Inside the Market's roundup of some of today's key analyst actions
Desjardins Capital Markets sees TransForce Inc.'s (TFI-T) announcement last week that it was acquiring the North American truckload operations of XPO Logistics for $558-million (U.S.), "as a very good transaction for TFI, in light of the attractive price tag (4.85-times enterprise value (EV) to earnings before interest, taxes, depreciation and amoritization (EBITDA,) for a well-run business (EBITDA margin of about 21 per cent versus 13.4 per cent for TFI's TL operations).
In addition, we believe this deal is the initial step toward a probable spin-off of TFI's truckload assets in the long term."
As a result, Desjardins kept its "buy" rating on Transforce but increased its target price to $34 (Canadian) from $31.
"Our new target is based on the average of three valuation methods: (1) a 14-times multiple on our 2018 adjusted Earnings per share (EPS) estimate, (2) a 7.0-times EV/
EBITDA multiple on our 2018 EBITDA estimate, and (3) a discounted cash flow (DCF) value of $32.03 (was $29.54).
CIBC upgraded TransForce to "sector outperformer" from "sector performer" due to the acquisition. CIBC also boosted its price target to $35 from $28.50.
"We view the acquisition of XPO's North American TL operations as a positive given the earnings accretion and strategic benefits," CIBC said in a note.
CIBC says NuVista Energy Ltd.'s (NVA-T) recent closing of its equity financing of $104-million means the company can increase spending in 2016 and 2017 "ahead of new plant capacity ramp-up starting in 2018."
"Management has also outlined a 5-year growth plan, targeting over 60 MBoe/d of production in 2021," said analyst Adam Gill.
As a result, CIBC has boosted its price target on the stock to $8 from $7 and maintained its "sector outperformer" rating.
"Our near-term production outlook does not change materially in light of the ramp-up in spending. That said, we do see a 16 per cent lift to our Q4/17 estimates and see a 17 per cent improvement to our 2018 outlook. This delay for the reward of higher production levels could hamper the stock in the near term, but we do believe that the long-term approach of management will reward investors that wait for the fruits of this higher spending come late 2017," he said.
Desjardins Capital Markets resumed coverage of the stock with a target $8.50 and a "buy" rating.
Last week as Superior Plus Corp. (SPB-T) reported its third quarter results, "the company reported EBITDA from operations (excluding hedging impact) of $34.8-million versus our forecast of $30.1-million. Looking ahead to 2017, we believe there is little downside risk and potential for significant upside to our forecasts given the financial performance during the year, management's 2016 and 2017 guidance and the high likelihood for new acquisitions," said analyst Raveel Afzaal from Canaccord Genuity.
"In Q3/16, the company settled its hedging contracts for 2016 and 2017, which is the primary driver of the upward revision to our estimates and our target price increasing from $13.00 per share to $13.25 per share. Our target price continues to imply an EV/2017 EBITDA multiple of about 9.0-times and dividend yield of 5.4 per cent. The company is currently trading at a dividend yield of 6.1 per cent, which is well above its peer group average of 5.0 per cent."
He maintained his "buy" rating on the stock.
CIBC increased its price target to $12.25 from $11.50 on the stock and maintained its "sector performer" rating.
"We are revising our 2016 and 2017 estimates higher to reflect impact of foreign exchange (FX) hedge settlement, lower interest expense and modestly better outlook for specialty chemicals in 2017. We increase our 2016 EBITDA estimate to $277-million from $267-million as we actualize Q3/16 results. Our 2017 estimate is increased to $260-million from $252-million (we now assume Specialty Chemicals to be flat vs. down Y/Y; Energy Services essentially unchanged)," said analyst Jacob Bout.
Raymond James also boosted its price target on Superior Plus, to $14 from $12.50 and kept its "outperform" rating.
Mackie Research Captial Corp. says late last week that Noblis Health Corp. (NHC-T) "announced that it had obtained a new $82.5-million credit facility, allowing it to close the previously announced acquisition of Arizona Vascular," said analyst Russell Stanley.
"Arizona produced F2015 revenue of $20-million, with EBITDA of $7.9-million, representing a healthy margin of 40 per cent. The purchase price represents a 2.8-times EBITDA multiple," the analyst said.
"We view the news positively, as the stock's recent decline likely reflected concerns around the transaction being completed."
Mackie reiterated its "buy" recommendation and increased its 12-month target price to $7.75 per share from $7 per share.
Third quarter results for Colliers International Group Inc. (CGI-T; CIGI-Q) missed consensus amid "a global commercial real estate (CRE) markets not yet inspiring confidence beyond the fourth quarter of 2016, we believe it is prudent to lower our target price on the stock to $43 (U.S.) from $48," said Raymond James analyst Frederic Bastien.
"With the low interest rate environment continuing to drive attractive yields on CRE assets, lending practices remaining favourable, and foreign and institutional capital still chasing a home, we believe Colliers' prospects remain solid for 2017. That said, 3Q16 was a reminder that in an uncertain global world, things can turn on a dime," the analyst said.
He maintained his "outperform" rating on the stock.
CIBC also noted that "Colliers continues to be impacted by softness in commercial real estate volumes and uncertainty surrounding Brexit."
As a result, CIBC cut its price target on the stock to $40 from $43 but maintained its "sector performer" rating.
Goldman Sachs lowered its rating on Exxon Mobil (XOM-N) to "neutral" from "buy" on Monday.
It also removed the company from its Americas conviction buy list, citing a lack of catalysts to drive the oil firm's shares higher.
Meanwhile, Goldman upgraded its rating on shares of rival Chevron (CVX-N) to "buy" from "neutral" and added it to its conviction buy list.
Late last week, Exxon Mobil reported third-quarter sales that came in lower that expected.
CJS Securities initiated coverage on Howard Hughes Corp. (HHC-N) with a rating of "market outperform."
Stifel downgraded EV Energy Partners (EVEP-Q) to "hold" from "buy."
Goldman Sachs upgraded Range Resources (RRC-N) to "conviction buy" from "neutral" with a price target of $47.
UBS downgraded Methanex (MEOH-Q) to "sell" from "neutral."