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

Shares Apple Inc. (AAPL-Q) are up 70 per cent thus far in 2020, outperforming both the S&P 500 (13 per cent) and Nasdaq Composite (38 per cent) by a significant margin.

However, Citi analyst Jim Suva thinks the U.S. tech giant is poised for further gains in the new year.

In a research note released Friday titled 5 Reasons Apple Stock Can Trade Higher in 2021, he raised his financial estimates for Apple, leading him to hike his target price for its shares.

“Our estimate revisions are predicated on stronger-than-anticipated demand across several products including iPhones, Wearables and PCs/Tablets,” he said. “While December quarter demand is constrained by supply, we believe stronger-for-longer demand for Apple’s products prevail through FY21E as the economy recovers. We are also increasing the target multiple applied to Apple to be consistent with where it is trading today as we do not expect multiple compression given positive fundamentals underpinning Apple’s growth. That being said, we believe future upside in stock price will likely come from sales and EPS upside rather than valuation multiple expansion. We do recognize that some new risks have emerged, namely the Apple and Google exclusive search agreement, app store 30-per-cent take rate, and mega cap legislative scrutiny, but we do NOT believe these will materialize in 2021 and will create more occasional headline risk rather that fundamental risk. Such headlines could provide a near term stock pullback which we would use a buying opportunity for Apple shares.”

Mr. Suva pointed to these five factors for his view of 2021 gains:

  • 1. With many Apple products sold out for the key holiday retail season, he thinks supply constraints may limit the upside this quarter “but if demand continues, the March quarter should be stronger than normal.”
  • 2. India manufacturing production is coming online, “will help Apple avoid the 30-per-cent import tariff fee thereby making Apple product pricing more competitive.”
  • 3. A platform “that is reaching beyond products and software.”
  • 4. A move into healthcare and its “Apple Watch growth opportunity is starting to be embraced by health insurance companies.”
  • 5. “The misperception is that Apple does not grow sales and its EPS are disproportionally boosted by stock buybacks ... Apple is indeed growing and stock buybacks are only 3-per-cent EPS boost to the company’s double digit EOS growth.”

Based on that views, Mr. Suva hiked his 2021 earnings per share projection to US$4.13 from US$3.95. His 2022 and 2023 estimates increased to US$4.53 and US$5.02, respectively, from US$4.48 and US$4.92.

Keeping a “buy” rating for Apple shares, he raised his target to US$150 from US$125. The average on the Street is US$126.45.

“We see Apple benefiting from strong demand across several of their products and services as the economy recovers,” he said. “The growth in installed base helps to drive demand in future years. The full product + software + service package is what makes Apple unique as others do not control this. We see Apple shares as attractive given the revenue diversification, unique product + service set and potential for strong cash flow generation and shareholder returns.”


The Street applauded BlackBerry Ltd.’s (BB-N, BB-T) third-quarter 2021 financial results that largely met expectations.

After the bell on Thursday, the Waterloo, Ont.-based tech firm reported an adjusted, non-Generally Accepted Accounting Principles profit of 2 US cents a share, beating analyst consensus of 1 US cent.

“In-line F3Q21 as expected,” said Raymond James analyst Steven Li. “As we move into the new year, important to watch new Enterprise product suite that was just launched in October (Protect, Optics for desktop, MTD for mobile and Persona). Enterprise Software & Services has been struggling for some time (down 14 per cent year-over-year in F2019, down 9 per cent in F2020 and down 3% per cent in F2021 by our estimates). Any stabilization/ growth in Enterprise going forward would be additive to the BB story.”

Maintaining a “market perform” rating, Mr. Li raised his target for BlackBerry shares to US$8 from US$7.50. The current average is US$7.21.

Other analysts increased their targets included:

* Scotia Capital’s Paul Steep to US$8.50 from US$5 with a “sector perform” rating

* TD Securities’ Daniel Chen to US$8.50 from US$5.50 with a “hold” recommendation


CIBC World Markets analyst Hamir Patel thinks 2021 is setting to be “another strong year” for forestry stocks.

“Heading into 2021, we continue to favor wood products equities within our Paper & Forest Products coverage universe given attractive supply/demand fundamentals for U.S. housing,” he said in a research note released Friday. “We have raised our EBITDA forecasts for next year by 20-30 per cent across most wood products names, reflecting a $50 per thousand board feet [mfbm] (up 11 per cent) increase to our W. SPF price deck next year to $500/mfbm (40 per cent below $830 spot), and a $45/msf (13 per cent) rise in our forecast for OSB North Central prices in 2021 to $395/msf (also 40 per cent below spot at $655).

“Our top pick remains West Fraser. With strong FCF generation forecasted for both lumber and OSB mills in 2021 and 2022, we expect the combined entity to generate C$1.2 billion of free cash flow in 2022 (12 per cent yield). Our other Outperformer names in wood products (by pecking order) are Canfor, Interfor, Resolute and Western FP. We also remain constructive on StellaJones and Hardwoods, two names with attractive M&A pipelines and exposure to residential construction. On the paper and packaging side, we continue to like Cascades given strong containerboard demand (and the large multiple gap vs. U.S. peers), as well as Mercer (low-cost pulp assets with lumber optionality).”

In the report, Mr. Patel made four rating changes to stocks in his coverage universe.

He upgraded these three stocks:

* Western Forest Products Inc. (WEF-T) to “outperformer” from “neutral” with a $1.50 target, up from $1.20, which is the current average on the Street.

“Western’s shares have lagged peers over the past year given lingering investor frustration with operating performance (following the extended labor disruption) and stronger pricing momentum for commodity grade,” he said. “With cedar prices continuing to move higher (despite duties being reduced from 20 per cent to 8.99 per cent from early December) and Western pivoting more of its commodity volumes (which traditionally went to China) towards the U.S. market in 2021, we expect a large improvement in EBITDA next year (up over 70 per cent year-over-year versus Western Canadian peers which will largely have negative comps given their record commodity pricing in 2020)”

* Resolute Forest Products Inc. (RFP-N, RFP-T) to “outperformer” from “neutral” with a US$8.50 target, up from US$6.50. Average: US$5.81.

“We are moving RFP ... given the company’s significant leverage to an improved pricing outlook for lumber (over 50 per cent of 2021 estimated EBITDA) and pulp (nearly 30 per cent of 2021 estimated EBITDA),” he said. “While demand continues to erode sharply for graphic papers, we believe Resolute has a solid track record of generating cash from its paper operations and monetizing them where appropriate. We note that Resolute had $214-million of lumber duties on deposit at the end of Q3. If the company were to eventually receive back 80 cents on the dollar at the conclusion of this trade dispute (as happened at the end of Lumber IV), this would represent $171-million ($2.05/share) – equivalent to 32 per cent of RFP’s current market capitalization.”

* Domtar Corp. (UFS-N, UFS-T) to “neutral” from “underperformer” with a US$33 target, up from US$28. Average: US$33.15.

“We have raised our rating ... reflecting improved supply/demand fundamentals for pulp, as well as growing upside risks to the valuation of the containerboard conversion pipeline given robust U.S. box shipments (up 4.8 per cent year-over-year in November and up 2.6 per cent year-to-date) and potential for another containerboard price hike in the spring,” he said. “We continue to see execution risks for the company’s planned expansion into containerboard given the poor track record in personal care ($1.7-billion invested in a business that may only fetch $1.1-billion-$1.3-billion ten years later).”

Conversely, Mr. Patel downgraded Acadian Timber Corp. (ADN-T) to a “neutral” recommendation from “outperformer with a $17 target, down from $18. The average is $16.90.

“We are reducing our rating on ADN to Neutral (from Outperformer) as softwood sawlog pricing appreciation in New Brunswick and Maine has underwhelmed despite robust lumber markets,” he said. “At the same time, the company’s hardwood customers and paper customers are facing challenging market conditions. While Acadian has attractive ESG attributes and is well positioned to pursue growth opportunities, we do not expect much activity from the company until a new CEO is in place (which may not happen until closer to the expiry of the transitional management team’s role in September 2021).”

He also adjusted his target prices for other forest product companies in his coverage universe on Friday.

He raised his targets for these stocks:

  • West Fraser Timber Co. Ltd. (WFT-T, “outperformer”) to $102 from $88. Average: $91.
  • Stella-Jones Inc. (SJ-T, “outperformer”) to $54 from $52. Average: $51.88.
  • Norbord Inc. (OSB-T, “outperformer”) to $69 from $59. Average: $53.61.
  • Interfor Corp. (IFP-T, “outperformer”) to $29 from $22. Average: $25.17.
  • Hardwoods Distribution Inc. (HDI-T, “outperformer”) to $32 from $31. Average: $35.19.
  • Conifex Timber Inc. (CFF-T, “neutral”) to $2 from $1.60. Average: $1.95.
  • CanWel Building Materials Group Ltd. (CWX-T, “neutral”) to $8.25 from $8. Average: $7.97.
  • Canfor Pulp Products Inc. (CFX-T, “neutral”) to $8.50 from $5.50. Average: $6.50.
  • Canfor Corp. (CFP-T, “outperformer”) to $29 from $23. Average: $26.

Conversely, he lowered his target for KP Tissue Inc. (KPT-T, “neutral”) to $12 from $13, falling below the $13.50 average.


Citing concerns about its valuation, Canaccord Genuity analyst Dalton Baretto lowered his rating for Coeur Mining Inc. (CDE-N) to “hold” from “buy” following its virtual Investor Day event on Thursday.

“Although (obviously) virtual, CDE’s Investor Day was very well done, and provided insight into the company’s thinking on a number of fronts - exploration, growth, balance sheet management, ESG, diversity and inclusion,” he said. “The highlights for us were discussions around the Rochester expansion and the Silvertip re-start, as well as thoughts around funding and liquidity in what is expected to be a very capital-intensive 2-4 years. We discuss each of these topics below. We were most encouraged by the progress being made at Silvertip, and while we continue to await key details on the final project, we have re-introduced an in-situ valuation for the asset based on existing reserves and resources. Based on $1.50 per ounce AgEq, we now value Silvertip at $373 million, or $1.53 per share.

“With the expansion at Rochester and a re-start at Silvertip, CDE’s silver production should grow meaningfully over the next five years. We expect a 64% increase in silver production by 2025 even before considering production from Silvertip. As we have seen over the last nine months, precious metals producers with material silver revenue contribution command premium multiples in a buoyant precious metals pricing environment.”

Though he lowered his 2021 and 2022 EBITDA estimates to account for changes to his near-term production profile for Rochester, Mr. Baretto maintained a US$11 per share target. The average is $10.17.

“Given the recent rally in CDE’s share price, the limited implied return to our target price, and significant capex and limited FCF over the next couple of years, we are downgrading CDE,” he said.

Elsewhere, Raymond James analyst Brian MacArthur raised his target to US$10.25 from US$9.50, maintaining a “market perform” recommendation.

“Over the past few years, Coeur has restructured its asset base through acquisitions and divestitures,” he said. “Consequently, it now has a diversified portfolio of four mines with lower jurisdictional risk and growth. It is the one of the world’s largest primary silver producers and is a significant producer of gold. Coeur has a flexible balance sheet and an aggressive exploration budget to improve its reserve life. In addition, the Rochester project could extend its mine life and meaningfully increase NPV. Finally, we believe the shares offer good liquidity for investors.”


Seeing it “in a good position” to take advantage of a rise in uranium prices, Noble Capital Markets analyst Michael Helm initiated coverage of enCore Energy Corp. (EU-X) with an “outperform” rating on Friday.

“The success of enCore Energy and its stock price is tied to the success of the domestic uranium industry,” he said. “A glut of uranium on the global market caused uranium spot prices to fall below profitable levels in recent years. Most domestic production of uranium has shut down. If uranium prices return to historical levels, all domestic uranium companies including enCore Energy will do well. We believe such a move will occur in the next few years in response to rising demand and a decreasing international supply of uranium.

“We believe enCore’s Rosita processing plant can be started quickly and relatively inexpensively should uranium prices rise. enCore’s strong balance sheet and low-cost structure give it a competitive advantage over other domestic uranium producers. As it waits for uranium prices to return, enCore has been putting together a management team consisting of the leading uranium experts in the country. During the last uranium boom period, enCore management consolidated uranium assets that were eventually sold to Uranium One for $1.8 billion.”

Currently the lone analyst covering the Vancouver-based company’s stock, Mr. Helm established a target of 85 cents per share.

“We see many catalysts that could move the stock upward,” he said. “Investors in enCore energy should keep an eye on the following potential developments: 1) Closing the Westwater Resources transaction, 2) A rise in Uranium prices above $50/lbs, 3) Signing of long-term contracts with utilities, 4) Restarting the Rosita processing plant, 5) Drilling success in Texas and development of wellhead field, 6) Decision to reopen Kingsville or expand Rosita, and 7) Consolidation of a fragmented uranium industry.


In other analyst actions:

* Canaccord Genuity analyst Charlie Sharp upgraded Touchstone Exploration Inc. (TXP-T) to “buy” from “speculative buy”

“The formal conclusion of a gas sales agreement (GSA) with the National Gas Company of Trinidad and Tobago establishes the detail of the long-term offtake terms for Ortoire licence gas (TXP, WI 80 per cent),” said Mr. Sharp. “The delivery of the agreement was anticipated before YE20, but that does not diminish its importance. It is clearly a critical plank in providing security of commercialization of all the gas resources, found and to be found, on the licence. While the development plans for discoveries so far on the licence - Coho, Cascadura, Chinook Deep, and Cascadura Deep - were all gaining momentum, those can now be firmed up with clarity on the terms and conditions.

“With the long-term GSA in place, we raise our rating.”

* Following a recent update with its management, Raymond James analyst Bryan Fast raised his target for Finning International Inc. (FTT-T) to $31 from $24 with an “outperform” rating, exceeding the $28 average.

“Cyclicals have played catch up over the last two months as vaccine news has brought a line of sight on an eventual road to recovery,” he said. “Shares of Finning have performed particularly well. Following 3Q20 results, Finning was up 12 per cent that day (vs. the TSX up 2 per cent) and up 39 per cent since (vs. the TSX up 11 per cent). The company has emphasized the commitment to controlling the controllable and delivering the benefits of a higher velocity operating model, something we expect will be at the top of investors’ minds (and ours) heading into a more normal operating environment.”

“Investors tend to shift their focus on Finning from book value to earnings momentum at this point in the cycle. On this basis, we have increased our target to $31 per share based on a 19 times PE multiple, which is in line with the 5-year average. Although we note that based on book value, Finning is no longer in the ‘historically good buying zone’, we have yet to reach overbought territory.”

* After coming off a research restriction related to a $25-million secondary offering of its shares by Yamana Gold, BMO Nesbitt Burns analyst Rene Cartier upgraded Nomad Royalty Company Ltd. (NSR-T) to “outperform” from “market perform” with a $1.70 target. The average is $2.08.

“After a period of underperformance, in our view, the risk/reward looks more compelling for Nomad Royalty, particularly with the targeted production growth in 2021, and we are upgrading shares,” he said.

* Lake Street Capital Markets analyst Eric Martinuzzi initiated coverage of AcuityAds Holdings Inc. (AT-T) with a “buy” rating.

“We believe AcuityAds’ new illumin platform levels the ad buying playing field,” he said. “With illumin, marketers do not need to be coders. Through an intuitive interface they can map the customer journey, implement the buy, tune the campaign, and optimize conversion faster than ever before.”

* Cormark Securities analyst David Ocampo raised his target for Air Canada (AC-T) to $25 from $22, keeping a “market perform” rating. The average on the Street is $26.97.

* Cowen and Co. analyst Jeffrey Osborne increased his target for Westport Fuel Systems Inc. (WPRT-Q, WPRT-T) to US$4.50 from US$2.50 with a “market perform” rating. The average is $4.70.

* JP Morgan analyst Kenneth Worthington raised his target for Brookfield Asset Management Inc. (BAM-N, BAM.A-T) to US$55 from US$53 with an “overweight” rating. The average is US$47.67.

* RBC Dominion Securities analyst Irene Nattel raised her target for Aritzia Inc. (ATZ-T) to $29 from $24, keeping an “outperform” rating. The average is $26.31.

* BMO Nesbitt Burns analyst John Gibson cut his target for Tervita Corp. (TEV-T) to $4.50 from $5 with an “outperform” rating. The current average is $4.17.

“TEV stock has performed well of late (up 75 per cent over the past month); however, we still feel it offers compelling value based on its production-oriented business streams, improving balance sheet, and inexpensive valuation,” said Mr. Gibson.

* TD Securities analyst Brian Morrison increased his target for Linamar Corp. (LNR-T) to $82 from $66 with a “buy” rating. The average is $62.67.

* Mr. Morrison raised his target for shares of Magna International Inc. (MGA-N, MG-T) to US$80 from US$68, keeping a “buy” rating. The average is US$69.81.

* Mr. Morrison also hiked his target for Martinrea Interational Inc. (MRE-T) to $22 from $18 with a “buy” recommendation. The average is $19.31.

* Oppenheimer initiated coverage of Medicenna Therapeutics Corp. (MDNA-T) with an “outperform” rating and $12 target. The current average is $10.70.

* TD Securities analyst Tim James cut his target for Airboss of America Corp. (BOS-T) to $29 from $32 with a “buy” rating. The average is $34.80.

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