"This mainly reflects our lower NTM [next 12 months] estimate (i.e. from lower Other income, higher non-interest expenses, slightly offset by lower credit and rolling forward our valuation one quarter). Until their mortgage related issues are fully resolved, we believe this will continue to provide an overhang on the stock. With LB stock now trading below BVPS [book value of equity per share], we see limited downside from here," he said.
"We have lowered our F2018 and F2019 EPS estimates to $5.89 (from $6.02), and $6.15 (from $6.19). Our revised estimates mainly reflect lower Other income and higher non-interest expenses, slightly offset by better provisions. Overall, we now see challenging earnings traction this year, while forecasting resumption of more than 4 per cent EPS growth for F2019."
"Our $57 target price is based on an unchanged 9.6 times our NTM EPS estimate of $5.92 (from 5.98). Our target multiple represents a 20 per cent discount to the target multiple average of 12.0 times that Canaccord Genuity applies in valuing large Canadian banks."
Desjardins Capital Markets has maintained its "hold" rating and its $57 price target.
**
National Bank of Canada (NA-T) reported strong results in the latest quarter and Canaccord Genuity is raising its price target.
"NA delivered another strong quarter with at least double-digit adj. NI [net income] growth across all its segments. For the quarter, NA's 4 per cent EPS beat mainly reflected higher than expected trading revenue (up year over year from tough comp last year), slightly offset by increased provisions (mainly related to Credigy). We maintain our 'buy' rating and slightly increase our target price to $68 per share (from $67 per share), which mainly reflects rolling forward our valuation one quarter. Outside of the above-mentioned items, we view the quarter as pretty clean, and our annual EPS estimates remain relatively unchanged. Currently, NA trades at a P/E (F2019E) of 9.9 times, and represents a 7 per cent discount to its Big-6 average (versus historical discount of 10 per cent). We believe a narrower valuation gap is warranted with NA expectations of above average earnings growth relative to peers, aided by positive fundamentals in Quebec," said analyst Scott Chan.
He kept his "buy" rating and boosted his price target to $68 from $67. The median is $67.
"We have revised slightly lower our F2018 EPS estimate to $5.85 (from $5.93), while our F2019 EPS estimate remains unchanged at $6.28. Our current annual estimates reflect at least high single digit earnings growth."
"Our $68 target price is based on an unchanged 11.2 times P/E multiple applied to our NTM (Q3/18-Q2/19) EPS estimate of $6.12 (from $6.03). Our target multiple represents a 7-per-cent discount to the target multiple average of 12.0 times that Canaccord Genuity applies in valuing large Canadian banks."
Desjardins Capital Markets maintained its "hold" rating and its $65 price target.
**
Northview Apartment Real Estate Investment Trust (NVU.UN-T) reported solid fourth quarter results and that has led Desjardins Capital Markets to raise its price target on the REIT.
Northview's fourth quarter results "were slightly ahead of our forecast. The flow-through to our FFO [funds from operation] outlook and NAV [net asset value] are reflected in our $27 price target (was $26.50). The recent expansion of the development program into Ontario is notable given NVU's in-house capabilities and strong track record as a developer in other regions. We see NVU as an attractively valued multifamily name which provides investors with (1) an above-average distribution yield, and (2) upside to a potential recovery in resource-based markets," said analyst Michael Markidis.
"Same-property NOI [net operating income] increased 6.4 per cent, bringing the full-year growth rate to 4.3 per cent. Within the multifamily portfolio, gains were registered in all five geographic segments. Québec and Western Canada led the way at 11.4 per cent and 11.1 per cent, respectively; mid-single-digit increases were posted in northern Canada, Ontario and Atlantic Canada. The momentum should carry through to 2018; however, growth figures will likely moderate given (1) more challenging prior-year comparatives, and (2) uncertainty in selected markets in northern Alberta and northern B.C.," he said.
He kept his "buy" rating and raised his price target to $27 from $26.50.
"NVU trades at 18.4 times EBITDA and a 6 per cent premium to our NAV (versus the peer group averages of 22.3 times and a 1 per cent discount). Our $27 target continues to be based on a 15 to 20 per cent NAV premium, which equates to a reasonable about 12 times multiple to our 2019 FFO."
**
In other actions:
Barrick Gold (ABX-N;ABX-T) had its price target lowered by analysts at Citigroup Inc from US$13.00 to $11.00. They now have a "sell" rating on the stock.