Inside the Market’s roundup of some of today’s key analyst actions
At least two analysts upgraded Mullen Group Ltd. (MTL-T) following the company’s second-quarter results, applauding revenue that declined less than expected, stronger margins and a strengthened balance sheet. The provider of transportation services to the energy industry also set a new monthly dividend of 3 cents.
Industrial Alliance Securities analyst Elias Foscolos moved his rating to “strong buy” from “buy” and increased his price target to $12.50 from $9.
“Yesterday’s financial results and conference call should drive home the point that MTL has transformed into a logistics company with a western Canadian focus,” commented Mr. Foscolos in a note. “The financial results and comments on the earnings call compel us to make major modifications to our financial projections for 2020 and beyond, which now project pre-pandemic financial performance.”
“We believe the new monthly dividend rate of $0.03 was set with a number of parameters in mind. The key parameters being flexibility for future increases and straddling the interest between rewarding shareholders now with a dividend and positioning for growth,” he added.
Elsewhere, RBC raised its price target to $10 from $8 and upgraded its rating to “outperform” from “sector perform.” BMO analyst John Gibson raised his target price to $11 from $8.50 and reiterated an “outperform” rating. Mr. Gibson summed up the second quarter results as “very strong, demonstrating the company’s defensive revenue streams, solid cost structure, and torque to an economic recovery.”
Raymond James analyst Daryl Swetlishoff raised his price target on Canfor Corp. (CFP-T) after second-quarter earnings that came in stronger than expected. He expects the stock to benefit from strong U.S. housing demand, which will help the company to continue to pay off debt.
“With lumber prices near historical highs, lumber producers have rallied off of March lows with Canfor up 148% (vs. the TSX +43%), although we highlight that the last time pricing was approaching $600/mfbm, Canfor was trading at $33/sh, more than double the current price. Our increasingly constructive view on building materials markets is fueled by better than expected US Housing demand, a robust repair and reno market as stay at home measures persist through the summer months, coupled by a lack of meaningful inventory as producers curbed supply following the outbreak of COVID-19 in 1Q20,” Mr. Swetlishoff said in a note.
A rally in lumber prices continued into July, thanks to tight North American building materials markets. “Although we have seen volatility in lumber futures this week, several days of limit down, followed by limit up on Thursday, channel checks indicate order files extending into late August, and cash prices are approaching $600/mfbm (for WSPF). We expect this to translate to very strong 3Q results for much of our building materials coverage with Canfor forecast to generate $190 mln EBITDA,” he added.
He raised his price target to $19.50 from $19 and reiterated an “outperform” rating.
Desjardins Securities analyst David Newman upgraded Premium Brands Holdings Corp. (PBH-T) to “buy” from “hold,” and raised his price target to $100 from $85. The action was attributed to the company’s impressive performance in its specialty floods division, a recovery in its premium foods distribution operations, and strong liquidity on its balance sheet. These positives “should prepare the company for another round of ambitious M&A while protecting against tail risks associated with COVID-19,” he said in a note.
Premium Brands reports earnings Aug. 6. “The recovery in PBH’s top-line revenue since the early days of the COVID-19 pandemic has been swift, but EBITDA has lagged. Based on the speed of the recovery, we have increased our 2Q20 top-line estimate to C$886m vs our previous C$784m and consensus of C$855m. Despite some near-term COVID-19-related drags on profitability, we are increasing our 2Q20 EBITDA estimate to C$47m (from C$40m; consensus of C$59m) on the back of a stronger top-line forecast and a progressive improvement in margins throughout the quarter,” Mr. Newman said in a note.
“PBH has raised ~C$322.5m of new capital, including C$34.5m from CPPIB. With available liquidity of >C$500m by our estimate, PBH has ample dry powder to execute its active acquisition strategy, with five deals at an advanced stage (combined revenue of >C $300m),” he addded.
At least 10 analysts raised their price targets on Twitter Inc. (TWTR-N), including JP Morgan hiking its target price to US$39 from $33 and UBS raising its price target to US$36 from $25.
The median price target on the Street is now US$36, up from $29 a month ago.
Twitter Inc. on Thursday reported its highest-ever yearly growth of daily users who can view ads, beating analysts’ estimates on usage and sending its shares up 4%. Twitter’s average monetizable daily active users increased 34% year over year to 186 million, above analysts’ estimate of 176 million, in a rise it said was primarily driven by external factors such as shelter-in-place requirements and increased conversation around the COVID-19 pandemic.
But the company missed Wall Street’s lowered expectations for quarterly revenue, as the coronavirus-spurred economic slowdown battered the company’s largely events-oriented digital ads business.
At least four research firms downgraded their ratings on Intel Corp. (INTC-Q), and several others also dropped their price targets, after the company revealed Thursday that its next generation of chips would be delayed and that it may take the unusual step in seeking a third-party manufacturer to make them.
Barclays downgraded Intel to “underweight” from “equal weight” and lowered its price target to US$48 from $58.
Bernstein downgraded Intel to “underperform”, Deutsche Bank dropped its rating to “hold” from “buy” and Roth Capital to “neutral” from “buy.”
The median analyst target is now US$60, down from $63.50 a month ago. There are now 12 buy ratings, 25 holds, and 7 sells, according to Refinitiv Eikon data.
Desjardins analyst Benoit Poirier started coverage of IBI Group Inc. (IBG-T) with a “buy” rating and a $8.25 stock target price.
“The company is a provider of architecture and engineering services as well as technological products and solutions. We like IBI for its expertise in urban development, which is supported by strong underlying trends such as urbanization and rising infrastructure needs. We see significant opportunity for value creation as IBI grows its Intelligence practice, improves the profitability of its US business and resumes M&A.”
In other analyst actions:
Kelt Exploration Ltd. (KEL-T): CIBC raises to outperformer from neutral and hikes target price to C$3.25 from C$2.25.
Linamar Corp. (LNR-T): RBC raises target price to C$43 from C$36.
Trisura Group (TSU-T): National Bank of Canada initiates with outperform rating; C$85 price target.
Cenovus Energy Inc. (CVE-T): TD Securities raises target price to C$8 from C$7.50.
First Majestic Silver Corp. (FR-T): TD Securities cuts to “hold” from “buy” but raises target to C$19.50 from C$16.50.
Winpak Ltd. (WPK-T): CIBC raises target price to C$45 from C$43. RBC raises target price to C$45 from C$44
Amazon.com Inc. (AMZN-Q): Credit Suisse raises price target to $3400 from $2760.
Xerox Holdings Corp. (XRX-N): JP Morgan cuts price target to $20 from $23 and downgrades rating to underweight from neutral.
With files from Reuters
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