Skip to main content
Canada’s most-awarded newsroom for a reason
Enjoy unlimited digital access
per week
for 24 weeks
Canada’s most-awarded newsroom for a reason
per week
for 24 weeks
// //

Inside the Market’s roundup of some of today’s key analyst actions

In the wake of stronger-than-expected third-quarter results, Scotia Capital analyst Patricia Baker upgraded Canadian Tire Corp. Ltd. (CTC.A-T) touting its “enhanced agility.”

On Thursday, the retailer reported adjusted earnings per share of $4.93, easily exceeding both Ms. Baker’s forecast of $3.34 and the consensus projection on the Street of $3.73.

Story continues below advertisement

“The quarter was marked by three very important trends: (1) a real retail-driven operating performance led by the core CTR division that looks to us sustainable; (2) good progress on operating expenses despite the challenges associated with operating with COVID restrictions and higher related costs; and (3) a good performance at CTFS which saw the division with improved ageing of accounts and an allowance rate even with that of Q2/F20, underscoring the fact CTFS can manage its credit card operations ably,” said Ms. Baker.

“CTC.A Triangle Rewards featured prominently in driving the solid performance in Q3, adding 400k new members, but equally important saw the return of 200k customers. We believe there is far more to come with Triangle, as we sense CTC.A is only just beginning to optimally leverage its capabilities in driving customer traffic. There is a marked change in tone and focus at CTC.A that provides us with heightened confidence that the improved trends evident in the retail operations are, in fact, sustainable and that we are at a point where we can expect consistency in operating performance.”

Moving her rating for its shares to “sector outperform” from “sector perform,” she hiked her target to $185 from $144. The current average on the Street is $150.60, according to Refinitiv data.

Several other equity analysts on the Street also hiked their target prices for Canadian Tire shares.

* Desjardins Securities' Chris Li sees upside to earnings forecast and valuations through the “the successful execution of sales growth and cost-reduction initiatives.” Keeping a “buy” rating for its shares, Mr. Li hiked his target to $170 from $155.

“While CTC has certainly benefited from stay-at-home, we believe it is successfully executing on initiatives (ie Triangle loyalty program, personalization, owned brands, product assortment, e-commerce, etc) that will further enhance its competitive position," he said.

* Canaccord Genuity’s Derek Dley to $160 from $145 with a “hold” rating.

Story continues below advertisement

“Canadian Tire noted that early winter weather is already driving positive trends for outerwear products at CTR and Mark’s locations in Western Canada, setting the banners up well for a strong Q4/20 performance," said Mr. Dley. “That said, we expect SportChek to remain challenged in the near term given that most of the store base is in malls, which continue to see lower foot traffic due to COVID-19. Within the CTFS business, the company saw credit card spend trends improve throughout the quarter, commenting that spend was essentially flat in September relative to last year, although again conceding this business is likely benefitting from ongoing subsidy and mortgage interest deferral programs. In our view, the improving trends across all segments coupled with a relatively clean inventory exiting the quarter leaves Canadian Tire well positioned to continue its momentum heading into Q4/20.”

* National Bank Financial’s Vishal Shreehar to $168 from $156 with an “outperform” recommendation.

* CIBC World Markets' Mark Petrie raised to $173 from $162 with an “outperformer” rating.


Citi analyst Prashant Rao is “becoming more constructive” on shares of Imperial Oil Ltd. (IMO-T), seeing “scope to enhance return of capital to shareholders.”

In a research note released Friday wrapping up earnings season for Canadian large-cap energy companies, Mr. Rao raised his target price for Imperial shares with an eye toward the company’s capital allocation update at its Investor Day event on Nov. 19.

Story continues below advertisement

“We expect some of the 3Q20 cost control factors to carry forward into next year, helping the company generate sufficient CFFO to amply cover its current dividend and grow excess cash,” he said.

After incorporating the company’s latest guidance as well as Citi’s latest commodity price assumptions, Mr. Rao trimmed his funds from operations per unit forecast for both the fourth quarter and fiscal 2021 to 32 cents and $3.69, respectively, from 56 cents and $3.96.

However, keeping a “neutral” rating for its shares, he increased his target by a loonie to $18 based on “slightly” higher long-term return on invested capital assumptions. The average target on the Street is $21.13.

“IMO’s strong balance sheet and ample liquidity should allow the company to maintain its dividends during this downturn,” said Mr. Rao. “After a significant pullback in IMO’s stock price, current risks/rewards appear to be balanced.”

Though he also lowered his FFO projections for Imperial’s peers, he maintained his target prices for their stocks. They are:

  • Cenovus Energy Inc. (CVE-T, “buy”) at $8. Average: $7.25.
  • Husky Energy Inc. (HSE-T, “neutral”) at $4. Average: $4.51.
  • Suncor Energy Inc. (SU-T, “neutral”) at $16. Average: $24.01.


Story continues below advertisement

Even though DIRTT Environmental Solutions Ltd. (DRT-T, DRTT-Q) exceeded expectations with its third-quarter results, Industrial Alliance Securities analyst Neil Linsdell downgraded its stock on Friday, citing “more muted” short-term expectations.

After the bell on Wednesday, the Calgary-based company reported revenue of $46.2-million, down 29 per cent year-over-year but up 9 per cent from the second quarter and above the projections of both Mr. Linsdell and the Street ($42.8-million and $43-million, respectively). Earnings per share slid to a 2-cent loss from a 7-cent profit a year ago, matching the analyst’s estimate and a penny below the consensus.

“Average daily order entries in October were consistent with year-to-date performance, however, a lack of meaningful projects for workspace redesigns has pushed us to reduce our expectations over the next year,” said Mr. Linsdell. “We are now more inclined to expect delays in clients committing to any significant changes as the world waits to see if/how a vaccine will enable a return to business as usual.”

“Over the longer term, we do still expect a post-COVID-19 environment that is favourable to DIRTT’s solutions, including flexible and quickly adjustable workspace designs and offsite construction reducing onsite labour needs. We also expect an increased focus on preparedness in the healthcare industry, which might further favour DIRTT’s modular concept. Additionally, we could see a lot of other companies re-evaluating the high-density, open-concept work environment, and forcing renovations.”

Moving the stock to “hold” from “speculative buy,” the analyst also lowered his target price for DIRTT shares to $2 from $2.80. The average is $2.64.

“Uncertainty in 2020 will likely flow through at least the first half of 2021 as clients and potential clients continue to delay significant commitments to large projects,” he said. " While we continue to expect steady improvements from DIRTT over the next couple of years, we have lowered our short-term expectations and have therefore reduced our rating."

Story continues below advertisement


Citing a “more constructive” outlook following “solid” quarterly results, Raymond James analyst Bryan Fast upgraded Cervus Equipment Corp. (CERV-T) to “outperform” from “market perform.”

Late Wednesday, the Calgary-based company reported adjusted earnings per share for the third quarter of 54 cents, exceeding the 35-cent projection of both Mr. Fast and the Street.

“The story has been further de-risked by recent events including the reduction of used Ag sector inventories (now at manageable levels), a dividend cut (announced last quarter) and an improving outlook for Cervus' heaviest weighted segment (Ag),” he said. “We believe all this leaves investors with a more favourable risk-return set up for Cervus. Further, with the recent go-private announcement for Ag sector pure-play Rocky Mountain investors are left with Cervus as one of the few remaining ways to gain exposure to the sector. This transaction also provides a valuation floor for Cervus shares, which are currently trading at roughly the same multiple of BV that is being offered for RME.”

Mr. Fast hiked his target to $12 from $9. The average on the Street is $10.68.


Story continues below advertisement

BCE Inc. (BCE-T) is “well positioned for a rest” in 2021, said RBC Dominion Securities analyst Drew McReynolds following Thursday’s release of in-line third-quarter financial results that “showed notable sequential improvement.”

“We believe BCE is well positioned to be a ‘safe haven’ for investors reflecting an attractive dividend yield, a high degree of liquidity and unmatched scale within the Canadian telecom industry to absorb COVID-19 impacts,” he said. “Not unlike other operators, BCE is not immune to near-term wireless ARPU pressure, a contracting business market and double-digit declines in advertising spending. Nevertheless, we believe the migration to unlimited plans/EIPs, sustained FTTH [fiber-to-the-home] investment and the realization of additional operating efficiencies that leverage a scale advantage position BCE for a “reset” in 2021E that can support continued dividend growth.”

Mr. McReynolds said BCE has seen its competitive position strengthening with “steady” FTTH expansion.

“The positive surprise in Q3/20 were retail Internet net additions of 63k (versus our 47k estimate, 58k in Q3/19 and 46k for the cablecos in Eastern Canada) driven by steady FTTH expansion that has reached 56-per-cent coverage (5.5 million premises passed, up 140k in Q3/20) and accelerated wireless home Internet deployment approaching 50 per cent of the targeted footprint of 1.0 million,” the analyst said. “Despite COVID-19-related headwind and uncertainty: (i) wireline revenues remain resilient down 0.8 per cent year-over-year (versus down 1.0 per cent in Q2/20) with residential revenues up year-over-year; (ii) Internet revenues increased 10 per cent year-over-year (pricing, tier migration); and (iii) wireline retail net additions were 16k, up 22k year-over-year and representing the second quarter of positive retail net additions over the past five years.”

Keeping a “sector perform” rating, Mr. McReynolds trimmed his target for BCE shares to $58 from $59 after changes to his working capital assumptions. The average on the Street is $59.90.


Ensign Energy Services Inc. (ESI-T) “weak” stock performance has “likely run its course,” according to Raymond James analyst Andrew Bradford.

Though its third-quarter results fell short of his expectations, he raised his rating for its shares to “market perform” from “underperform.”

“ESI shares have lost considerable ground relative to other North American drillers over the last 30-days and year-to-date,” he said. “We suspect the market has internalized much of the ‘news’ or analysis that drove this under performance.”

His target for Ensign shares slid to 45 cents from 55 cents, which falls short of the 78-cent consensus.


After stronger-than-expected third-quarter results, Desjardins Securities analyst Benoit Poirier encourages investors to buy shares of Stantec Inc. (STN-T).

On Wednesday after the bell, the Edmonton-based engineering services company reported adjusted EBITDA, which Mr. Poirier called investors' main focus, of $158-million, easily exceeding his $138-million forecast as well as the consensus estimate of $154-million. Adjusted earnings per share of 62 cents also beat projections (56 cents and 53 cents, respectively.).

“For 2020, management expects adjusted EPS (was $2.02) to be flat vs 2019—in line with previous Street expectations,” he said. “While still early, management provided an outlook for 2021, as it expects the business to generate solid earnings in 2021. Ultimately, while STN’s low- to mid-single-digit organic growth outlook for 2021 is mostly in line with consensus (we estimated 4.1 per cent), we note that the adjusted EBITDA range provided (14.5–15.5 per cent) was somewhat lower than consensus (15.6 per cent) and our forecast (15.9 per cent).”

Mr. Poirier suspects some investors were disappointed by the EBITDA margin guidance, however he said Stantec now sits “well-positioned to beat these revised expectations as management accelerates its M&A strategy and executes a second cost-optimization phase in early 2021, and given upcoming infrastructure stimulus funding in the U.S. (not in the current 2021 outlook).”

“STN ended 3Q with net debt to EBITDA of 0.8 times, which offers plenty of opportunities to return cash to shareholders through share buybacks while continuing its M&A strategy,” he said. “Management indicated that M&A discussions have restarted over the past 4–6 weeks with existing and new targets. STN has a robust pipeline of M&A transactions across key geographies.”

Keeping a “buy” rating for Stantec shares, Mr. Poirier trimmed his target to $47 from $51 after slight tweaks to his 2020 and 2021 expectations. The average is $46.45.

“We believe STN is well-positioned to accelerate its M&A strategy with its robust balance sheet to unlock value for shareholders,” he said.

Elsewhere, Canaccord Genuity analyst Yuri Lynk cut his target for to $49 from $51 with a “buy” rating, while ATB Capital Markets' Chris Murray lowered his target to $49 from $51 with an “outperform” rating.

“We view results as relatively in-line with our expectations, with a lower than expected organic retraction in net revenue offset by solid margin performance. Guidance for 2020 and 2021 was weaker than we had anticipated with the Company calling out gross margin pressures tied to the mix of projects and higher marketing and admin costs driving the 2021 margin profile below typical performance. While management indicated that this is not a structural issue, and margins are expected to return to their industry leading levels, shares were down 3.6 per cent on a day when broader markets rallied.”


Pointing to a potential acceleration in M&A activity, Raymond James analyst David Quezada raised his rating for Polaris Infrastructure Inc. (PIF-T) to “strong buy” from “outperform” after the release of third-quarter result on Thursday that he deemed a “non-event.”

“On the 3Q20 call, management highlighted an expectation of increased activity on the M&A front into 1Q21,” he said. “While describing the 10 MW hydro project as a ‘single’ in baseball terms, CEO Marc Murnaghan noted some potential opportunities that could be classified as ‘doubles’ or ‘triples.’ We believe this reflects optimism as to a potential acceleration in diversification activities going forward as the company targets larger renewable assets. PIF maintains $58-million in cash and has a net debt to EBITDA of just 2.1 times which, in addition to annual FCF of $29-million and strong relationships with lenders, positions the company to undertake material M&A with resulting diversification driving an increase to the company’s trading multiple. Importantly, PIF’s recent M&A has come on very attractive terms, in our view, creating material value for shareholders; we believe these potential transactions will represent significant catalysts.”

Mr. Quezada maintained a $25 target. The average on the Street is $26.10.

“We are upgrading Polaris to Strong Buy reflecting: 1) A valuation that has materially lagged peers despite PIF’s pure-play renewable status; 2) potential for accelerated M&A activity supporting improved diversification and an increased trading multiple; and 3) strong cash flow with a FCF yield of 12 per cent,” he said.


Primo Water Corp. (PRMW-N, PRMW-T) is “well-positioned to deliver the consistency that investors have long been waiting for,” said CIBC World Markets analyst Mark Petrie, raising his rating to “outperformer” from “neutral.”

“The acquisition of the legacy Primo business has added defensiveness and growth through the pandemic, while synergy capture has been swift and material,” he said. “This diversification could not have been better timed and has resulted in a fundamentally stronger portfolio. Along with excellent performance on cost control and efficiency, we see EBITDA downside as limited, almost regardless of conditions.”

Mr. Petrie increased his target to US$17 from US$16. The average is US$17.36.


In other analyst actions:

* Seeing its proposal to jointly acquire British insurer RSA Insurance Group PLC for the equivalent of $12.4-billion in cash as having “a good probability of closing,” CIBC World Market analyst Paul Holden raised his rating for Intact Financial Corp. (IFC-T) to “outperformer” from “neutral,” seeing “significant financial and strategic benefits.” His target slid to $160 from $170. The average on the Street is $162.58.

* Cormark Securities analyst Amir Arif upgraded Paramount Resources Ltd. (POU-T) to “buy” from “market perform” with a $4 target, up from $2.75 and above the $3 consensus.

* Raymond James analyst David Quezada initiated coverage of Greenlane Renewables Inc. (GRN-X) with a “strong buy” rating and $1.25 target, falling 3 cents below the consensus.

“Our bullish stance is a function of: 1) Substantial industry growth in RNG driven by a steep adoption curve similar to the early days of wind and solar power as gas utilities are pressured to decarbonize; 2) the company’s strong competitive positioning with three key RNG upgrading technologies; 3) sales momentum via $38-million in large orders year-to-date; and 4) a valuation that has lagged clean tech peers in recent months despite the aforementioned sales wins,” he said.

* RBC Dominion Securities analyst Paul Treiber raised his target for Open Text Corp. (OTEX-Q, OTEX-T) to US$53 from US$50 with an “outperform” rating (unchanged). The average on the Street is US$52.18.

“OpenText reported Q1 results well above expectations, with the upside coming from all revenue lines,” he said. “Carbonite integration ahead of schedule, margin expansion and high FCF conversion affirm OpenText’s ability to integrate and generate high returns from acquisitions. The company is augmenting its value creation playbook with a share repurchase program.”

* Raymond James analyst Andrew Bradford trimmed his target for Enerflex Ltd. (EFX-T) to $8.50 from $9, keeping an “outperform” rating. The average is $9.18.

“Our 3-month ago view is essentially unchanged today,” he said. " We see an attractive long-term value proposition, though very little indication of catalysts emerging on the horizon. On the surface, Enerflex is priced at 5.2 times our 2021 estimate of EBITDA - which is more than two turns below the average multiple for more normalized years (7.7 times), let alone cyclically suppressed years like 2021. However, the value becomes more pronounced when we consider the likelihood that Engineered Systems is probably not contributing to EBITDA today - and probably won’t be until mid-next year. In other words, the upside/downside risk profile is beginning to tilt significantly to the upside."

* Scotia Capital analyst Meny Grauman raised his target for Sun Life Financial Inc. (SLF-T) to $64 from $61 with a “sector perform” rating, while Canaccord Genuity’s Scott Chan increased his target to $61 from $58 with a “hold” recommendation. The average on the Street is $60.92.

* Scotia Capital’s Ropert Hope lowered his target for Pembina Pipeline Corp. (PPL-T) to $37 from $42. The average is $39.36.

“Pembina’s premium to its midstream peers has contracted in recent months," said Mr. Hope. "Some are concerned about a slowing growth profile (which we expect to see for the space in general), re-contracting risk on certain pipes (which we reflect in our model) and concerns about leverage (which we think are overblown). We believe Pembina deserves a premium to its midstream peers, though we bring down the size of the premium in our valuation. As such, our target price moves down to $37.”

* JP Morgan analyst Tien-Tsin Huang raised its target for Lightspeed POS Inc. (LSPD-T) to $57 from $44, exceeding the $54.96 average. He kept a “neutral” rating.

* RBC Dominion Securities analyst Paul Quinn raised his target for Norbord Inc. (OSB-T) to $60 from $57 with an “outperform” rating, while Raymond James' Daryl Swetlishoff increased his target to $60 from $56 with a “strong buy” rating. The current average is $53.45.

“Norbord remains a top pick reflecting demonstrated operating/cost leadership, the margin growth/stabilization strategy and a focus on corporate resilience,” said Mr. Swetlishoff. “Norbord doubled the quarterly dividend to $0.60/share (2.5-per-cent yield) a conservative increase (relative to record earnings) however, consistent with historic ranges and the stated goal of maintaining enhanced financial flexibility. Based on our forecast for continued very strong earnings we highlight high potential for further dividend increases as macro and seasonal uncertainty abates. Norbord is an excellent derivative play to capitalize on the bullish US housing market outlook. We also highlight Norbord’s focus on improved communication surrounding strong ESG credentials as a potential catalyst for share price appreciation. Reduced net debt prompts us to hike our target by $4 to $60/share; compelling value in the shares backstops our Strong Buy rating and we encourage investors to add to positions.”

* Barclays analyst Adrienne Yih raised her target for shares of Canada Goose Holdings Inc. (GOOS-N, GOOS-T) to US$37 from US$32 with an “overweight” rating, while Credit Suisse’s Michael Binetti raised his target to $49 (Canadian) from $40 with an “outperform” recommendation. CIBC World Markets' Mark Petrie raised his target to $56 (Canadian) from $42 with an “outperformer” rating. The average is US$31.57.

“Canada Goose’s highly seasonal business, geographic diversity, and leverage to tourism make year-to-date trends difficult to extrapolate, but we continue to believe the company is navigating the crisis responsibly and is set up to thrive over time,” said Mr. Petrie. “30-per-cent-plus growth in domestic China, accelerating e-commerce, flexible manufacturing, resilient gross margins despite idling capacity, and having functional outdoor products during COVID all support the important H2 period, and beyond. Our forecasts increase slightly, and increasing our target multiple (to acknowledge untapped earnings potential and upside as the market recovers) drives our price target.”

* Scotia’s George Doumet hiked his target for Jamieson Wellness Inc. (JWEL-T) to $42 from $37 with a “sector outperform” rating, while National Bank Financial’s Endri Leno raised his target to $42.75 from $41.50 with an “outperform” rating. The average is $40.41.

* Scotia’s Paul Steep cut his Kinaxis Inc. (KXS-T, “sector outperform”) target to $241 from $252. The average is $238.18.

“Our view is that Kinaxis delivered solid performance in Q3 with ongoing year-over-year growth in subscription revenues, with the beat driven by stronger-than expected term licenses and professional services, which resulted in upside to adjusted EBITDA and EPS,” he said. “We continue to see Kinaxis as unique within the Canadian software universe.”

* National Bank Financial’s Vishal Shreedhar raised his target for Premium Brands Holdings Corp. (PBH-T) to $113 from $106 with an “outperform” recommendation, while Scotia Capital’s George Doumet moved his target to $122 from $120 with a “sector outperform” rating.

“PBH reported Q3 results that handily beat expectations and bested our (Street-high) revenue and adj. EBITDA estimates by 4 per cent to 5 per cent,” said Mr. Doumet. “Top-line results were solid across the board, but the star of the quarter was higher margins driven by leverage to the top line and, to a lesser extent, price actions taken in the face of a reduction of input costs. Lastly, with $700-million of dry powder, we expect M&A to be a significant contributor to earnings over the next 12 months, with an estimated potential upside of 20-25 per cent on our current EBITDA estimates.”

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies