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

With its shares up 16 per cent year-to-date, the next catalyst for Manulife Financial Corp. (MFC-T) is “not easy to see,” according to RBC Dominion Securities’ Darko Mihelic.

Though he viewed its first-quarter underlying business growth as “good,” particularly in Asia and the U.S., the equity analyst thinks the results failed to provide evidence of significant return on equity expansion or a lower risk profile. That led him to lower his rating to “sector perform” from “outperform.”

Mr. Mihelic called Manulife’s quarterly results “noisy” with reported earnings per share of 38 cents, falling well below both his 60-cent forecast and the 57-cent projection from the Street. He said the result was “significantly impacted by the direct impact of interest rates of 43 cents per share reflecting the steepening of the yield curve in the U.S. and Canada, higher risk-free rates, and narrowing corporate spreads.”

Its also announced a restructuring charge of $115-million after-tax that is expected to generate significant recurring pre-tax savings ($100-million by 2021, $200-million by 2022 and $250-million by 2023.”

“While we view the expected expense savings from the announced restructuring charge positively, we do not see it as enough of an earnings or valuation catalyst,” Mr. Mihelic said. “Our EPS estimates in 2022 move modestly higher due to the expected expense savings, but our BVPS forecasts (excluding AOCI) modestly decline given this quarter’s results..”

Despite increases to his 2021 and 2022 earnings expectations, Mr. Mihelic maintained a target price of $28 per share. The average target on the Street is $29.46, according to Refinitiv data.

“Although it is possible that MFC’s upcoming investor day may change our view, we find it difficult to see significant upside to our EPS/ROE estimates from here,” he said. “We therefore believe MFC’s next ‘leg up’ must be tied to a re-rating of its valuation multiple. On this front we are skeptical. We believe our relatively high risk premium assumption for MFC is justified by its exposures to long-term care and variable annuities in the U.S., as well as some of the volatility associated with MFC’s earnings stream that the ALDA portfolio and MFC’s myriad hedging strategies seem to create.”

Others making target changes include:

* Canaccord Genuity’s Scott Chan to $29 from $29.50 with a “buy” rating.

“MFC reported a slight core EPS beat supported by double-digit growth in all operating segments,” said Mr. Chan. “Heading into the quarter, higher interest rates and a steeper yield curve supported higher Lifeco valuations and are positive indicators for better earnings visibility long term.”

* Scotia Capital’s Meny Grauman to $27 from $29 with a “sector perform” rating.

“.Manulife delivered a mixed bag of results to kick off 2021,” he said. Although core EPS beat consensus, headline EPS was less than half of the core number and came in well below the Street as the impact of the steeping yield curve was even larger than expected. Meanwhile book value per share fell 6 per cent quarter-over-quarter and 12 per cent year-over-year as unrealized FX and AFS securities losses weighed on AOCI. This decline in book value was something that we did not see across any of the other lifecos this quarter, and was the key reason the shares underperformed on earnings day. Along with the big decline in book value, MFC also delivered a higher-than-expected leverage ratio and a lower LICAT ratio. While both measures are still at reasonable levels in our view, they have deteriorated significantly over the past few quarters and likely do constrain Management’s capital deployment options. We understand that the magnitude of the curve steepening that we saw this past quarter was unusually large, and that rising rates are positive for Manulife (and all its peers) over the long term, clearly one cannot rule out further steepening in the current economic environment.”


Equity analysts on the Street also made a series of target price adjustments to Manulife’s lifeco peers after the release of their quarterly results this week.

For Sun Life Financial Inc. (SLF-T), changes include:

* CIBC World Markets’ Paul Holden to $70 from $69 with a “neutral” rating. The average is $71.31.

“Overall earnings were in line with expectations, with the U.S. segment reporting stronger-than-expected results and MFS slightly missing its mark,” said Mr. Holden. “Softer results at MFS always seem to be a limiting factor for the stock, but SLF is once again looking particularly good on regulatory capital. It has the acquisition hammer, when and where it will use it are unknowns. We increase our price target ... on a higher multiple (we have increased target multiples across the group). We maintain our Neutral rating as we don’t see a lot of upside to consensus EPS or valuation multiples, but do recognize capital deployment as a potential catalyst.”

* Scotia Capital’s Meny Grauman to $74 from $76 with a “sector outperform” rating.

“In many ways these results were a proto-typical quarter for Sun Life with solid clean results free of any significant complication despite a material steepening in the yield curve,” said Mr. Grauman.

For Great-West Lifeco Inc. (GWO-T), changes include:

* CIBC’s Paul Holden to $40 from $36.5 with an “outperformer” rating. The average is $36.67.

“GWO delivered a solid quarter underpinned by strong results from Empower and Capital Risk Solutions,” said Mr. Holden. “Valuation multiples have normalized, but we would argue there is upside to EPS estimates given strong momentum in the aforementioned business lines. We also see significant option value with Putnam that is not included in our price target.”

* Scotia Capital’s Meny Grauman to $38 from $37 with a “sector perform” rating.

“Overall, we view GWO’s Q1 result as solid start to the year. Although core EPS was in line with us it was 5 per cent better than the Street and continued to point to strong momentum in the Capital and Risk Solution unit in particular. Results at Putnam deteriorated after a very strong Q4, but there is a high degree of seasonality in those numbers. From a shareholder perspective though the key focus remains the build out of GWO’s Empower platform, and the acquisition of MassMutual’s retirement services business which closed on December 31st,” he said.

* Desjardins Securities’ Doug Young to $38 from $36 with a “hold” rating.


Believing its near-term organic and M&A growth potential are properly reflected in its currently valuation, ATB Capital Markets analyst Chris Murray lowered Stantec Inc. (STN-T) to a “sector perform” recommendation on Friday from “outperform” previously.

After the bell on Wednesday, the Edmonton-based firm reported revenue, adjusted EBITDA and adjusted earnings per share of $878.6-million, $129.1-million and 50 cents, respectively, falling short of both Mr. Murray’s expectations ($936.6-million, $147.4-million and 58 cents) and the consensus projections on the Street ($931.9-million, $136.7-million and 50 cents).

“Organic net revenue growth (down 7.4 per cent year-over-year) came in well below expectations, reflecting a challenging operating environment, the restructuring of a key contract and difficult (pre-COVID) comp,” the analyst said. “However, despite the difficult set-up, margins expanded moderately in the quarter, reflecting strong operational execution with management reaffirming full-year guidance. With the macro back-drop demonstrating signs of improvement, we see STN as in a solid position to meet 2021 guidance with a pick-up in M&A activity offering further potential upside.”

Mr. Murray emphasized Stantec still possesses “plenty of dry powder” to pursue growth through acquisitions.

“The Company reported Net Debt/EBITDA of 0.8 times, comfortably below its targeted level of 1.0-2.0 times, which we see positioning the company to be active on the M&A front, particularly as travel and social distancing restrictions begin to loosen globally,” he said. “On the call, management reiterated that while it will look to actively repurchase its shares during market dislocations, accretive (tuck-in) M&A remains its preference as it relates to capital allocation priorities.”

Though Mr. Murray reduced his earnings expectations for both 2021 and 2022 to reflect the weaker-than-anticipated quarterly results, he raised his target for Stantec shares to $57 from $54. The average on the Street is currently $59.82.

“Our revised $57.00 12-month target implies a 6.2-per-cent return to target. As such, we believe moving to a more neutral stance reflecting the fair value of shares is warranted and we reduce our rating,” he said.

Elsewhere, Elsewhere, Laurentian Bank Securities analyst Nishita Mehta lowered Stantec to “hold” from “buy” with a target of $56 (unchanged).

Ms. Mehta said: “STN results were behind our and consensus estimate as net revenue registered organic retraction of 7.4 per cent from the weak Buildings and the Energy & Resources segments. Management reaffirmed its 2021 guidance of low to mid single-digit organic growth, but we remain conservative in our estimate given Q2 organic growth is expected to be flat, which would require a substantial year-over-year growth in 2H/21 to reach management’s guidance. However, we highlight a potential upside to our estimates from M&A as leverage remains low at 0.8x. Our estimates do not incorporate future M&A due to the uncertainty of timing and size of such transactions; however, our valuation multiple of 11 times on EV/EBITDA (similar to WSP) incorporate partial upside from M&A.”

Others making target changes include:

* Desjardins Securities’ Benoit Poirier to $59 from $57 with a “buy” rating.

“While we agree that 1Q results were soft, we believe the stock price performance following the results (down 5 per cent) was exaggerated,” said Mr. Poirier. “We are encouraged by management’s comments on the organic growth prospects of the business (especially in 2H) and the robust M&A pipeline ahead. We believe STN is ideally positioned to unlock value with its disciplined M&A strategy and healthy balance sheet. We are increasing our target ... and recommend investors buy the shares.”

* Canaccord Genuity’s Yuri Lynk to $67 from $69 with a “buy” rating.

“We view the 5-per-cent pull back in the stock in reaction to the print as a great opportunity to add positions,” he said. “Yes, EBITDA missed. However, it was largely due to $11 million of additional non-cash stock based compensation triggered by the 39-per-cent surge in Stantec’s stock price. Underlying organic growth, margin, and backlog trends remain extremely encouraging.”

* RBC’s Sabahat Khan to $51 from $48 with a “sector perform” rating.

* TD Securities’ Michael Tupholme to $64 from $60 with a “buy” rating.


CIBC World Markets analyst Robert Catellier deemed Pembina Pipeline Corp.’s (PPL-T) “reasonable,” however he lowered his rating for its shares to “neutral” from “outperformer” on Friday based on their current valuation.

“We see the risks and potential return as roughly balanced at this point,” he said. “Strong commodity price tailwinds are partially mitigated by hedging; however, there are longer-term headwinds from recontracting the Alliance Pipeline and we expect emerging competition from the Keyera KAPS pipeline system under development.”

On Thursday after the bell, Pembina reported adjusted EBITDA of $835-million, narrowly below Mr. Catellier’s $853-million estimate and consensus of $850-million. Adjusted funds from operations per share of $1.06 met his forecast while falling 2 cents below the Street.

“The adjusted EBITDA variance was due to lower marketing results, likely from frac spread hedges, and higher corporate expense. We therefore view these results as operationally in line with our outlook. The company reiterated 2021 guidance, including adjusted EBITDA of $3.2-$3.4-billion,” he said

Mr. Catellier maintained a $39 target for Pembina shares. The average is $38.80.

“The share price has reached our price target, and as a result we are downgrading on valuation,” the analyst said. “Possible positive catalysts include continued strength in frac spreads, improving crude oil marketing margins, increasing producer activity leading to higher volumes on Pembina’s systems possibly leading to expansion opportunities. Potential headwinds include recontracting risk for Alliance Pipeline, the ongoing challenges to Ruby Pipeline, and longer-term recontracting risk on the company’s conventional pipeline systems to the degree competition develops from Keyera’s KAPS pipeline system.”


Despite its stock’s strong performance thus far in 2021, Citi analyst Itay Michaeli continues to see a “favorable risk/reward” for Magna International Inc. (MGA-N, MG-T), touting “a number of conceivable catalysts” with the development of electric and automated vehicles as well as advanced driver-assistance systems

In a research report released Friday, he raised his financial expectations for the Aurora, Ont.-based auto parts manufacturer after “strong” first quarter results, seeing evidence of ”solid” growth over market (GoM) and “rising EPS power.”

“We see two paths for further multiple expansion. The first is simply delivery of Magna’s FCF growth/conversion plan. The second, in our view, is to reposition the segments/story (including for a possible future spin) towards the increasingly important & unique role that Magna can play in AV/EV mobility scaling. This “two-entity” thesis is a way to perceive Magna in the context of Car of the Future investing,” said Mr. Michaeli.

Maintaining a “buy” rating, he hiked his target to US$116 from US$101. The average is US$103.78.

Others making target changes include:

* Scotia Capital’s Mark Neville to US$115 from US$105 with a “sector outperform” rating.

“We have increased our 2021/2022 estimates by approximately 10 per cent, despite current supply chain challenges (namely, the global chip shortage). While the situation is fluid and visibility limited, Magna (and the supply chain in general), in our opinion, has thus far navigated remarkably well,” said Mr. Neville.

* JP Morgan’s Ryan Brinkman to US$114 from US$110 with an “overweight” rating.


Though it reported “stable” first-quarter results that fell in line with his expectations, Canaccord Genuity analyst Brendon Abrams downgraded True North Commercial REIT (TNT.UN-T) to “hold” from a “buy” recommendation, citing valuation concerns in the wake of “strong” unit price performance.

“As has been the case since the onset of the pandemic, the REIT’s cash flows and portfolio have been nearly ‘uninterrupted’, reflecting True North’s strategy of acquiring and owning properties leased on a longterm basis to credit-worthy tenants (75 per cent of total revenue),” he said. “With limited near-term lease maturities, we expect True North will continue to generate stable operating and financial performance throughout our forecast period, notwithstanding heightened uncertainty surrounding the broader office market, attributable primarily to impacts from work-from-home policies, over the medium-term.”

After the bell on Wednesday, the Toronto-based REIT reported funds from operations for the first quarter of 15 cents per diluted unit, stable year-over-year and a penny better than the projections of both Mr. Abrams and the Street. Same-property net operating income growth of 0.8 per cent was largely offset by higher expenses.

“True North presents an opportunity to invest in a geographically diversified Canadian office REIT with a portfolio leased overwhelmingly to government and credit-rated tenants (75 per cent of revenue) on long-term leases,” he said. “This provides the REIT with a significant degree of cash flow predictability.”

With the results, Mr. Abrams raised his target for True North units to $7.25 from $6.75. The average on the Street is $6.80.

“While we expect stable operating and financial performance from True North’s portfolio, the unit price has appreciated materially recently (30 per cent over the past six months) and we believe its units are fairly valued,” he said. “We are, therefore, reducing our rating for True North to HOLD from Buy. Combined with an 8.3-per-cent distribution yield, our target implies a one-year total return of 9.2 per cent.”


Despite a surge in steel prices leading to “strong” first-quarter results, shares of Russel Metals Inc. (RUS-T) were downgraded to a “hold” rating from “buy” by Laurentian Bank Securities analyst Nishita Mehta in a response to a “sharp” share price rise.

“In Q1/21, RUS benefited from strong global steel demand, low inventory levels, and a supply of inventory below 30-40 per cent of the normalized levels,” she said. “Given the transactional nature of the business, RUS can pass on higher sale prices, which resulted in an increase of adjusted EBITDA margin to 14.6 per cent in Q1/21 vs. 4.8 per cent in Q1/20. Although costs have started to pick up for RUS, management anticipates elevated margins to continue in 2021, albeit not at the levels of Q1 and we remain cautious in our estimates. Furthermore, the combination and downsizing of lower margin OCTG/line pipe with Marubeni-Itochu Tubulars America Inc. is expected to improve ROIC by 300 basis points, based on historical returns.”

Ms. Mehta raised her target for Russel shares to $30 from $28 to reflect her “view for the company in the light of the current market scenario of the North American Steel Industry.” The current average on the Street is $32.75.


The Street applauded better-than-anticipated quarterly results from AutoCanada Inc. (ACQ-T), leading several equity analysts to raise their target prices.

They include:

* ATB Capital Markets’ Chris Murray to $59 from $55 with an “outperform” rating. The average is $50.03.

“. We view Q1/21 results as very strong, particularly as Q1 typically represents a seasonally weak quarter, and come away with greater confidence in the Company’s outlook and management’s ability to execute on its growth plans. With margins looking sustainable and M&A set to begin in Q2/21 with an expanded $150mm acquisition pipeline and the digital retail strategy continuing to develop, we continue to look favourably on the fundamentals for the Company,” he said.

* Scotia Capital’s Michael Doumet to $55 from $46 with a “sector outperform” rating.

“The way we see it, 1Q21 profits highlight exactly how AutoCanada’s earnings power has been underestimated. Consistently, now for several quarters, the company has outperformed industry benchmarks, selling more new and used vehicles per dealership (and more F&I per vehicle), driving structural earnings growth,” said Mr. Doumet.

* National Bank Financial analyst Maxim Sytchev to $45 from $40 with a “sector perform” rating


In other analyst actions:

* Jefferies analyst Owen Bennett upgraded Tilray Inc. (TLRY-Q, TLRY-T) to “buy” from “underperform” with a US$23 target, up from US$4.77. The current average is US$18.98.

* * A day after its shares surged 4.75 per cent on stronger-than-anticipated results, CIBC World Markets’ Robert Bek raised his target Spin Master Corp. (TOY-T) to $54 from $44 with an “outperformer” rating, while RBC’s Sabahat Khan hiked his target to $53 from $45 with an “outperform” rating. The average on the Street is $47.36.

“We continue to rate Spin Master Outperformer, and have increased our price target ... capturing the strength of a big Q1 beat, a FY21 guidance increase, and the flow-through into FY22 on improved operational leverage,” said Mr. Bek. “We also argue for a further narrowing of the valuation discount from sector bellwether Hasbro to 2 times, as a result of an improvement in expected EBITDA margin to normalized levels, and with still-solid top-line growth. In our view, the story continues to be supported by improving fundamentals, with more positive catalysts to come during FY21. Consistent execution over the next few quarters should also pave the way for further upside.”

* RBC Dominion Securities analyst Greg Pardy raised his Imperial Oil Ltd. (IMO-T) target to $39 from $35 with a “sector perform” rating. The average is $34.61.

“Imperial’s impressive first-quarter operational results were eclipsed by the company’s stance that it will prioritize shareholder distributions in the months ahead,” he said. “Alongside a hefty 23 -per-cent increase in its annualized dividend—to $1.08 per share, the company also increased the size of its NCIB, and will look to repurchase up to 4 per cent (circa 29million shares) of its shares by the end of June.”

* Mr. Pardy also increased his Canadian Natural Resources Ltd. (CNQ-T) target by $1 to $45 with an “outperform” rating. The average is $46.24.

“CNQ is poised generate nearly $8-billion of free cash flow (post dividends of $2.2-billion) under our $64 WTI outlook in 2021,” said Mr. Pardy. “By aiming this free cash flow at debt reduction, CNQ is addressing market concerns that it runs with balance sheet leverage a snick too high. We are reaffirming an Outperform recommendation on CNQ, and raising our one-year price target $1 (2 per cemt) to $45 per share. CNQ is on both our Global Top 30 and Best Energy Ideas lists.”

* RBC’s Drew McReynolds bumped up his Cineplex Inc. (CGX-T) target to $11 from $9 with a “sector perform” recommendation, while Scotia Capital’s Jeff Fan raised his target by $1 to $12 with a “sector perform” rating and Canaccord Genuity’s Aravinda Galappatthige raised his target to $11 from $10.50 with a “hold” recommendation. The average is $12.86.

“While we do expect interest in the stock to rise, as inoculations ramp and re-openings emerge on the horizon, we believe the upside to valuation multiples is limited by the uncertainties around timing of the rebound in box office, longer-term impact of direct-to-SVOD film releases over the past year, and the ongoing structural change in focus of the Media conglomerates (that own the studios) toward ramping their own SVOD platforms,” said Mr. Galappatthige.

* TD Securities analyst Sean Steuart upgraded Cascades Inc. (CAS-T) to “buy” from “hold” with a $17.50 target. The average is $18.21.

Others making target changes include: RBC’s Paul Quinn by $1 to $20 with an “outperform” rating, National Bank’s Zachary Evershed to $18.50 from $20.50 with an “outperform” rating and Desjardins Securities’ Frederic Tremblay to $16 from $18 with a “buy” rating.

“1Q21 results were down year-over-year and slightly below recently lowered Street estimates, with weaker Tissue results more than offsetting solid performance in Containerboard,” said Mr. Tremblay. “Despite continued volume and pricing tailwinds in Containerboard, the consolidated 2Q outlook was softer than expected and reflects another quarter of low tissue volume as well as cost headwinds for all segments.”

* Mr. Sean Steuart increased his target for Western Forest Products Inc. (WEF-T) to $3 from $2.75 with a “buy” rating. The average is $2.60.

* Scotia Capital analyst Benoit Laprade raised his Interfor Corp. (IFP-T) target to $48 from $46, keeping a “sector outperform” rating. The average is currently $42.50.

* Mr. Laprade raised his West Fraser Timber Co Ltd. (WFG-T) target to $128 from $125 with a “sector outperform” recommendation. The average is $115.71.

*Scotia’s Phil Hardie raised his target for Trisura Group Ltd. (TSU-T) to $158 from $135 with a “sector outperform” rating, while TD Securities’ Mario Mendonca hiked his target to $180 from $140 with a “buy” rating. The average is $173.13.

“Investors reacted enthusiastically to Trisura’s first-quarter results that were characterized by continued momentum from its U.S. hybrid fronting platform and a significant upside surprise from the Canadian operations,” said Mr. Hardie. “This was the second consecutive sizeable beat driven by the highly profitable, but often overshadowed, Canadian platform. The upside surprise was largely driven by 1) lower than expected expenses and 2) unusually high level of prior period favourable reserve development. While the contribution from the reserve releases is not likely sustainable, we believe key aspects of the lower than anticipated expense have some carry-through reflecting positive operating leverage.”

* Scotia’s Mark Neville increased his Linamar Corp. (LNR-T) target to $100 from $95, exceeding the $93.40 average, with a “sector outperform” rating.

“Suffice to say, results were better-than-expected across the board,” said Mr. Neville. “The company’s 2021 Outlook for NIM was revised higher – primarily on the back of an improved outlook for Mobility margins, but, in our opinion, still seems conservative even after considering current supply chain challenges (most notably, the global semiconductor shortage). While the stock reacted positively to the release (up 6 per cent), in the context of the recent share price reaction (i.e., the stock is still down 15 per cent from the highs reached post Q4 results) the reaction, in our opinion, was fairly muted

* Mr. Neville raised his Martinrea International Inc. (MRE-T) target to $19 from $18.50, maintaining a “sector perform” rating, while TD Securities’ Brian Morrison cut his target to $17 from $18 with a “hold” rating. The average is $18.75.

* RBC’s Darko Mihelic raised his IA Financial Corp. Inc. (IAG-T) target to $78 from $75 with an “outperform” rating, while CIBC’s Paul Holden increased his target to $82 from $71 with an “outperformer” recommendation and Canaccord Genuity’s Scott Chan bumped his target to $81 from $77.50 with a “buy” rating. The current average is $76.28.

* RBC’s Paul Treiber bumped up his Information Services Corp. (ISV-T) target to $27 from $23 with a “sector perform” rating, while CIBC’s Stephanie Price raised her target to $33 from $32.50 with an “outperformer” rating. The average is $29.95.

“Q1 revenue, adj. EBITDA and adj. EPS were well above expectations on strong transaction volumes in the Saskatchewan real estate market and organic growth in services. Management appears more upbeat than last quarter that the growth momentum would continue in the near-term,” said Mr. Treiber.

* RBC’s Derek Spronk increased his GFL Environmental Inc. (GFL-N, GFL-T) target to US$41 from US$38, keeping an “outperform” recommendation, while Scotia Capital’s Mark Neville raised his target to $39 from $37 with a “sector outperform” rating. The average is US$35.88.

“.While the initial share price reaction to results was underwhelming – perhaps due to the fact that the company didn’t officially raise guidance, although all indications are it will with Q2 results – we were thoroughly impressed by Q1 results, especially in the context of a lagged recovery in Canada where GFL generates 40 per cent of its revenues,” said Mr. Neville.

* RBC’s Douglas Miehm cut his target for Aurinia Pharmaceuticals Inc. (AUP-T, AUPH-Q) to US$23 from US$26, falling below the US$27.89 average, with an “outperform” rating.

“Aurinia’s Q1/21 results reflected the first quarter following FDA approval of its sole product, LUPKYNIS, for the treatment of active LN on Jan. 22, 2021. As we expected, the company reported only modest initial revenues given the mid-quarter launch and COVID headwinds, which we now estimate to have a more pronounced impact on the sales ramp-up. We decrease our 2021-22 revenue estimates and lower our price target ... reflecting near-term uncertainty. We maintain our longer-term revenue outlook, and reiterate our view that Aurinia is well positioned to gain market share in this underpenetrated therapeutic area,” said Mr. Miehm.

* CIBC’s David Popowich raised his Tourmaline Oil Corp. (TOU-T) target to $35 from $30 with an “outperformer” rating. The average is $35.20.

* CIBC’s John Zamparo increased his Premium Brands Holdings Corp. (PBH-T) target to $120 from $118 with a “neutral” rating, while RBC’s Sabahat Khan cut his target to $107 from $111 with a “sector perform” rating, Desjardins Securities’ David Newman raised his target to $135 from $128 with a “buy” rating. and National Bank Financial’s Vishal Shreedhar bumped up his target to $134 from $130 with an “outperform” rating. The average is $126.82.

“The highlight in PBH’s quarter, in our view, was Clearwater’s (CLR) significant improvement, which should assuage some fears about the company’s balance sheet, cash flows, and ability to pay PBH’s interest and management fees,” said Mr. Zamparo. “On the core business, PBH stands to benefit from the recovery of foodservice (32 per cent of sales in 2020), and April sales surged, though we believe this assumption is already reflected in consensus estimates as well as in the share price. Cost pressures—on both food and labour—will be critical to achieving expected EBITDA growth this year, and could weigh on margins.”

* Mr. Zamparo moved his target for Primo Water Corp. (PRMW-N, PRMW-T) to US$18.50 from US$18 with an “outperformer” recommendation. The average is $19.36.

“Attractive, but relatively uneventful quarters such as Q1 are a sign of success for the Primo business,” he said. “Commercial volumes have begun to recover, residential volumes remain at above-average rates, and increased EBITDA guidance this year was not much of a surprise, but is encouraging nonetheless. Primary risks are a reduction in residential consumers postlockdowns and unabated cost inflation, but we don’t view either of these as probable. If anything, we believe it’s more likely that Primo generates EBITDA above its new outlook ($380MM-$390MM). We find the recent data from re-opened economies like Israel compelling, while synergy capture and the more flexible cost structure create an attractive setup for future growth.”

* CIBC’s Dean Wilkinson raised his Granite REIT (GRT.UN-T) target to $87 from $85, keeping an “outperformer” rating. The average is $86.75.

“An otherwise operationally in-line quarter was marked with some one-time debt restructuring charges on early redemption of certain debentures, which we believe is a prudent charge in the current low-rate environment given the expected interest savings on a go-forward basis,” said Mr. Wilkinson. “Granite continues to progress on growing its portfolio through acquisitions and advancing its development pipeline, which, in time, should serve to materially grow NAV. GRT is well positioned to complete additional acquisitions in the coming quarters and further diversify its tenant base.”

* CIBC’s Mark Jarvi cut his target for Boralex Inc. (BLX-T) to $47 from $48 with an “outperformer” rating. The average is $51.50.

* CIBC’s Stephanie Price raised her Altus Group Ltd. (AIF-T) target to $58 from $52.50 with a “neutral” rating, while RBC’s Paul Treiber bumped up his target to $68 from $62 with an “outperform” recommendation. The average is $63.67.

“Altus reported a Q1 that was in line with consensus on revenue, but 11 per cent below consensus on adjusted EBITDA,” said Ms. Price. “Management guided to full-year margins remaining steady year-over-year, while consensus had been forecasting an expansion of 170 bps. For the first time, results included a quarterly bookings metric, and bookings in the quarter were up 46 per cent over the prior year in constant currency. With the quarter, Altus announced it had acquired StratoDem, with its real data science offering furthering the move into real estate market adjacencies that began with the acquisition of Finance Active.”

* National Bank’s Cameron Doerksen cut his NFI Group Inc. (NFI-T) target to $32 from $34 with an “outperform” rating, while Scotia Capital’s Mark Neville trimmed his target to $34 from $35 with a “sector outperform” rating and ATB Capital Markets’ Chris Murray lowered his target to $33 from $35 with an “outperform” recommendation. The average is $35.

“Overall, we are neutral on the quarter with a positive bias as positive book-to-book trends and growing enthusiasm around greater EV spending have positive longer-term implications for the Company,” said Mr. Murray.

* Barclays analyst Raimo Lenschow raised his Open Text Corp. (OTEX-Q, OTEX-T) target to US$56 from US$55 with an “overweight” rating. The average is US$57.05.

* Canaccord Genuity analyst Katie Lachapelle cut her Lithium Americas Corp. (LAC-T) target to $28.50 from $30.50 with a “speculative buy” rating. The average is $25.41.

* BMO Nesbitt Burns analyst Ben Pham raised his Algonquin Power & Utilities Corp. (AQN-N, AQN-T) target to US$16 from US$15 with an “outperform” rating. The average is US$17.45.

* TD Securities analyst Greg Barnes increased his Franco-Nevada Corp. (FNV-N, FNV-T) to US$180 from US$170, exceeding the US$171 average.

* TD’s Graham Ryding increased his Fiera Capital Corp. (FSZ-T) target to $11.50 from $11 with a “hold” rating. The average is $12.

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