Inside the Market’s roundup of some of today’s key analyst actions
Analysts tweaked their price targets in both directions on Rogers Communications Inc. (RCI-B-T) after what was seen as mixed fourth quarter results.
Rogers reported consolidated revenue came at $3.680 billion in its latest quarter, about 3% below Street estimates, with the miss due mostly because of wireless weakness. EBITDA came at $1.590 billion, 2% better than Street estimates. No guidance was given for fiscal 2021 given COVID uncertainties.
Aravinda Galappatthige of Canaccord Genuity raised his price target to C$69 from $68 and maintained a “buy” rating, noting that profitability came in higher than expected in all three of the company’s business segments but wireless service revenues were lighter than forecasts. “We believe that the second phase of lockdowns, in the latter part of Q4, had a greater than expected impact, especially on roaming and overage,” he said in a note. “On a positive note, cost containment and margins were a highlight, as reflected in the stronger than expected EBITDA.”
CIBC World Markets was a little less impressed, cutting its target to $64 from $65 in the wake of the earnings. CIBC analyst Robert Bek commented: “We are currently at Neutral on Rogers, solely as a valuation call on the space. While we continue to believe the defensive qualities of the cable/telco space in Canada will resonate, we consider the valuation levels fair given underlying fundamentals and regulatory noise. In our view, the valuation step-up for Rogers still requires better visibility out of the pandemic, and in Wireless execution.”
Elsewhere on the Street, Scotiabank cut its target to $70 from $71 and TD Securities reduced its target to $73 from $74.
The median price target on Rogers is now C$69, which is up $3 from a month ago, according to Refinitiv Eikon data Friday morning.
RBC Dominion Securities initiated coverage on Stelco Holdings Inc. (STLC-T) with a “sector perform” rating and $26 price target, cautioning that shares already reflect fundamentals in the steel market.
“Stelco is poised to benefit from strong North American steel prices in 2021, as well as the completion of recent investments in its facilities to lower costs, increase capacity and improve its product offering, although at current levels the shares are fairly valued in our view,” said analyst Alexander Jackson. “If the steel market remains tight and prices elevated, we see more upside in the shares, however, we expect steel prices to moderate as supply returns to re-balance the market.”
Scotiabank upgraded Sun Life Financial Inc. (SLF-T) to “sector outperform” from “sector perform” while raising its price target to C$70 from $64.
“Although SLF is already trading at the widest premium to the group we see further upside here,” Scotiabank analyst Meny Grauman explained in a note. “What is driving this is our decision to de-emphasize the firm’s relative valuation to Manulife and instead focus on absolute trading multiples for a name that continues to deliver a peer-leading Return on Equity, is sitting on a large amount of excess capital, and has an underappreciated future growth driver in SLC Management.”
Credit Suisse also raised its target to $65 from $62 on Sun Life. Analyst Mike Rizvanovic raised his price target while previewing fourth quarter results for the Canadian insurers, and said Sun Life was still his top pick in the lifeco sector.
“For Q4 specifically we are anticipating strong performance in asset management on the back of recovering markets during the quarter that we believe will mostly benefit SLF given its higher exposure to that business,” Mr. Rizvanovic said in a note. “That should help offset some of the drag from less yield enhancement opportunities this quarter on lower corporate spreads, and a modest negative on U.S. earnings from a stronger Canadian dollar.”
Raymond James analyst Steve Hansen cut his price target on Methanex Corp. (MEOH-Q, MX-T), citing gas shortages across the globe that may negatively impact the company. However, he reiterated an “outperform” rating as he reduced his price target by $5 to US$50.
The lower price target is “based upon downward revisions to our financial estimates associated with the firm’s recent production/discount guidance, offset by upward revisions to our price deck given sustained market strength,” Mr. Hansen said in a note. “Notwithstanding these changes, we reiterate our rating based upon our constructive view of global methanol fundamentals and the sharp recent pullback in Methanex shares.”
Credit Suisse raised its price target on Enbridge Inc (ENB-T) to C$50 from C$48 as it looked ahead to the company’s earnings release on Feb. 12.
“We forecast EBITDA of C$3,408m versus a consensus of C$3,378m (range C$3,327m-C$3,543m),” said analyst Andrew Kuske. “On an operational basis, the most interesting element of the results will be the dynamics associated with growing Western Canadian liquids volumes and the impact into ENB’s financials. On a near-term basis, there continues to be a fixation on the pace of Line 3 Replacement construction along with the various legal, regulatory and political challenges with certain ENB systems. At times, those dynamics overshadow the business fundamentals, in our view. Given the long-cycle nature of our coverage universe, we do not place ndue emphasis on short-term quarterly results.
“Risks exist with ENB’s favourable pipelines business around approval timelines; but the business is positioned for growth and de-risking over the next two years,” he said.
In other analyst actions Friday:
* Ats Automation Tooling Systems Inc (ATA-T): RBC raises target price to C$25 from C$23
* Cenovus Energy (CVE-T): National Bank of Canada cuts target price to C$13 from C$13.5 and TD Securities cut its target price to C$10 from C$10.5.
* Champion Iron Ltd (CIA-T): Laurentian Bank Securities raises PT to C$6.50 from C$6.40 and Scotiabank raises target price to C$7 from C$6.5.
* Lightspeed Pos Inc (LSPD-T): CIBC raises price target to C$100 from C$80
* Manulife Financial Corp (MFC-T) Credit Suisse raises price target to C$25 from C$23 and Scotiabank raises target price to C$25 from C$23
* Saputo Inc (SAP-T): National Bank of Canada cuts target price to C$38 from C$39
* Apple Inc (AAPL-Q): Baird raises target price to US$155 from $133 and HSBC raises target price to $125 from $105.
* Automatic Data Processing Inc (ADP-Q): Citigroup raises price target to US$190 from $180 and upgraded its rating to “buy” from “neutral.” Baird also raised its target price to $178 from $165.
* Facebook Inc (FB-Q): Baird raises target price to US $320 from $310 and HSBC raises target price to $220 from $195.
* Tesla Inc (TSLA-Q): Baird raises target price to US$736 from $728 and Daiwa Capital Markets raises target price to $845 from $430. Independent Research raised its target price to US$299 from $297 and reiterated a sell rating.
With files from Reuters