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

Canada Goose Holdings Inc.’s (GOOS-T) third-quarter revenue beat “impressed given a return to growth despite COVID headwinds in the important holiday quarter,” according to RBC Dominion Securities analyst Kate Fitzsimons, who see the Toronto-based clothing maker “well positioned to surpass pre-COVID revenues into fiscal 2022 and emerge further along in its lifestyle brand and channel evolution.”

Following Thursday’s earnings release, Ms. Fitzsimons pointed to several reasons for optimism, including an acceleration in e-commerce “strength” and growth in China, which has seen “shoppers come out with purpose” and its lighter-weight goods “resonating” in warmer regions of the country.

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“We were encouraged that inventory continues to be prioritized towards China,” she said. “Considering the improvements in the important holiday quarter, we were impressed all in at the 3Q performance.”

Seeing “strong” holiday results increasing her confidence in Canada Goose’s ability to meet its long-term sales target of growth of more than 20 per cent, Ms. Fitzsimons hiked her target for its shares to $68 from $47 after raising her earnings expectations through 2023. The average target on the Street is $45.54, according to Refinitiv data.

She maintained an “outperform” rating.

“Multiple levers of growth into FY22 and to sustain that 20-per-cent-plus top line profile, including: 1) international, including China but also encouragingly Europe; 2) new categories, with the footwear launch to come this calendar year; 3) advanced ecomm strategy, with estimated 30-per-cent penetration pre-COVID. Net/net, we named GOOS as one of our top 2021 ideas and expect the better holiday results despite COVID-headwinds can dispel some disbelief around brand heat as we look towards FY22 and beyond,” said Ms. Fitzsimons.

Elsewhere, BTIG analyst Camilo Lyon upgraded Canada Goose to “neutral” from “sell” without a specified target, believing the report “serves as a proof point of the brand’s resilience.”

Other analysts making target price increases include:

* CIBC World Markets’ Mark Petrie to $67 from $56 with an “outperformer” rating.

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* Credit Suisse’s Michael Binetti to $64 from $52 with an “outperform” rating.

* RBC Dominion Securities’ Kate Fitzsimons to $68 from $47 with a “buy” rating.

* Cowen and Co.’s Oliver Chen to $63 from $49 with an “outperform” rating.

* Barclays’ Adrienne Yih to US$42 from US$37 with an “equalweight” rating.

* Evercore’s Omar Saad to US$60 from US$40 with an “outperform” rating


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With Northland Power Inc. (NPI-T) “taking a big swing at offshore wind development, Raymond James analyst David Quezada raised his rating for its shares to “outperform” from “market perform” on Friday.

“Leveraging a first mover advantage with offshore wind development in Western Europe, Northland currently sits 4th among the top producers of offshore wind globally — a position it looks poised to maintain or improve in coming years” he said. “In fact, we came away from the company’s Investor Day impressed by the scope of NPI’s potential expansion going forward ... NPI anticipates adding 4-5 GW over the coming five years, necessitating gross capital investment of $15-20-billion ($10-$14-billion net) on projects that are currently in active development — sufficient to double adjusted EBITDA by the latter half of the decade. The impressive potential growth stems from moves NPI has made in recent years to build out an international development precedence with eight offices across four continents. This presence has facilitated local expertise and strategic partnerships necessary to get access to early stage development opportunities. We maintain our view of NPI’s project return vs. cost of capital spread as among the best in its peer group, which suggests to us that this expansion will drive significant shareholder value. Thus, we are moving our rating.”

Mr. Quezada hiked his target for Northland shares to $57 from $50. The average on the Street is $51.83.

“As one of the few publicly traded avenues to play offshore wind, we believe NPI is uniquely positioned both within its peer group and its competitive position in the industry,” he said. “Accordingly, we see a scarcity value in Northland that is further bolstered by robust longer term growth. We believe these attributes, as well as a declining proportion of thermal generation in NPI’s mix, suggests the company’s trading multiple will continue to move higher. As such, we have moved our rating to Outperform and hiked our target price to $57/share from $50 based on a 15.0 times 2022 EV/EBITDA. While most of these projects are too early stage to formally include in our valuation, under a scenario where NPI can build 4-5 GW of offshore wind and effectively double EBITDA by 2026, that would represent a 15-per-cent 5 year CAGR [compound annual growth rate] by our estimates.”


Lightspeed POS Inc. (LSPD-T, LSPD-N) is “still in the early innings,” said National Bank Financial analyst Richard Tse following Thursday’s release of stronger-than-anticipated third-quarter financial results.

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The Montreal-based point-of-sale and e-commerce software provider reported a 79-per-cent jump in revenue year-over-year to US$57.6-million, topping Mr. Tse’s US$54.3-million projection and the US$50.2-million expectation on the Street It expects fourth-quarter revenue to rise to US$68-$70-million.

Lightspeed also announced an adjusted earnings per share loss of 6 US cents, topping the analyst’s estimate of a 13-US-cent deficit.

“In our opinion, the biggest takeaway from the reported FQ3 results is that those results were even stronger when we take into account the challenges in the hospitality sector where GTV [gross transaction volume] was down 19 per cent year-over-year organically. To us, that challenge only goes to underscoring the retail segment and its ability to support the Company’s resilience, and perhaps more importantly, shed some light on the potential upside from hospitality contribution on the other side of the pandemic. Bottom line, if the Company can post the results it’s had in the current environment, a normalized environment would only go further to amplify that operating performance. On that note, we also (continue) to believe recent acquisitions are adding more operational and strategic leverage.”

Reiterating an “outperform” rating for Lightspeed shares, Mr. Tse raised his target to US$90 from US$80. The average on the Street is $91.23 (Canadian).

Other analysts increasing their targets included:

* ATB Capital Markets’ Martin Toner to $130 from $120 with an “outperform” rating.

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“We believe strong results in one of the toughest macroeconomic backdrops since the Company went public bodes well for FY22 and beyond. Average revenue per user (ARPU), merchant location, and payments growth all impressed, and the benefits of the Shopkeep and Upserve acquisitions have only partially begun,” he said.

* JP Morgan’s Tien-Tsin Huang to $94 from $74 with a “neutral” rating. The average is $91.53.

* Raymond James’ Steven Li to $114 from $80 with an “outperform” rating.

* Eight Capital’s Suthan Sukumar to $120 from $84 with a “buy” rating.

* CIBC World Markets’ Todd Coupland to $130 from $100 with an “outperformer” rating.

* Barclays’ Raimo Lenschow to US$92 from US$83 with an “overweight” rating.

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* Scotia Capital’s Paul Steep to US$76 from US$55 with a “sector perform” rating.

* Credit Suisse’s Timothy Chiodo to US$85 from US$70 with an “outperform” rating.


After its quarterly results exceeded expectations for the fifth consecutive time, RBC Dominion Securities analyst Paul Treiber said he’s “starting to see green shoots” for Open Text Corp. (OTEX-Q, OTEX-T).

“While organic growth was still negative, it was against tough year-over-year license comps and the company’s outlook implies further improved organic growth 2H/FY21,” he said. “[Trailing 12-month free cash flow] up 35 per cent shows OpenText’s ability to integrate and generate high returns from acquisitions. We see the potential for an improved organic growth trajectory and upside from acquisitions.”

After the bell on Thursday, the Waterloo, Ont.-based software firm reported revenue of US$856-million, up 11 per cent year-over-year and easily exceeding the projections of both Mr. Treiber (US$804-million) and the Street (US$818-million). He noted the result was only 1.6 per cent below the pre-pandemic estimate of US$870-million.

Open Text’s adjusted EBITDA rose 14 per cent to US$361-million also topping expectations (US$328-million and US$327-million, respectively). Adjusted earnings per share of 95 US cents also beat estimates (84 US cents and 83 US cents).

Mr. Treiber sees an improving organic growth trajectory with its fiscal 2021 revenue outlook topping the Street’s view.

“We estimate that OpenText’s constant currency (CC) organic growth was negative 5.8 per cent Q2, better than our estimate for negative 0.7 per cent and against tough year-over-year license revenue comps,” he said. “Excluding license revenue, we estimate organic growth would have been negative 2.2 per cent. OpenText’s Q3 outlook implies negative 2.3-per-cent constant currency organic growth or negative 1.6 per cent excluding license. Management anticipates positive cloud organic growth 2H/FY21, given: new digital transformation initiatives, rebound in business network volumes, cybersecurity demand (i.e. Carbonite/Webroot) and cloud adoption.”

Based on that better-than-anticipated organic growth, Mr. Trieber raised his forecast for 2021 and 2022, leading to higher revenue and earnings expectations.

That prompted him to increase his target for Open Text shares to US$60 from US$53 with an “outperform” rating (unchanged). The average on the Street is US$52.23.

“We see attractive risk-reward on the shares, considering: 1) expected value creation through acquisitions; 2) organic growth expectations appear achievable; and 3) valuation is below Canadian software consolidators,” he said.

Others making target changes include:

* National Bank Financial’s Richard Tse to $65 from $55 with an “outperform” rating.

* Raymond James’ Steven Li to US$55 from US$49 with an “outperform” rating.

* BMO Nesbitt Burns’ Thanos Moschopoulos to US$56 from US$54 with an “outperform” rating.

* Scotia Capital’s Paul Steep to US$58 from US$51 with a “sector outperform” rating.

* Barclays’ Raimo Lenschow to US$55 from US$51 with an “overweight” rating.

* Eight Capital’s Suthan Sukumar to US$58 from US$52 with a “buy” rating.


In a research report titled Hard to Pronounce – Easy to Own, ATB Capital Markets analyst Martin Toner initiated Docebo Inc. (DCBO-T) with an “outperform” rating on Friday.

“Docebo’s LMS, enabled by the cloud and the advantages of the SaaS [software as a service] model has broken new ground, and created new use cases for its solution,” he said. “Its targeted solution helps customers improve the fundamentals of their business in ways that traditional LMSs do not. This compelling value proposition enables both rapid customer growth and growth with existing customers. The result is an above-average growth rate for a SaaS company.”

“Docebo’s is decentralizing learning and growing the LMS market. Whereas LMS procurement decisions used to be made centrally within organizations’ human resources departments, Docebo’s LMS solutions are now being pushed down to functional parts of organizations. Driving control into functional departments of its customers enables the individuals with the most expertise in the subject matter to control and manage learning. These leaders are also the most invested in the outcomes of the learning programs. These leaders are using Docebo to create new use cases and drive tangible business results, like achieving sales targets. Docebo’s key use case, the ‘Extended Enterprise’, trains its customers’ customers and is used in 50 per cent of implementations. Extended Enterprise addresses the key success factor of customer retention, which has significant value, as well as enable its customers to better achieve sales objectives.”

Mr. Toner sees the Toronto-based employee-training software company as a “platform company,” noting its platform allows customers to adjust their content to improve both effectiveness and learning.

“Third parties can add and sell content to Docebo’s customers, offering a deep and diverse amount of material to enhance the offering and create stickiness around the product. We believe Docebo will add to the platform and create a more comprehensive suite.”

“Docebo continues to add large, recognizable names to its customer list and new customers continue to increase the average contract value (ACV) of its customer base. In September 2020, Docebo announced winning AWS as a customer. While there is significant potential to grow AWS into a much larger customer, we believe the AWS contract, is a validation of Docebo’s platform and will enable Docebo to win other large enterprise customers. AWS chose Docebo over its internal offering, reminiscent of when Amazon shut down its e-commerce platform and pushed its third-party merchants to Shopify Inc.’s (SHOP-T) platform.”

Citing its “large and growing total addressable market, and stable business model,” Mr. Toner thinks Docebo “compares well to several mature software companies that grew at similar rates over long periods and became highly profitable.”

He set a target of $85 per share, exceeding the $84.39 average.


Calling it “a resilient oil sands contractor breaking ground in new markets,” ATB Capital Markets analyst Tim Monachello initiated coverage of North American Construction Group Ltd. (NOA-T) with an “outperform” rating, touting its “dominant and stable” position in the region.

“NOA has built a dominant position in the Canadian oil sands as the top third-party provider of earthworks and large civil construction services to mining operations with multi-decade operating lives remaining,” he said. “NOA’s exposure is defensive with roughly 89 per cent of revenues tied to customer OpEx spending since 2017. We believe NOA holds more than 80-per-cent market share of third-party earthworks projects that require heavy equipment (more than 150k-ton trucks) and perhaps 25 per cent of the more fragmented lighter equipment market. Its dominant market position in the oil sands is largely unrivalled.”

Mr. Monachello thinks expansion outside the Oil Sands provides the Acheson, Alta.-based company with a “long runway for growth.”

“NOA has made meaningful strides to diversify its end-markets both regionally, and by commodity exposure – including a two-year, $250-million ($186-million net) contract awarded in October 2020 for construction services at an Ontario gold mine through an Inuit joint venture (JV) partnership (Nuna),” he said. “We believe NOA has roughly $2-billion in diversified opportunities (including gold and other commodities) that could be awarded over the next three years. Further, the Canadian mining segment offers $82-billion of planned or under-construction mining projects that are largely untapped. NOA has guided that its non-oil sands EBIT exposure should expand to roughly 40 per cent in 2021 from 30 per cent in 2020 and just 6 per cent in 2018.”

Seeing diversified project awards as a potential near-term catalyst and calling its valuation “attractive” with upside, he set a target price of $16.50 per share. The average is currently $15.40.

“NOA screens attractively in terms of valuation and performance including: (1) EV/EBITDA multiples among the lowest in our coverage (4.2 times in 2021); (2) return on equity (ROE) and return on invested capital (ROIC) among the highest in our coverage (19.9 per cent and 9.4 per cent, respectively, in 2021); and (3) attractive free cash flow (FCF) yields (16.4-per-cent distributable free cash yield in 2021),” said Mr. Monachello. “We believe as NOA diversifies its end markets, demonstrates continued growth outside the oil sands, deleverages its balance sheet, and continues to repurchase shares it could see its multiples expand into the 5.0-6.0-times range.”


Believing CareRx Corp. (CRRX-T) has “gone through a remarkable transformation to become a pure-play provider and improve its financial metrics,” Desjardins Securities analyst David Newman initiated coverage with a “buy” recommendation.

“CareRx owns 12 per cent of the approximately 425,000-bed long-term care (LTC) and seniors home market, which could grow to more than 1 million by 2036 with an ageing population and a chronic shortage of beds,” he said. “The company is well-positioned to secure more than its fair share of the greater-than 45,000 industry beds up for renewal in the next 12–18 months given its leadership position, high service levels and technology. While CareRx is targeting 100,000 beds serviced by 2023 (vs more than 52,000 today), we forecast 61,000 beds.”

“CareRx could expand its addressable market by nearly 15 times by tapping into the at-home market (6 million Canadians). It launched Pharmacy At Your Door in July 2020, a full-service pharmacy and digital at-home delivery business. It is also pursuing other opportunities, including greater penetration at retirement homes, new verticals (eg correctional facilities) and virtual care.”

Also touting its “proven M&A track record,” Mr. Newman set a target of $7.50 per share. The current average is $7.48.

“CareRx’s growth strategy should be driven by: (1) a large and growing seniors market, as well as the rising prevalence of chronic disease (eg diabetes), leading to greater demand for specialty pharmacy services; (2) the company’s scalable multi-provincial platform to serve LTC and retirement facilities, as well as the at-home market, including procurement leverage; and (3) multiple organic growth and acquisition opportunities in a fragmented specialty or institutional pharmacy market, especially given rising regulations and ongoing pressure on drug costs, mark-ups and dispensing fees.”


After its fourth-quarter results fell in line with his expectations, Industrial Alliance Securities analyst Frédéric Blondeau raised his target for Allied Properties REIT (AP.UN-T) to $40 from $38 with a “hold” rating (unchanged), seeing its portfolio “performing exceptionally well given [the] circumstances.” The average on the Street is $45.27.

Others making changes included:

* CIBC World Markets analyst Dean Wilkinson to $44 from $43 with an “outperformer” rating.

* Scotia Capital’s Mario Saric to $47.50 from $48 with a “sector outperform” rating.

* Desjardins Securities’ Michael Markidis to $42 from $41 with a “hold” rating.

“Current valuation metrics (FTM FFO yield spread and P/BVPU) are below historical averages. We believe this dynamic will persist until visibility with respect to future office demand improves,” Mr. Markidis said.


Though Saputo Inc. (SAP-T) is exhibiting “solid execution against a challenging industry backdrop,” Desjardins Securities analyst Chris Li said he’s “waiting for better visibility” following Thursday’s release of its third-quarter results.

“While SAP is navigating COVID-19-related challenges well, the extreme volatility in the block cheese price and the continuing pressures on the foodservice channel will keep earnings visibility limited in the near term,” he said. “This is partly offset by solid performance in other markets and sales channels, highlighting the strength of SAP’s global diversification. We would wait for more clarity before becoming more positive.”

Keeping a “hold” rating, Mr. Li raised his target to $40 from $38. The average is $39.75.

Elsewhere, CIBC World Markets analyst Mark Petrie upgraded Saputo to “outperformer” from “neutral” with a $43 target, up from $38. while BMO Nesbitt Burns’ Peter Sklar increased his target to $41 from $38 with a “market perform” rating.


In other analyst actions:

* Piper Sandler analyst Michael Lavery lowered Canopy Growth Corp. (CGC-Q, WEED-T) to “neutral” from “overweight” with a US$27 target, exceeding the US$26.82 average.

* RBC Dominion Securities analyst Paul Quinn raised his target for shares of Resolute Forest Products Inc. (RFP-N, RFP-T) to US$11 from US$9.50 with an “outperform” recommendation. The average is US$9.63.

“Resolute Forest Products Inc. reported Q4 results that were above our estimates but below consensus,” he said. “After 40 years with Resolute, CEO Yves Laflamme is retiring but leaving the company in the capable hands of Remi Lalonde. While the last decade was characterized by portfolio changes, deleveraging, and getting the pension under control, we think that the next decade will be about maintaining a stable balance sheet, returning capital to shareholders, and repositioning into growing markets (i.e., lumber, pulp and tissue).”

* In response to in-line fourth-quarter results, Raymond James analyst Daryl Swetlishoff increased his target for Interfor Corp. (IFP-T) to $40 from $37.50. The average is currently $32.58.

“We expect Interfor shareholders to be rewarded by the impressive financial flexibility and encourage investors to add to positions. We also highlight these results are a credible read-thru for other building materials producers and expect positive market reactions for the entire group,” he said.

Elsewhere, Scotia Capital analyst Benoit Laparade raised his target for Interfor to $36 from $34 with a “sector outperform” rating.

* After its virtual Investor Day event on Thursday, CIBC’s Nik Priebe raised his target for ECN Capital Corp. (ECN-T) to $9 from $8.25 with an “outperformer” rating, while BMO Nesbitt Burns’ Tom MacKinnon raised his target to $8.50 from $7 with an “outperform” rating. Raymond James’ Stephen Boland raised his target to $9.50 from $8.25 with an “outperform” recommendation. The average is $8.10.

“After an uncertain beginning in 2020 with the pandemic, each of the three subsidiaries have thrived into the latter part of the year. Each company gave presentations regarding their growth strategies driven by gaining higher market share and new product introductions. Preliminary guidance of $0.55 to $0.64 of operating EPS for 2022 was introduced. This is ~22% from the mid-point of 2021 guidance. ECN has one of the highest growth rates of any company in our coverage universe. We believe the market is undervaluing each of these assets compared to recent valuations being attributed to other lenders,” said Mr. Boland.

* CIBC’s Robert Bek raised his Telus Corp. (T-T) target to $28 from $26, maintaining a “neutral” rating. The average is $27.73.

* Mr. Bek also increased his target for Stingray Group Inc. (RAY.A-T) to $8 from $7.50 with an “outperformer” rating, while TD Securities’ Bentley Cross increased his target to $8 from $7 with a “hold” recommendation. The average is $8.21.

* CIBC’s Jamie Kubik bumped his target for Enerplus Corp. (ERF-T) to $6.50 from $6, keeping an “outperformer” recommendation. The average is $6.10.

* TD Securities analyst Vince Valentini cut his target for BCE Inc. (BCE-T) to $66 from $67, keeping a “buy” rating, while BMO Nesbitt Burns’ Tim Casey trimmed his target to $59.50 from $61.50 with an “outperform” recommendation. The average is $59.46.

* Cormark Securities analyst David Ocampo increased his target for shares of Exco Technologies Ltd. (XTC-T) to $14.75 from $12 with a “buy” rating. The average is $12.58.

* TD Securities analyst Cherilyn Radbourne raised her target for ATS Automation Tooling Systems Inc. (ATA-T) to $33 from $31 with a “buy” rating, exceeding the $32.17 average.

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