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

Though it capped a “positive day” on Thursday with the release of in-line fourth-quarter financial results, Canaccord Genuity analyst John Bereznicki lowered his rating for Superior Plus Corp. (SPB-T) based on valuation concerns.

Shares of the Toronto-based jumped 6.7 per cent following the announcement of the sale of its chemical business for $725-million to private equity fund manager Birch Hill Equity Partners.

After the bell, Superior reported fourth-quarter earnings before interest, taxes, depreciation and amortization of $169.8-million and adjusted operation cash flow per share of 66 cents, both meeting the expectations of both Mr. Bereznicki and the Street.

“Operationally, Superior met our expectations in both its domestic and U.S. propane distribution segments as well as in its Speciality Chemical business,” he said. “Concurrent with its year-end release, Superior unveiled 2021 EBITDA guidance of $370- to $410-million, which reflects the company’s pending $725-million Specialty Chemical segment divestiture announced earlier in the day. We are revising our estimates to reflect this sale and the company’s pro forma 2021 guidance ... Following a solid investor response to Superior’s sale announcement on Thursday, we believe the company’s shares are reasonably valued.”

Moving the stock to “hold” from a “buy” recommendation, he maintained a $15 target for Superior Plus shares.

Other analysts making target prices changes include:

* RBC Dominion Securities analyst Nelson Ng to $15 from $13 with a “sector perform” rating.

* TD Securities’ Daryl Young to $15.50 from $14.50 with a “buy” rating.

* Scotia Capital’s Ben Isaacson to $15 from $13 with a “sector perform” rating.


Canadian Tire Corp. Ltd. (CTC.A-T) finished 2020 “on an exceptionally strong note,” according to Desjardins Securities analyst Chris Li.

“The much better-than-expected 4Q results justify the strong share price performance over the past few months,” he said. “We believe further upside is possible if CTC shows a path to earnings growth in a post-COVID-19 world. While not easy, we believe CTC has multiple sales-growth and cost-reduction levers to lead the way.”

However, shares of the retailer closed down just over 0.1 per cent on Thursday following the premarket earnings release, leading Mr. Li to suggest the Street had largely expected the “exceptionally strong” retail results, that led to normalized earnings per share growth of 52 per cent, topping the consensus expectation of 26 per cent.

“CTC has been one of the best-performing stocks in our consumer coverage, with a one-year return of 20 per cent,” the analyst said. “While we do not view valuation as demanding at 13.2 times 2021 EPS (largely in line with the long-term average), we believe further upside will come only as investors gain more visibility on CTC’s earnings power in a post-COVID-19 world.

“A key question is whether CTC will be able to leverage its competitive advantages (ie Triangle loyalty program, enhanced data analytics, owned brands and e-commerce) to gain market share and replace lower at-home demand once the pandemic is under control. Getting the correct level of CTR revenue post the pandemic is critical. In 2022, we expect CTR revenue to be 16 per cent higher than in 2019. This implies an average annual growth rate of 5 per cent. Between 2015 and 2019, CTR revenue growth averaged only 3.5 per cent per year. All else equal, every 100 basis points change in our 2022 revenue growth assumption impacts our EPS forecast by 35 cents (2 per cent).”

Citing the near-term impact of COVID-19 lockdown restrictions, Mr. Li lowered his 2021 earnings per share expectation to $13.30 from $13.61. However, he raised his target price for its shares to $195 from $180. The average on the Street is $178.09.

He kept a “buy” rating.

Other analysts making target price adjustments include:

* CIBC’s Mark Petrie to $202 from $198 with an “outperformer” rating.

“Canadian Tire delivered record Q4 results driven by a strong performance at CTR and boosted by a modest release of reserves in Financial Services,” said Mr. Petrie. “The pandemic and regional restrictions add uncertainty to 2021, but we remain confident that CTC is a highly relevant platform in all conditions and is set up to deliver strong results through 2021. E-commerce has been a surprising point of strength through the pandemic and competency there mitigates a key downside risk.

* Scotia Capital’s Patricia Baker to $202 from $185 with a “sector outperformer” rating.

* Canaccord Genuity’s Derek Dley to $190 from $160 with a “hold” rating.

* BMO Nesbitt Burns’ Peter Sklar to $178 from $157 with an “outperform” rating.

* National Bank Financial’s Vishal Shreedhar to $199 from $189 with an “outperform” rating.


After its operational update featured weaker-than-anticipated revenue and earnings for the fourth quarter and the commencement of a strategic review process, Canaccord Genuity analyst Matthew Lee lowered his rating for MAV Beauty Brands Inc. (MAV-T) to “hold” from “buy,” citing “lower visibility” for the future.

“For Q4, we largely expected to see a bounce-back in overall financial performance from MAV as its brands increased distribution and added new products to the roster,” he said. “However, it appears the impacts of COVID-19 on retail foot traffic were more profound than expected in the sector, with FDM retail experiencing a single-digit decline and drug channels experiencing a low double-digit decline. In addition, MAV faced temporary disruptions in its third-party warehousing and manufacturing operations, which management expects to be largely transient.”

The Vaughan, Ont.-based company is now expecting quarterly revenues of $22.5-million to $24.5-million with the mid-point representing a 24-per-cent year-over-year decline. Its EBITA is projected to be $3-$4-million, or a 60-per-cent drop. Mr. Lee had expected $32-million and $9.1-million, respectively.

With the results, it revealed a strategic review process to seek out future options, including a future sale of the business.

“We believe the company may be looking for alternative methods of funding future acquisitions without raising additional equity,” said Mr. Lee. “Alternatively, this may point to Marc Anthony and T&A and Associates, who cumulatively own 56 per cent, looking for a potential exit opportunity.”

“With the impacts of the pandemic returning in force, we have opted to reduce our H1/21 estimates from 3-per-cent growth to a 2-per-cent decline, which accounts for the potential challenges faced by retailers going into the new year. Management highlighted that Q1 was off to a stronger start, with January showing flat year-over-year haircare industry sales across the U.S., but a more conservative forecast may be warranted given the potential for sales to be further impacted by the pandemic and the pantry loading that occurred in March 2020.”

Mr. Lee maintained a $6 target for MAV shares. The average on the Street is $6.33.

“We maintain our view that the longer-term outlook on the name is solid, given its potent platform strategy and the strong consumer uptake of the brand,” he said. “However, with the pandemic-related uncertainty around foot traffic in the near term, we opt to take a more cautious approach to MAV.”

Mr. Lee was one of the three analysts to downgrade the stocks.

Elsewhere, National Bank Financial’s Vishal Shreedhar cut his rating to “sector perform” from “outperform” with a $6 target, while Acumen Capital’s Nick Corcoran lowered MAV to “speculative buy” from “buy” with a $7 target, down from $8..

“We revise our estimates down to reflect a more cautious outlook until Management can prove the business model. Catalysts include stronger than expected 2021 results, resumption of acquisitions, or a take-out,” said Mr. Corcoran.

CIBC World Markets analysts Matt Bank raised his target for to $7.50 from $5.50, keeping a “neutral” rating.


RBC’s Sam Crittenden thinks Teck Resources Ltd. (TECK.B-T) still possesses potential to be “unlocked.”

“We see potential for a catch-up trade in Teck shares, which trade at a discount to peers, as the company executes on its growth plans and benefits from higher base metals prices and improving coal prices,” said Mr. Crittenden following the release of its fourth-quarter results.

Seeing it “executing on copper growth” and expecting better coal pricing with improving operations, Mr. Crittenden raised his 2021 earnings per share projection to $3.42 from $3.35, citing “slightly lower copper and zinc production in 2021 is offset by lower operating costs for zinc and coal.”

However, he trimmed his target by a loonie to $32, maintaining a “buy” rating. The average on the Street is $27.57.

“Teck is trading at 4.8 times consensus forward EBITDA versus the historical average of 5.4 times, diversified peers at 4.2 times, and large cap copper peers at 4.9 times,” he said. “The diversified peers are trading below their historical average of 6–8 times due to the strong iron ore price, which is expected to moderate. We think Teck could trade closer to the historical average for diversifieds as it increases copper exposure.

“At spot prices, we calculate a NAVPS [net asset value per share] for TECK of $41.43, which includes $26.95 for the base metals assets and $14.24 for met coal and implies that the shares are trading at 0.65 times NAV. It is typical for development-stage assets like QB2 to trade at a discount and we believe this value can be unlocked as the asset is derisked, with first production expected in H2/2022.”

Elsewhere, Citi analyst Alexander Hacking increased his target to $30 from $26 with a “neutral” recommendation.

“We update our Teck model for updated 2021 guidance, note: we adjust QB2 capex $400-million higher for stronger CLP,” he said. “4Q results were generally strong – in particular demonstrating that recent investments translated into materially lower coal costs – and guidance contained no major surprises. We raise estimates based on higher metals price forecasts from Citi’s commodity team – including $10,000/ton copper. No doubt that Teck has significant optionality on long-term copper prices over the next decade including QB3 and NuevaUnion. That said, we calculate higher attributable FCF yields on pure play copper miners (FM, FCX), even in 2023-24E post-QB2. The upside from Teck vs the copper names would come from met coal and the cash bonzanza from any price spikes to more than $200 per ton; the downside is if Asian met coal demand is hit by steel de-carbonization faster than expected.”

Raymond James’ Brian MacArthur moved his target to $29 from $28 with an “outperform” rating.

“We believe Teck offers good exposure to coal, copper, and zinc, and is able to convert EBITDA from its Canadian operations efficiently given its large Canadian tax pools. Given Teck’s long life, low jurisdictional risk, diversified asset base, and valuation, we rate the shares Outperform,” he said.

TD Securities’ Greg Barnes raised his target to $34 from $30 with an “action list buy” recommendation.


In response to the release of stronger-than-expected quarterly results late Wednesday, a group of equity analysts raised their target prices for shares of Exchange Income Corp. (EIF-T).

The Winnipeg-based company reported revenue and EBITDA of $302-million and $82-million, respectively, for the fourth quarter, exceeding the consensus projections of $295-million and $67-million, despite facing pandemic-related challenges.

“We maintain our positive outlook on Exchange’s high cash flow yielding portfolio of proven, resilient businesses,” said Canaccord Genuity’s Doug Taylor. “While the near-term aviation outlook remains clouded as more infectious COVID-19 variants spread, the company’s critical aviation services to remote communities are well placed to rebound ahead of civil aviation peers, especially as vaccine rollouts reach these residents ahead of many larger cities. EIF’s manufacturing businesses continue to face some COVID-related operational challenges but remains a positive story with improved visibility to growth in 2022 post-pandemic. Our BUY rating remains unchanged with only small adjustments to our near-term profit expectations.”

Mr. Taylor increased his target for Exchange Income shares to $44 from $41. The average on the Street is $41.45.

Others making changes include:

* Laurentian Bank Securities’ Mona Nazir to $44 from $40 with a “buy” rating.

“EIF’s diversified business model is yielding significant results, in comparison to ‘Airlines & Aviation’ firms that continue to feel the pinch of the pandemic,” she said. “Quarterly performance again was significantly ahead of estimates, with EBITDA beating by 24 per cent. We continue to like EIF at these levels and believe that 2020 financial performance has illustrated the resilience of its business model and management’s ability to rein in costs, win new work and deepen relationships (First Nations, front-line worker aid, employees, customers).”

* RBC’s Walter Spracklin to $42 from $40 with an “outperform” rating.

* ATB Capital Markets’ Chris Murray to $50 from $46 with an “outperform” rating.

* National Bank Financial’s Cameron Doerksen to $44 from $42 with an “outperform” rating.


Analysts at National Bank Financial raised their target prices for a group of TSX-listed energy stocks on Friday.

Changes included:

  • Canadian Natural Resources Ltd. (CNQ-T, “outperform”) to $50 from $41. The average on the Street is $39.15.
  • Cenovus Energy Inc. (CVE-T, “outperform”) to $13.50 from $13. Average: $9.45.
  • Imperial Oil Ltd. (IMO-T, “sector perform”) to $38 from $31. Average: $27.38.
  • PrairieSky Royalty Ltd. (PSK-T, “sector perform”) to $15 from $12. Average: $12.86.
  • Seven Generations Energy Ltd. (VII-T) to $14 from $10. Average: $10.
  • Suncor Energy Inc. (SU-T, “sector perform”) to $33 from $38. Average: $30.14.
  • Tourmaline Oil Corp. (TOU-T, “outperform”) to $37.50 from $30. Average: $28.27.
  • Vermilion Energy Inc. (VET-T, “sector perform”) to $9.50 from $7. Average: $7.45.


In the wake of its latest earnings beating expectations and the company increased its outlook for 2021 amid an anticipated economic recovery, Raymond James analyst Bryan Fast upgraded North American Construction Group Ltd. (NOA-T) to “outperform” from “market perform,” seeing it “regrouped and ready to roll.”

“We believe the company has weathered the depths of the pandemic and is well positioned to capitalize on an improving macro backdrop,” said Mr. Fast. “NACG’s near-term and long-term growth prospects are attractive, with $3-billion in the potential project pipeline. As we have highlighted in the past, management’s focus on low costs, efficient capital allocation, and the goal of being the best contractor in the market, positions them well amongst their competitors to capitalize on the massive scope of work opportunity. Further, the company continues to diversify from the oil sands, as evidenced by key contract wins in 2020. In fact, North American has set a new diversification target for adjusted EBIT in 2022 of 50 per cent (up from 40 per cent previously).

“Our downgrade at the onset of the pandemic in 2020, was predicated on a lack of near-term catalysts given the volatile and uncertain operating environment. Despite navigating a difficult year, NACG took steps towards deleveraging, ending the year with net debt down 5 per cent yeat-over-year. Investors may recall that this was a central component of our investment thesis prior to the pandemic. As the operating environment further normalizes, we expect NACG to continue down that path.”

His target rose to $18 from $10, exceeding the $16.20 average.

Others making target price changes include:

* National Bank Financial’s Maxim Sytchev to $21 from $18 with an “outperform” rating.

“NOA’s management continues to deliver despite challenging circumstances,” said Mr. Sytchev. “With improving commodity complex (WTI back to last year’s levels, copper at 5-year highs, etc.), this better sentiment should be translating into a higher multiple, especially when taking into account 50-per-cent EBIT outside of oil sands threshold by 2022 (which we view as achievable given company’s existing backlog in hand and bidding prospects); skewing to potentially 70 per cent of EBIT (via M&A) outside of oil sands could provide further impetus. While we of course cannot predict the timing, exact asset, etc., we want to give management and the board credit for future capital deployment optionality, earned via judicious capital stewardship since 2012.”

* PI Financial’s Devin Schilling to $22 from $17 with a “buy” rating.

“With diversification progressing ahead of schedule, we are bumping our target higher and reiterating our top pick status,” he said.

* Canaccord Genuity’s Yuri Lynk to $21 from $20 with a “buy” rating.

* ATB Capital Markets’ Tim Monachello to $21 from $20 with an “outperform” rating.

* BMO Nesbitt Burns to $18 from $17 with an “outperform” rating.


Calling it a “dominant player with cross-selling capabilities,” Laurentian Bank Securities analyst Mona Nazir initiated coverage of Bird Construction Inc. (BDT-T) with a “buy” recommendation, believing its recent acquisition of Stuart Olson is not fully realized in its stock price.

“The transaction increases Bird’s revenue by 70 per cent and takes backlog up approximately 80 per cent to $3.9-billion (including $1.3-billion ‘pending’),” she said. “With $25-million in synergies to be extracted by 2021, Bird’s margin profile is expected to remain relatively unchanged while the book of business is more diversified with reduced volatility and a greater percentage of recurring revenue.”

Seeing increasing infrastructure spending in Canada as a growth driver and emphasizing its “superior” dividend yield to its peers, she set an $11 target for Bird shares. The average is currently $10.67.

“Although Bird’s stock price has appreciated over 30 per cent on the back of its Stuart Olson acquisition and as investor sentiment improves, we view the stock price as an attractive entry point for investors,” he said. “We highlight that in comparison to its peer group, Bird has not experienced relative appreciation over the last five years, rather contraction. Should management continue to progress with the de-risking strategy and Stuart Olson synergy extraction increase margin levels to the 4-per-cent level, we believe that the stock price could rebound back to the $12.00+ level.”


In other analyst actions:

* TD Securities analyst Craig Hutchison downgraded First Majestic Silver Corp. (FR-T) to “hold” from “buy” with a $23 target, up from $21. The average on the Street is $20.

* JP Morgan analyst Levi Spry downgraded OceanaGold Corp. (OGC-T) to “neutral” from “overweight” and cut his target to $2 from $3.50. The average is $3.37.

* TD Securities’ Greg Barnes raised his target for Hudbay Minerals Inc. (HBM-T) to $12.50 from $11, maintaining a “buy” recommendation. The average is $10.98.

* National Bank Financial analyst Gabriel Dechaine raised his target for Canadian Imperial Bank of Commerce (CM-T) to $126 from $124, keeping an “outperform” rating. The averageis $122.19.

* Scotia Capital analyst Paul Steep raised his target for shares of Thomson Reuters Corp. (TRI-N, TRI-T) to US$89 from US$84 with a “sector perform” rating. The average is US$85.86.

* Scotia’s Benoit Laprade raised his Western Forest Products Inc. (WEF-T) target to $2 from $1.50 with a “sector perform” rating, while Raymond James’ Daryl Swetlishoff moved his target to $1.85 from $1.75 with an “outperform” rating. The average is $1.64.

“With continued domestic market strength and improving offshore fundamentals we see Western as well-positioned in coming quarters. While enjoying material share price appreciation we highlight that Western still offers compelling value, trading at just 4.2 times 2021 EV/EBITDA and advocate investors continue to add to positions.,” Mr. Swetlishoff said.

* RBC Dominion Securities analyst Walter Spracklin lowered his Waste Connections Inc. (WCN-N, WCN-T) target to US$113 from US$116, keeping an “outperform” rating, while ATB Capital Markets’ Chris Murray trimmed his target to $140 (Canadian) from $145 with a “sector perform” recommendation. The average on the Street is US$126.85.

“A Q4 beat - check. Conservative guidance - check. Room for upside - double check. WCN delivered on the key metrics in terms of operating excellence and outlook. Further, our straw poll of top holders indicates that the contraction in valuation premium is almost entirely due to sector rotation - and nothing to do with underlying fundamentals. We therefore consider the relative weakness as transitory and continue to recommend the shares at current levels,” said Mr. Spracklin.

* Desjardins Securities analyst Gary Ho hiked his target for Goeasy Ltd. (GSY-T) to $139 from $119 with a “buy” rating, while BMO Nesbitt Burns’ Etienne Ricard hiked his target to $143 from $108 with an “outperform” recommendation. The average is $124.50.

“4Q20 adjusted EPS and operating income beat our expectations,” he said. “GSY’s 47-per-cent dividend increase was also a positive surprise. The new three-year outlook calls for loan book growth of 60 per cent, suggesting management is more comfortable with the current environment. With an abundance of financial flexibility, GSY is well-positioned to fund organic growth and strategic acquisitions. We raised our 2021 and 2022 adjusted EPS estimates and our valuation multiples.”

* CIBC World Markets analyst Robert Catellier raised his target for TC Energy Corp. (TRP-T) by a loonie to $70 with an “outperformer” rating. The current average is $68.30.

* CIBC’s Scott Fromson increased his target for CCL Industries Inc. (CCL.B-T) to $72 from $70 with an “outperformer” recommendation. The average is $70.13.

* RBC Dominion Securities analyst Pammi Bir raised his target for Dream Industrial REIT (DIR.UN-T) to $14 from $13.50 with an “outperform” rating, while Desjardins Securities’ Michael Markidis increased his target to $14.50 from $14 with a “buy” recommendation. The average is $14.19.

* RBC’s Sabahat Khan cut his target for MTY Food Group Inc. (MTY-T) to $47 from $43 with a “sector perform” rating, while CIBC’s John Zamparo trimmed his target to $63 from $65 with an “outperformer” rating. National Bank Financial’s Vishal Shreedhar lowered his target to $52 from $57 with a “sector perform” rating. The average is $54.38.

“We view the 6 per cent sell-off in MTY following Q4 results as overdone,” said Mr. Zamparo. “This is predominantly a U.S. business (60 per cent of system sales), and operations south of the border — 4-per-cent system sales increase year-over-year in Q4 — are enviable. Progress on the Canadian business was modest, but the company is well-positioned for future recovery at home, while we expect little drop-off in the U.S. Furthermore, we expect a return to the dividend/buyback by FQ3 and M&A should be on the docket in 2021.”

* Stephens analyst Mark Connelly raised his target for Nutrien Ltd. (NTR-N, NTR-T) to US$53 from US$55 with a “equal-weight” recommendation, while Credit Suisse’s Christopher Parkinson raised his target to US$53 from US$51 with a “neutral” rating. Scotia Capital’s Ben Isaacson moved his target to US$63 from US$60 with a “sector outperform” rating. The average is US$55.95.

* Credit Suisse analyst Andrew Kuske raised his Inter Pipeline Ltd. (IPL-T) target to $20 from $16.50 with a “neutral” rating. The average is $16.13.

* National Bank Financial analyst Travis Wood hiked his target for Peyto Exploration & Development Corp. (PEY-T) to $8 from $3.50 with an “outperform” rating, while CIBC’s David Popowich raised his target to $6 from $4 with a “neutral” rating. TD Securities’ Aaron Bilkoski increased his target to $6.50 from $3.50 with a “hold” rating, exceeding the average of $4.89.

“We have underestimated the degree to which Peyto could push capital efficiencies lower, along with the corresponding free cash flow leverage in the business as commodity prices have improved,” said Mr. Popowich. “Although our 2021 FCF estimate is essentially unchanged today, our 2022 estimate increases by $54-million (to $136-million) on the back of yesterday’s reserves update, which implies a FCF yield of 14 per cent. Acknowledging that we are playing catch-up as Peyto continues to outperform both with the drill bit and with its share price, we see this as a reasonable valuation in the context of the gas-weighted peer group.”

* BMO Nesbitt Burns analyst Jonathan Lamers raised his target for Boyd Group Services Inc. (BYD-T) to $250 from $249 with an “outperform” rating. The average is $245.83.

* BMO’s Fadi Chamoun cut his TFI International Inc. (TFII-N, TFII-T) target to US$84 from US$105 with an “outperform” rating. The average is US$75.61.

* Stifel analyst W. Andrew Carter increased his Hexo Corp. (HEXO-T) target to $10 from $5.60 with a “hold” rating. The average is $5.89.

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