Inside the Market’s roundup of some of today’s key analyst actions
Though he viewed Manulife Financial Corp.'s (MFC-T) third-quarter financial results as “solid,” Scotia Capital Meny Grauman thinks a series of investor concerns will continue to weigh on its stock and expects further multiple expansion will be limited.
That led Mr. Grauman to downgrade Manulife shares to “sector perform” from “sector outperform” on Friday.
After market close on Wednesday, the Toronto-based firm reported core earnings per share of 73 cents, exceeding the consensus projection on the Street by a penny and Mr. Grauman’s estimate by 3 cents. Though it was drop of 4 per cent from the same period a year ago, he called the result “impressive” given the absence of $100-million in core investment games and ongoing “challenges” related to the COVID-19 pandemic.
“The firm delivered a beat on the back of better-than-expected Strain and 9-per-cent year-over-year growth in Expected Profit, and on a segmented basis performance in Asia, the U.S., and Asset Management all exceeded expectations,” he said. "In addition, investment-related experience in the ALDA book was positive, and the firm entered into another reinsurance agreement that unlocked capital and delivered a gain on sale that offset the annual assumption review.
“And yet despite all of these incremental positives that continue to highlight the diversity and resiliency of MFC’s earnings streams, the shares underperformed on earnings day, and we believe this underperformance will persist as investors continue to be more focused on tail risks than core earnings momentum. These risks include the value of the firm’s legacy exposure and the risk that MFC will have to reduce its ALDA return assumptions even in the face of Q3′s positive result. Although the potential for rising long rates is a potential catalyst, we believe that yields would have to go much higher before these issues go away.”
Mr. Grauman trimmed his target for Manulife shares to $23 from $25. The average on the Street is $24.21, according to Refinitiv data.
Elsewhere, Desjardins Securities' Doug Young increased his target to $25 from $23 with a “buy” rating.
Though it reported “very healthy” same-store sales growth of 6.9 per cent in the third quarter, BMO Nesbitt Burns analyst Peter Sklar said Loblaw Companies Ltd. (L-T) did not enjoy strong earnings growth from the “benefit of this excessive top line,” seeing EBITDA grow just 2 per cent.
“With continuing similar levels of COVID-19 costs, we are forecasting that Loblaw will only be able to generate modest EBITDA growth in future quarters,” said Mr. Sklar, prompting him to downgrade the retailer to “market perform” from “outperform” with a $71 target, down from $86. The average is $79.60.
“As well, with the prospect of vaccines becoming available in 2021, we believe investors will be less focused on the stability offered by grocery stocks such as Loblaw,” he said.
Elsewhere, CIBC’s Mark Petrie lowered his target to $82 from $85 with an “outperformer” rating.
“Q3 results came in nicely ahead of our cautious expectations, though the outlook remains uncertain given pandemic-driven volatility and costs,” said Mr. Petrie. “The lack of earnings leverage year-to-date has led to a material underperformance for L vs. peers. We do expect this to reverse as conditions normalize, but the company will also continue to invest in longer-term initiatives with less certain paybacks.”
On Thursday before the bell, Brookfield reported core funds from operation of 53 US cents, excluding 8 US cents in distribution gains, easily exceeding both Mr. Katz’s 42-US-cent projection and the 48-US-cent consensus on the Street.
“We come away from BAM’s 3Q call: 1) bit more encouraged around already robust NNA potential; 2) relatedly, still foresee significant scaling in legacy footprint, with flagship/successor funds back in the market through ’21, along with natural adjacencies such as Impact and Insurance; 3) with a high sustained FRE [fee-related earnings] margin outlook, despite ongoing investment spending; and, 4) see bit of pick-up in realization activity, which will help bolster BVPS [book value per share] growth given nominal yield,” he said.
Maintaining a “buy” recommendation, Mr. Katz raised his target for Brookfield shares to US$45 from US$41. The average is US$44.59.
“We believe BAM remains in a strong FRE growth cycle. Following the recent reinsurance transaction, we see more compelling risk/reward,” he said.
Others increasing their targets included:
* Canaccord Genuity’s Mark Rothschild to US$48 from US$42.50 with a “buy”
“Brookfield Asset Management Inc. (BAM) reported strong growth in FFO per share, largely from some of its more volatile business lines,” said Mr. Rothschild. "Exceptionally strong performance from Norbord and significant FFO from ‘cash and financial assets’ were the key drivers, and were supported by rising management fees. The company remains active in growing its management fees and anticipates launching fundraising for several new flagship funds in 2021. Combined with continued growth at most of its large subsidiaries and various new business strategies, we believe Brookfield is well positioned to grow cash flow considerably over the next few years.
* CIBC’s Dean Wilkinson to US$46 from US$44 with an “outperformer”
* TD’s Cherilyn Radbourne to US$50 from US$46 with a “action list buy”
* BMO Nesbitt Burns' Sohrab Movahedi to US$45 from US$43.50 with an “outperform”
“We view BAM shares as attractive at current valuations (absolute and relative),” said Mr. Movahedi.
* JP Morgan’s Kenneth Worthington to a Street-high US$53 from US$51 with an “overweight”
In the wake of Thursday’s release of better-than-anticipated third-quarter financial results, a pair of analysts upgraded Intertape Polymer Group Inc. (ITP-T).
The Montreal-based packaging products and systems company reported revenue of $323-million, up 10 per cent year-over-year on increased e-commerce contributions and ahead of the Street’s $297-million forecast. Adjusted EBITDA of $64.5-million also easily topped the consensus ($41.4-million).
CIBC World Markets analyst Scott Fromson raised his rating to “outperformer” from “neutral” with a $30 target, jumping from $16. The average is $22.38.
“ITP’s massive Q3/20 beat was driven by e-commerce products, notably water-activated tapes and protective packaging," said Mr. Fromson. “Simply put, e-commerce is a much larger, more sustainable revenue driver than we had previously thought. ITP doesn’t break down end-market or product exposure; we estimate e-commerce currently makes up 20-30 per cent of revenues, growing at a 15-20-per-cent rate, well above the 10-per-cent consolidated Q3/20 revenue growth rate. We expect the e-commerce tailwind will persist beyond FY/21, though growth will moderate and margins will come in a bit as supply/demand for ITP’s products normalizes. ITP is a huge beneficiary of the ‘work/stay-at-home’ investment theme - the pandemic-accelerated shift to more online shopping represents a fundamental change to ITP’s strategic positioning.”
Meanwhile, National Bank’s Zachary Evershed to “outperform” from “sector perform” with a $22.50 target, up from $17.50.
A group of other analysts raised their target prices for Intertape shares, including:
* Industrial Alliance’s Neil Linsdell to $26 from $18 with a “buy” rating
“After initial disruptions earlier in the year related to COVID-19, including destocking at distributors, ITP reacted to this crisis by further optimising operations in order to both protect profitability in the short term while also preparing for possible subsequent waves of lockdowns or economic disruption," he said. "This prudence, combined with years of investments in efficiency improvements, and a buildout over several years of e-commerce products and solutions, paid off significantly in Q3. The Company now stands poised to benefit from the structural shift to e-commerce and a robust building construction environment. As the Company uses excess cashflow to reduce its debt level, while also further investing in building out more e-commerce capacity, and increasing its dividend, investors should be well positioned to reap the benefits of their patience”
* Scotia Capital’s Michael Doumet to $32.50 from $20 with a “sector outperform” rating
“Q3 was transformational in every sense of the word,” said Mr. Doumet.
* TD Securities' Daryl Young to $24 from $18 with a “buy” rating
* BMO’s Stephen MacLeod to $29 from $18 with an “outperform” rating
“We continue to like ITP’s e-commerce exposure, which positions the company well to benefit from a structural shift in consumer buying patterns. We have increased our estimates and target, and see a path to even further multiple expansion,” said Mr. MacLeod.
After an unexpected third-quarter earnings beat, Raymond James analyst Andrew Bradford upgrades CES Energy Solutions Corp. (CEU-T) to “strong buy” from an “outperform” recommendation, expecting the stock to see gains on Friday morning and viewing its current price “as an attractive entry point for a survivor in the Canadian oilfield.”
After the bell on Thursday, the Calgary-based company reported headline EBITDA of $18-million, or $12-million without wage subsidies. That exceeded the $9-million forecast on the Street, leading Mr. Bradford to predict upward financial estimate and target price revisions.
He raised his 2021 EBITA projection to $113-million from $84-million.
“CES had a big jump in US drilling fluid market share to 17.4 per cent - from 13.6 per cent in 2Q and 14.9 per cent in 3Q,” said Mr. Bradford. "This sets an all time high for market share in the U.S. and drives part of the lift in our estimates. CES has steadily marched market share higher since entering the US market and on the rare occasions that its market share has slipped in a quarter, it has quickly been recovered. The high water mark in 3Q should be viewed as a starting point to further market share gains.
“CES ultimately recovered just over $150-million in working capital in just two quarters of Covid downturn. We fully expect CEU will reinvest in working capital again as its sales rise over the coming months, but should be able to finance this increase entirely from cash flow.”
The analyst raised his target to $1.50 from $1.15. The average is $1.53.
The costs stemming from the pandemic “remain unpredictable” for Sienna Senior Living Inc. (SIA-T), said Laurentian Bank Securities analyst Yashwant Sankpal following the release of “soft” third-quarter results.
That led him to downgrade the Markham, Ont.-based company to “hold” from “buy" with a $13 target, down from $16. The average is $14.32.
“SIA appears to be doing a good job of navigating through the operational obstacles thrown at it by the pandemic,” Mr. Sankpal said. “However, the price of measures to prevent and to battle the spread of the virus, while temporary, is steep and unpredictable, bringing down SIA’s quarterly FFO [funds from operations] by as much as 45 per cent on a year-over-year basis. Despite the funding support provided by the government, out of pocket expenses remain a wildcard and the situation could probably get worse in the face of a second wave this winter. Currently having deep enough pockets is the best survival strategy for many Seniors Living operators. While SIA has a relatively under levered balance sheet and $200M-million-plus of liquidity, given the amount of uncertainty it faces, we suggest investors wait on the sidelines until there is more visibility on the company’s cash flow.”
Elsewhere, Canaccord Genuity’s Brendon Abrams raised his target for Sienna Senior Living Inc. (SIA-T) to $12.75 from $11 with a “hold” rating, while National Bank Financial’s Tal Woolley increased his target to $15 from $13 with an “outperform” recommendation.
“Looking forward, the situation as it relates to the spread of COVID-19 in Ontario (the company’s largest market) remains extremely fluid,” Mr. Abrams said. “The anticipated ‘second wave’ has begun to build recently, with case counts increasing both in the general population and in LTC facilities. In turn, government restrictions in many GTA regions have been tightened. This is expected to have a negative impact on the company’s retirement occupancy, which had stabilized in Q3/20 and actually gained some positive momentum, and is likely to keep net pandemic-related expenses elevated.
“Overall, we commend Sienna’s senior management team for tackling the challenges of COVID-19 head-on. The company remains committed to the safety of residents and staff, and notes that the special measures required will likely weigh on financial results. In saying this, we continue to be cautious on the stock given the significant headwinds facing the sector and company. We expect operating margins will remain well below pre-pandemic levels, driven primarily by lower retirement occupancy and elevated costs.”
Topaz Energy Corp. (TPZ-T) is the “new belle of the royalty ball,” said Industrial Alliance Securities analyst Michael Charlton, calling it “an exciting, relatively new energy and infrastructure royalty company in the Canadian energy sector.”
In a research report released Friday, he initiated coverage of the Calgary-based company with a “buy” recommendation, emphasizing its “elegant business model meant for dividends.”
“Topaz’s business model is perfect for paying dividends due to its relatively low level of at-risk drilling capital and low infrastructure operating costs,” said Mr. Charlton. “Since Topaz, a royalty company, does not directly actively engage in exploration or development operations but rather relies on production and infrastructure royalties to derive its revenue, Topaz has minimal capital requirements as drilling and production operating costs are usually borne by the E&P who is actively engaged in exploration and development.”
“Given its minimal maintenance capital requirements and total tax pools of $881-million, Topaz has a structural advantage when it comes to free cash flow (FCF) potential. With the importance investors are placing on FCF and dividends in favour of production growth, Topaz offers an attractive yield of 5.7 per cent, as shareholders are being rewarded while waiting for more positive investor sentiment to return to the sector, with additional upside potential in future royalty/infrastructure acquisitions and increased infrastructure throughput (utilization).”
Mr. Charlton said Topaz “couldn’t pick a better partner” in Tourmaline Oil Corp. (TOU-T), which owns a 51.7-per-cent stake, seeing its interests “well aligned with both parties looking to create maximum value for their respective shareholders.”
“Given Tourmaline’s scale, being the largest natural gas producer in Canada and a low-cost 400,000 barrels of oil equivalent per day (boe/d) production base, with over 50 years of potential drilling inventory, not to mentions it is Canada’s fifth-largest midstreamer, Topaz looks to have picked a great partner with a track record of success and value creation, a wonderful first step in what looks to be a long, profitable and elegant dance,” he said.
Mr. Charlton set a $19 target for Topaz shares.
“We have not seen a lot of companies IPO in the energy space in recent years as market conditions have hardly been enticing,” he said. “This new and attractive royalty and infrastructure company is targeting 60-per-cent EBITDA from production gross overriding royalty (GORR) and 40 per cent from facility partnerships backed by various take-or-pay commitments. We believe Topaz’s unique hybrid royalty/infrastructure arrangement should garner substantial investor attention, as the sector is likely in for a period of consolidation as world economies struggle to recover and ultimately demand returns. We are confident that Topaz will be successful with its mission to deliver returns to shareholders and could not have picked a better partner in Tourmaline for its first dance.”
Elsewhere, Elsewhere, in a research note titled A Gem For All Seasons, Raymond James analyst Chris Cox initiated coverage wiht an “outperform” rating and $16 target.
“We believe Topaz represents a unique new royalty/infrastructure vehicle for the Canadian Energy sector, providing investors with focused exposure to arguably the two highest-quality cash flow streams tied to Tourmaline, and allowing investors to participate alongside the Company’s attractive organic growth and ambitious consolidation plans in the basin,” said Mr. Cox. “The result is an advantaged outlook for both sides of the business; a Royalty portfolio that will benefit from the transparent peer-leading growth profile of Tourmaline (and, a contrast to the declining production profile of peers), while the Infrastructure assets benefit from attractive contracting/counterparty exposure. With the company cashed up following its recent IPO, we see acquisitions amplifying the already attractive upside from the existing assets and further supporting a premium multiple.”
National Bank Financial initiated coverage with an “outperform” rating and $18 target, while BMO Nesbitt Burns analyst Ray Kwan started it with an “outperform” recommendation and $17 target.
“We believe Topaz is well positioned as a low-risk, high distribution energy company, exposed to the growth of Tourmaline Oil as well as a rise in natural gas prices,” said Mr. Kwan.
“With the company flush with more than $140-million in cash, we believe Topaz will continue to be active on the acquisition front, further accelerating cash flow per share growth, and differentiating itself from its peers, which generally have struggled to show positive growth during this downturn.”
Those making changes included:
* Scotia Capital’s George Doumet to $31 from $29.50 with a “sector perform” rating.
“There was a significant amount of optimism going into Q3 results supported by the potential for a strong North American read-through from TOY’s public comps,” he said. “While results were enough to exceed our expectations, we believe GPS volumes did disappoint some of the more bullish expectations, especially in North America - which was modestly down year-over-year. Margins came in shy of expectations, but we expect to see more structural improvements over the next 12 months, even after accounting for higher marketing spend. The real star of the quarter was Sago Mini/Toca Boca.
“We’re confident that the supply chain issues are largely behind (the full consolidation exercise actually happened sooner than expected). That said, before getting more bullish, we would like to get more comfortable with TOY’s ability to generate a stable/predictable 3-4-per-cent organic growth cadence in the context of its current valuation (9 times EV/EBITDA 21e), which in our opinion, isn’t overly cheap.”
* CIBC’s Robert Bek to $35 from $33 with a “neutral” rating. The average on the Street is $31.50.
* RBC Dominion Securities' Sabahat Khan to $34 from $31 with a “sector perform” rating.
* D.A. Davidson’s Linda Bolton Weiser to $30 from $23 with a “neutral” rating.
* TD Securities' Brian Morrison to $38 from $34 with a “buy” rating.
In other analyst actions:
* After better-than-expected third-quarter financial results, National Bank Financial analyst Endri Leno raised Medical Facilities Corp. (DR-T) to “outperform” from “sector perform” to $6.75 from $4.50. RBC’s Douglas Miehm raised his target to $6 from $4.25 with a “sector perform” rating, while Industrial Alliance Securities' Chelsea Stellick increased her target to $6.60 from $5.10, maintaining a “speculative buy” recommendation. The average is $5.59.
“While we have been on the sidelines with DR for some time due to underperforming acquisitions and margin declines, the former have been largely divested and the latter was up 130 basis points vs. Q2/10 and up 80 basis points vs. 2019," said Mr. Leno. “Moreover, 1) vols continue to normalize; 2) there is potential for incremental vols over, at least, the next 3 quarters; 3) leverage is reasonable at 2.4 times Net Debt to 2021 estimated EBITDA; and 4) the 5-per-cent yield is sustainable at a 25-per-cent 2021 estimated payout. Although we would be cautious, given the history, on any new acquisitions, the improved outlook prompts us to upgrade DR.”
* Ms. Stellick downgraded IMV Inc. (IMV-T) to “speculative buy” from “buy,” citing “the delays in trial timelines and the new evidence that DPX-Survivac/CPA + Keytruda had no clinical response in the PD-L1 negative DLBCL patients.” She maintained a $10 target, exceeding the $8.03 consensus.
* Stephens analyst Justin Long upgraded Descartes Systems Group Inc. (DSGX-Q, DSG-T) to “overweight” from “equal-weight” with a US$70 target, up from US$60, which is the current consensus.
* CIBC’s Chris Couprie raised his target for WPT Industrial REIT (WIR.UN-T) to US$15 from US$14.50 with an “outperformer” rating, while RBC’s Neil Downey increased his target to US$15.50 from US$15, maintaining an “outperform” rating. Canaccord Genuity’s Mark Rothschild raised his target to US$16 from US$15 with a “buy” rating. The average is currently US$15.06.
“WPT Industrial REIT (WPT) continues to benefit from strong industrial property fundamentals in the REIT’s core U.S. markets, as reflected by strong rent collections of 99 per cent and double-digit leasing spreads in Q3/20,” said Mr. Rothschild. “Looking forward, we expect WPT’s defensive portfolio to continue performing well in the current environment. Solid rental lifts on leasing activity and contractual rent escalations, combined with contributions from completing development projects through its private capital pipeline should drive steady cash flow growth.”
* Mr. Couprie slashed his target for Invesque Inc. (IVQ-T) to $3.25 from $3.75 with a “neutral” rating, while Canaccord Genuity’s Mark Rothschild trimmed his target to US$2.25 from US$2.50 with a “hold” rating. The average is $2.85.
“Invesque reported Q3/20 results that were better than expected, supported by government grants aimed at mitigating the damaging impacts of the COVID-19 pandemic on certain businesses in the US. Looking forward, occupancy appears to be under pressure at a large number of properties in the portfolio, and Symphony, the company’s most important operator, appears to be facing some challenges. Therefore, forecasting cash flow is difficult. Further, with limited transaction activity, assigning cap rates is extremely challenging,” said Mr. Rothschild.
* Scotia’s Himanshu Gupta raised his target for Choice Properties REIT (CHP.UN-T) to $13.50 from $12.50, falling short of the $13.63 average. He kept a “sector perform” rating.
“We think CHP’s valuation looks attractive in the equity markets relative to debt markets,” he said.
* Desjardins Securities' Frederic Tremblay cut his target for Cascades Inc. (CAS-T) to $16.50 from $18.50 with a “hold” rating, , while CIBC’s Hamir Patel lowered his target to $20 from $22 with an “outperformer” recommendation. TD Securities' Sean Steuart lowered his target to $15.50 from $17.50 with a “hold” rating.The average is $18.17.
“3Q results were mixed as revenue was in line while adjusted EBITDA slightly missed,” said Mr. Tremblay. “Solid demand and an upcoming price increase make the containerboard sector a nice place to be, as shown by Cascades' strategic Bear Island conversion and a large wave of upcoming capacity additions from other producers. We remain concerned that this may lead to a deterioration of market conditions. In Tissue, COVID-19 has fuelled demand in retail and crushed it in Away-from-Home (AFH). We remain on the sidelines.”
* CIBC’s Dean Wilkinson increased his SmartCentres REIT (SRU.UN-T) target to $27 from $25, which is the current consensus, with an “outperformer” rating. TD Securities' Sam Damniani bumped his target to $23 from $21 with a “hold” rating.
* Mr. Wilkinson also raised his target for Tricon Residential Inc. (TCN-T) to $13.50 from $12 with an “outperformer” rating, while Canaccord Genuity’s Mark Rothschild increased his target to $13 from $12.50 wotj a “buy” rating. The average is $13.33.
“With strong single-family rental demand continuing to push rental rates higher, we expect this segment to drive further cash flow per share growth for Tricon going forward. Within the company’s multi-family portfolio, demand has stabilized after a hit to occupancy earlier this year and overall performance should be relatively steady in the remainder of 2020 and in 2021,” said Mr. Rothschild.
* Mr. Wilkinson trimmed his target for Minto Apartment REIT (MI.UN-T) to $22 from $24 with an “outperformer” rating. The average is $23.28.
* Desjardins Securities' Doug Young increased his target for Power Corporation of Canada (POW-T) to $30 from $28 with a “buy” rating, while CIBC’s Nik Priebe raised his target to $34 from $31 with an “outperformer” rating. The average is $30.86.
“It was a noisy quarter; however, we are encouraged by the actions to simplify the corporate structure and improve communication, and we view valuation as attractive,” said Mr. Young.
* CIBC’s Todd Coupland increased his target for Sierra Wireless Inc. (SWIR-Q, SW-T) by a loonie to US$11 with an “underperformer” rating, while BMO’s Thanos Moschopoulos trimmed his target to US$13 from US$13.50 with a “market perform” recommendation. The current average is US$13.56.
“The stock remains inexpensive, in our view, and the automotive divestiture should be helpful in allowing SWIR to better focus on end markets that can drive recurring revenue.,” said Mr. Moschopoulos. “However, while we’re encouraged by the growth in service revenue and service bookings, we’re apprehensive about the ongoing challenges in the hardware business.”
* Scotia Capital’s Phil Hardie increased his target for CI Financial Corp. (CIX-T) to $21 from $20 with a “sector perform” rating, while Desjardins Securities’ Gary Ho hiked his target to $19 from $18.50 with a “hold” rating. Canaccord’s Scott Chan increased his target by a loonie to $23 with a “buy” rating. The average is $20.14.
“We need to see net flows trend toward breakeven to be more constructive,” said Mr. Ho. “To us, it is too early to assess CI’s new strategy and whether it will be successful in expanding in the US, especially without better financial disclosures. In addition, average management fees continue to decline, the closed business remains a drag and the industry environment is still competitive.”
* CIBC’s Mark Jarvi cut his target for Just Energy Group Inc. (JE-T) to $10.50 from $14, keeping a “neutral” rating. The average is $12.
* Scotia’s Konark Gupta moved his target for Chorus Aviation Inc. (CHR-T) to $4 from $3.50 with a “sector perform” recommendation. The average is $4.81.
“CHR reported an earnings miss this week, driven by third-party leasing (higher credit loss provision), but beat us on FCF and net debt,” said Mr. Gupta. “Outlook was mixed with management continuing to expect stable liquidity while reducing capex guidance, but receivables are increasing and deferred lease collection terms have extended further. CHR also noted signs of stalling in global flying activity and we believe many airlines remain fragile despite vaccine hopes, which cause us to trim our valuation multiple. Overall, we have reduced our EBITDA outlook, driven by the third-party leasing segment, while raising our FCF estimates (reduced capex).”
* Scotia’s Paul Steep increased his target for Docebo Inc. (DCBO-T) to $58 from $66, maintaining a “sector perform” rating, while TD Securities' Daniel Chan raised his target to $66 from $60 with a “buy” rating. The average is $62.57.
“Our thesis on DCBO remains that the long-term opportunity depends largely on the company’s execution against its organic growth strategy, as it has added significant sales resources to drive growth in North America and Europe over the medium term,” said Mr. Steep.
* Scotia Capital’s Paul Steep raised his target for Altus Group Ltd. (AIF-T) shares to $53 from $45 with a “sector perform” rating. Canaccord Genuity’s Yuri Lynk raised his target to $65 from $60 with a “buy” rating , while RBC Dominion Securities’s Paul Treiber hiked his target to $62 from $52 with an “outperform” rating. The average is $54.50.
“Our view is that Altus' Q3 results reflected a mixed quarter with revenues in line and adj. EBITDA and EPS above our estimates driven by strength in Property Tax,” said Mr. Steep. "We believe that the firm continues to navigate a challenging time for all its clients with lower-than-expected results in Altus Analytics (AA) as the pandemic slowed the migration of clients towards the Cloud, along with lower one-time revenues (OTR).
We maintain our Sector Perform on the stock as the firm manages through a challenging period for its Commercial Real Estate customers dealing with the impact of the pandemic. We expect quarterly results through 2020 could be more volatile than usual given the impact of the pandemic on Altus' businesses. Longer-term, we see the Altus Analytics transition to being cloud first as positive, with potential for the firm to expand on its data analytics capabilities to leverage its operations outside North America."
* Citi analyst Ashwin Shirvaikar raised his target for Nuvei Corp. (NVEI-T) to US$48 from US$44 with a “buy” rating. The average is US$51.60
“Nuvei reported a good initial quarter as a public company, with robust volume growth and good revenue and profitability performance,” said Mr. Shirvaikar. “Also notable were a number of wins and expansion to new markets, which support longer-term growth. Vertical-specific opportunities that have the potential to deliver upside continue to be on track (e.g. gaming). Investors continue to be focused on factors like volume growth and revenue yield (input measures) as well as net revenue and EBITDA growth (output measures) – the company, of course is more focused on just the latter and we believe over time it will be important to provide steady, ongoing disclosure on both to satisfy investor curiosity.”