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

Equity analysts on the Street reacted positively to Brookfield Asset Management Inc.’s (BAM-N, BAM.A-T) admission that it is mulling the possibility of carving out its asset management business into a separate company.

One of many to raise his target price for its shares, Canaccord’s Mark Rothschild sees the potential for additional value to surface from a spinoff.

Brookfield Asset Management considers spinoff of asset-management business

“Though various structures are being considered, and there is no guarantee that this spinoff will occur, from management’s comments on the earnings call, it appears that the intention is to create a structure that will allow the management fees to be owned and valued separately in an ‘asset light’ entity,” he said in a research note released Friday. “Applying a 25-times multiple to base management fees, which is similar to where Blackstone currently trades, implies a value for this division of $71 billion or $121 billion including invested capital. We note that management believes that the value of the asset management business would be within a range of $70-$100 billion, which would imply a value of $45-$60 per share, excluding invested capital of $50 billion ($30.60 per share).”

Keeping a “buy” rating for Brookfield’s US-listed shares, he bumped up his target to US$75 from US$69. The average on the Street is US$71.87, according to Refinitiv data.

Meanwhile, Citi’s William Katz emphasized his opposition to the move while raising his target to US$65.50 from US$61 with a “neutral” recommendation.

“With management openly canvasing the investment community around the merits of a partial spin of the A/M platform, our initial response would be to keep the status quo. To us, such a move would not seem to create economic value but seemingly adds further to complexity,” he said.

“Why A “No” Vote From Us — 1) Investors already use SOTP to value BAM (and other Alts) disparate earnings streams; 2) we understand there is no economic benefit; 3) overall complexity would seem to further rise. We also note sector multiples are compressing against deteriorating macro dynamics.. Finally, the discussion raises corporate finance debate around capital return, we believe.”

Others making target adjustments include:

* Credit Suisse’s Andrew Kuske to US$68 from US$63 with a “neutral” rating.

“The real story ... was the potential for another matryoshka moment with the potential spin/separation of the asset management business,” he said. “This spin iteration may accomplish several objectives, including: a standalone currency for the alternative asset business (possibly ticker “BAA” as an option for “Brookfield Alternative Assets”); a re-visit of valuation; and, quite clearly act as a near-term actionable catalyst. A natural question of greater capital market segmentation creating additional complexity exists – albeit all likely very manageable within a broader Brookfield context. On balance, the franchise continues to grow and looks to be better positioned than in the past. For us, the overall platform build and the velocity of capital flowing through the Group are the major issues to watch.”

* CIBC World Markets’ Dean Wilkinson to US$75 from US$70 with an “outperformer” rating.

“While BAM delivered an operationally in-line quarter that demonstrated the company’s strengths with continued growth in AUM and earnings, along with the added sweetener of a dividend increase, results were all but overshadowed by comments in the shareholder letter regarding the potential separation of the asset management business to surface a higher valuation,” said Mr. Wilkinson. “The company believes that a pure-play alternative investment manager with a lighter on-balance-sheet capital base could be easier to value (something with which we don’t disagree), and when looking at comparable peers, could also attract a higher valuation. Management estimates a separated asset manager could result in a NAV of over $75 per share compared to our current NAV estimate of $72 per share (increased from $66), while also opening up the company to new growth avenues and potentially allowing investors to be more selective on their desired exposure. However, BAM is in early stages of the evaluation process so nothing is expected in the near term (and the possibility remains, although likely remote, of ultimately taking no action), with additional updates to be provided in future quarters. With strong growth prospects and an 8-per-cent discount to our upwardly revised NAV, let alone a higher potential sum-of-the-parts with a spun-off asset manager, we continue to view BAM as a core holding.”

* KBW’s Robert Lee to US$73 from US$69 with an “outperform” rating.

* JP Morgan’s Kenneth Worthington to US$70 from US$72 with an “overweight” rating.

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RBC Dominion Securities’ Drew McReynolds called Telus Corp.’s (T-T) fourth-quarter 2021 results and better-than-anticipated 2022 guidance “a pivotal turning point” as it “transitions into a new post-FTTH build/5G phase.”

Seeing multiple sources of potential net asset value upside, he was one of his several equity analysts to raise their financial expectations and target prices for the company’s shares following the quarterly results, which sent it higher by 1.2 per cent.

Telus boosts quarterly revenue, profit as broadband expansion attracts more customers

“While there is no finish line as TELUS positions itself to now capture incremental 5G opportunities, we do believe the company is “touching down in the endzone” in 2022/2023, emerging with a distinctively different financial and operational profile relative to most global telecom peers,” said Mr. McReynolds.

“In our view, there is no other company in our coverage that has as many potential sources of NAV upside than TELUS. We believe the key strategic benefit of the $1.5-billion of accelerated investment in 2021 and 2022 is an even stronger competitive position and enhanced capex flexibility beginning in 2023 given substantial completion of the FTTH build, which should enable TELUS to capitalize on new 5G growth opportunities without meaningful capital constraints, opportunity costs, or FCF impairment. Relative to our current forecast, we still see multiple sources of potential NAV upside including: (i) incremental cost savings associated with FTTH migration and copper de-commissioning; (ii) additional wireline margin expansion driven by Internet flow-through, cloud-migration and/or improved B2B/ TELUS Agriculture profitability; and (iii) the crystallization of TELUS Health and TELUS Agriculture. Longer term, given the company’s unique asset mix and under certain operational and regulatory conditions, we see strong strategic and financial rationale for TELUS to explore a transformational re-organization that can fully unlock the value of the company’s core infrastructure assets and core technology assets.”

Mr. McReynolds thinks its “stronger” 2022 guidance is “indicative of the increasing alignment of multiple growth drivers,” leading him to raise his target for Telus shares to $36 from $32 with an “outperform” rating. The average on the Street is $32.72.

Also reaffirming the company as his “highest conviction name in Canadian telecom,” he added: “In our view, the best-in-class revenue and EBITDA growth guidance of 8-10 per cent for 2022 is indicative of a longawaited alignment of multiple company-specific growth drivers that include: (i) the flow-through benefits of industry-leading bundling and subscriber growth, accelerated FTTH migration (with only 11 per cent of TV and Internet customers within the fiber footprint on copper, down versus 12 per cent in Q3/21 and 15 per cent in Q2/21) and copper de-commissioning; (ii) stronger “J-curves” kicking in at TELUS Health and TELUS Agriculture following multiple acquisitions, integrations and reinvestment over the past few years; (iii) B2B improvement with positive B2B EBITDA growth in Q4/21 and 2021 against the potential backdrop of an improving Alberta economy and incremental 5G commercialization (fixed wireless, MEC, network slicing, smart city, transportation, etc.); and (iv) multiple cost-efficiency levers (digitization, cloud, FTTH, 5G, etc.).”

Others making changes include:

* Desjardins Securities’ Jerome Dubreuil to $34.50 from $33 with a “buy” rating.

“While many global peers are returning to a ‘dumb pipes’ telecom paradigm, we do not believe T needs to take the same approach given the company’s advanced fibre deployment, solid wireless network performance and ownership of attractive technology platforms that generate synergies with the telecom business,” he said.

“In our view, T’s stock price does not fully capture the additional value the company offers shareholders through its large exposure to wireless, advanced FTTP program and ownership of attractive growth platforms. We believe its strong forward-looking management team has positioned the company well for long-term robust growth in connectivity, IT, health and agriculture.”

* Scotia Capital’s Jeff Fan to $38 from $36 with a “sector outperform” rating.

“In addition to solid Q4 results, we believe the 2022 outlook reflects the strong momentum exiting 2021,” said Mr. Fan.

* CIBC’s Robert Bek to $33.50 from $31 with an “outperformer” rating.

“The strong FY22 outlook sets the stage for an even better FY23, and continued opportunities to monetize non-traditional assets,” said Mr. Bek. “We continue to view TELUS as well-positioned fundamentally relative to its peers, with a justifiable valuation premium.”

* Canaccord Genuity’s Aravinda Galappatthige to $34 from $33 with a “buy” rating.

* National Bank’s Adam Shine to $36 from $35 with an “outperform” rating.

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Fundamentals are “falling into place” for Precision Drilling Corp. (PD-T), according to RBC Dominion Securities analyst Keith MacKey, who sees its fourth-quarter 2021 results showing the impact of improving North American rig margins.

“Precision averaged 45 active rigs in the U.S. in 4Q21, up 10 per cent sequentially, for an 8.2 per cent market share,” he said in a note. “PD has 52 rigs currently operating in the Lower-48. Industry rig counts continue to strengthen as E&P operators begin to replenish drilled-uncompleted well inventories. PD saw 4Q daily cash margins up sequentially and expects cash margins to expand throughout the year as higher leading edge rates on new contracts and renewals outpace inflationary factors.

“Strong market position in Canada supports cash generation. Precision is currently running 66 rigs in the seasonally strong first quarter. The company is effectively sold out of its 27 super triple fleet in Canada. PD also maintains a strong position in several Canadian plays which have attracted E&P capital in recent years, including the Clearwater heavy oil play. As noted in the most recent version of our WCSB Trend Tracker, PD has a 42-per-cent market share in heavy oil drilling.”

Mr. Mackey expects 2022 to “unfold favourably” for land drillers with rig counts continue to increase, leading to margin expansion through increased utilization and stronger prices.

Maintaining an “outperform” rating for its shares, he raised his target to $81 from $71. The average on the Street is $74.33.

Others making changes include:

* CIBC’s Jamie Kubik to $70 from $65 with a “neutral” rating.

* National Bank’s Dan Payne to $80 from $65 with an “outperform” rating.

* ATB Capital Markets’ Waqar Syed to $98 from $91 with an “outperform” rating.

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Citi analyst Tyler Radke sees “some choppiness” ahead for Shopify Inc. (SHOP-N, SHOP-T).

“Shopify enters 4Q21 earnings with the stock well off highs but still relatively expensive versus peers and facing a potentially challenging numbers set-up,” he said in a research report released Friday.

Citing results from the firm’s alternative data tracking, Mr. Radke expects e-commerce headwinds and potential supply chain and fulfillment issues to weigh on quarterly results, predicting weaker quarter-over-quarter new merchant additions.

“Our third party data points to net merchant additions in Q4 tracking well below Q3 levels (50 per cent), though we acknowledge the absolute reliability of the data has been more suspect recently,” he said. “We also note cautious read-thrus from e-commerce peers where results point to weaker than seasonal growth into Q4, with softer consumer spending trends and pressures from supply chain/inflation issues. In our Dec. ‘21 CIO survey, customer-facing applications fell to #6 rank from #3 in terms of net investment priority.”

“We see a mixed Q4 numbers set-up for SHOP, as street numbers may not reflect aforementioned headwinds, even though expectations likely remain muted following a miss in headline numbers vs. consensus in Q3. For initial 2022 guidance, we expect qualitative commentary to support new merchant additions ahead of 2019 levels but below 2020, with continued improvement in take rate.”

With that view, Mr. Radke reduced his financial estimates for the Ottawa-based ecommerce giant. His full-year 2021, 2022 and 2023 earnings per share projections slid to US$6.10, US$5.91 and US$6.91, respectively, from US$6.19, US$6 and US$7.26.

Keeping a “neutral/high risk” recommendation for Shopify shares, his target dropped to US$978 from US$1,570. The average on the Street is US$1,488.71.

“While the stock is off 32 per cent since the last report, shares still trade at a premium vs. front office peers, especially after normalizing for SHOP’s lower gross margins,” he said. “We are adjusting our estimates below the street for Q4 and for 2022 on GMV as we lower our merchant count.

“We rate Shopify shares as Neutral, High Risk because while we appreciate the magnitude of the TAM [total addressable market], an acceleration of secular tailwinds coming into focus, a strong management team and record of execution, we believe much of this is priced in at the current multiple — which earns a significant premium to the implied multiple of its growth/margin framework and implies a 10-yr revenue CAGR [compound annual growth rate] that appears potentially too high.”

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Desjardins Securities analyst Benoit Poirier said he was “surprised” by the market’s reaction to Bombardier Inc.’s (BBD.B-T) “solid” fourth-quarter financial results, which featured the first full year of positive free cash flow generation since 2010.

Bombardier swings to profit, prepares for production increase

Shares of the Montreal-based maker of luxury business jets dipped 2.2 on Thursday following the premarket release, which also included guidance deemed to be “very conservative” by the analyst.

Mr. Poirier sees Bombardier “poised for further upside as management delivers on key initiatives to improve margins,” predicting a production rate increases is achievable soon.

“BBD highlighted that starting in 2023, aircraft deliveries would increase by 15–20 per cent over 2022 (expected to be in excess of 120 units), implying more than 138–144 aircraft deliveries (consensus was 135),” he said. “Recall that management’s initial 2025 objectives implied 130–135 deliveries. We now forecast 139 deliveries in 2023, 143 in 2024 and 145 in 2025. This brings our revenue forecast to US$8.0b in 2025 (vs BBD’s US$7.5-billion target), with adjusted EBITDA in line with management’s objective of US$1.5-billion, implying slightly lower margins (19 per cent vs 20 per cent targeted). We expect management to provide an update on its long-term targets (2023–25) during the upcoming virtual investor day on February 24.”

“Following the 4Q21 results and management’s comments, we are increasing our estimates. While BBD’s indebtedness remains elevated, we believe the strong progress made with key strategic initiatives to expand revenue and margins (eg Global 7500, growth of aftermarket business and restructuring program) are cause for optimism.”

Mr. Poirier maintained his bullish position on both Bombardier’s short- and long-term prospects and recommends “investors revisit the story ahead of the investor day” on Feb. 24.

Reiterating his “buy” rating for its shares, he raised his target to $3.25 from $2.75. The average is currently $2.34.

“We are pleased with the progress made so far with the turnaround plan. We expect a positive update on BBD’s 2025 objectives during the upcoming investor day,” he said.

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Citing “strong cash flow growth supported by improving operating performance,” Canaccord Genuity analyst Mark Rothschild raised his rating for RioCan Real Estate Investment Trust (REI.UN-T) following a “strong” fourth-quarter of 2021 that exceeded his expectations.

“While the ‘beat’ was due to a greater volume of residential inventory gains, property fundamentals are improving, and internal growth has picked up,” he said. “Management is guiding to internal growth of 3-4 per cent for 2022, which highlights the strength of the REIT’s portfolio. Continued asset sales, with a focus on the REIT’s slower growth assets, has resulted in a much higher-quality portfolio. Following the solid quarter, we are raising both our cash flow estimates and NAV estimate. We now utilize a blended cap rate of 5.15 per cent to value RioCan’s portfolio, and following Q4/21 results, our NAV estimate jumps to $25.11 per unit (previously $23.32).”

Moving the REIT to “buy” from a “hold” recommendation, Mr. Rothschild increased his target to $26.50 from $25. The average is $25.92.

“RioCan’s units currently trade at an implied cap rate of 5.4 per cent, or a 6.9-per-cent discount to our NAV estimate,” he added. “On a cash flow multiple basis, the REIT’s units are trading at 15.9 times 2022 estimated AFFO [adjusted funds from operations], below the average of 16.3 times for Canadian retail peers. Reflecting the higher target price and forecast total return of 17.8 per cent, we are raising our rating.”

Elsewhere, CIBC’s Dean Wilkinson bumped up his target to $26.50 from $25 with an “outperformer” rating.

“With unit buybacks and a distribution hike, RioCan is casting a vote of confidence and of capital for both its business and the economic recovery (a sentiment we wholeheartedly share),” said Mr. Wilkinson. “We believe that by prioritizing the return of cash to unitholders, REI is perhaps a step ahead of peers and indeed the market (something we anticipate we will see more of as the year unfolds). Portfolio committed occupancy is nearing 97% and essentially at prepandemic levels, while leasing spreads have continued to be quite strong (high-single-digit growth), not just showcasing REI’s strong execution capabilities, but perhaps challenging the arguably negative narrative surrounding retail real estate that has dominated the majority of headlines. REI continues to make progress on its developments, which capitalizes on supply-demand imbalances in major markets such as the GTA, and should continue to drive accretive NAV growth over time. These value-add activities are well supported by the REIT’s balance sheet, which remains fortified with ample liquidity. We continue to view the REIT favourably with its growth drivers and solid execution.”

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Following its announcement of a deal to acquire Net CHB for $40-million plus potential performance-based consideration, Laurentian Bank Securities analyst Nick Agostino upgraded Descartes Systems Group Inc. (DSGX-Q, DSG-T), seeing the Arizona-based provider of customs filing solution complimenting its current offerings.

“The addition of NetCHB to DSG’s Global Logistics Network further establishes DSG’s solution as a one-stop-shop for brokers, distributors and freight-forwarders alike, with NetCHB’s existing customer group also set to benefit from DSG’s solution toolkit to cover the full shipment lifecycle,” he said.

Calling it “a tuck-in typical of DSG,” he added: “We believe the purchase price represents a revenue multiple between 4-5 times (with DSG willing to pay slightly above the 4 times average multiple for tuck-ins given recent market conditions), suggesting potential revenue generation of US$8-million annually.”

Moving the stock to “buy” from “hold,” he maintained a US$88 target. The current average is US$89.58.

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Seeing a “more constructive environment” after its third quarter of fiscal 2022 saw a “whopping” 50.2-per-cent year-over-year rise in deferred revenues, Echelon Capital analyst Amr Ezzat upgraded Computer Modelling Group Ltd. (CMG-T) to “buy” from “hold.”

“While most of the increase is on early renewals, we view the trend post last quarter’s 8.7-per-cent year-over-year increase as a clear signal of an improving underlying environment,” he said. “Annuity & Maintenance (’A&M’) licenses (recurring revenues) are up 0.7 per cent year-over-year, in line with our estimate, while the more sporadic perpetual licenses soared 126.8 per cent year-over-year. On the back of strong results, continued CoFlow commercialization activity, and stronger commodity prices, we are upgrading our recommendation ... We believe a higher return profile is possible beyond our target price should oil prices remain constructive for a sustained period.”

Before the bell on Thursday, the Calgary-based company, which produces reservoir simulation software for the oil and gas industry, reported quarterly sales of $17-million, exceeding both Mr. Ezzat’s $16.1-million estimate and the consensus projection of $16.2-million. Adjusted earnings before interest, taxes, depreciation and amortization of $8.4-million also topped the $7.4-million forecast from both the analyst and the Street.

Raising his sales and earnings estimates due to a “more supportive environment,” Mr. Ezzat increased his target for CMG shares to $6 from $5.50. The average is $6.25.

“With virtually 100-per-cent oil & gas clientele, the main upside/downside risk to our target price and rating is crude oil pricing,” he said.

Elsewhere, Canaccord Genuity’s Neil Bakshi raised his target to $6 from $5.50 with a “buy” rating.

“CMG reported December Q3 results that we would classify as the best quarterly print we’ve seen in over two years,” he said. “Specifically, we point to the inflection of recurring revenue and overall revenue growth back into positive territory (despite an FX headwind) and positive commentary regarding the ongoing annuity renewal cycle. We continue to believe that the improving fundamental backdrop for CMG’s energy-focused customers combined with its historically low valuation have created a compelling entry point, and we believe this thesis is reinforced with these results.”

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Spearately, Mr. Ezzat downgraded Andrew Peller Ltd. (ADW.A-T) to “hold” from “buy” after higher input costs and supply chain issues weighed on its third-quarter 2022 financial results.

On Thursday, shares of the Grimsby, Ont.-based winemaker dropped 6.8 per cent after it reported a 6.8-per-cent drop in sales year-over-year, narrowly better than the analyst’s estimate of 7 per cent, while also seeing lower margins on higher raw material and supply chain costs. That led to a drop of 25.5 per cent in earnings before interest, taxes, depreciation and amortization to $12.1-million, well below Mr. Ezzat’s $16.4-million estimate.

“We went into the quarter expecting sluggish sales on COVID19 headwinds and lingering pressures on margins,” he said. “Looking forward, we believe these higher input costs are likely to persist, which will largely offset the higher top line growth we expect the Company to realize on easing pandemic restrictions.”

With lower financial expectations, he dropped his target for Andrew Peller shares to $8.50 from $11. The average is $11.25.

Concurrently, Mr. Ezzat also cut his target for Sylogist Ltd. (SYZ-T) to $17 from $19, below the $16.81 average. He kept a “buy” rating.

“Sylogist Ltd.’s FQ122 results showcased weaker than expected top-line growth, hampered by a negative FX impact, purposeful pricing discounts offered to long-standing customers to gain their longer-term commitments toward modernization with the Company’s products, and Omicron related headwinds,” he said. “Importantly, we see these as temporary issues and remain optimistic on the story. Namely, recent acquisitions and contract wins are a clear signal that Sylogist is well underway in its transition to a company seeking to capitalize on growth in a more aggressive fashion. We’ve seen comparable storylines in the past with subsequent valuation reratings, and we believe SYZ will be no exception.”

Elsewhere, Acumen Capital’s Nick Corcoran cut his target to $11 from $14 with a “buy” rating/

“While we expect ADW to face significant near-term headwinds from inflationary pressures, we see longterm value in the name from its brand recognition and significant barriers to entry,” he said.

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In other analyst actions:

* National Bank Financial Vishal Shreedhar upgraded Saputo Inc. (SAP-T) to “outperform” from “sector perform” with a $33 target, down from $35 and below the $36.88 average on the Street. Others making target changes include: Scotia’s Patricia Baker to $38 from $36 with a “sector outperform” and CIBC’s Mark Petrie to $36 from $38 with an “outperformer” rating.

“Saputo reported a relatively in-line Q3 vs. modest expectations. Headwinds in supply chain and labour availability remain significant, though are moving in the right direction, and the company has also taken price increases to address cost inflation by the end of F22. We are confident F22 will be the earnings trough, but the commodity landscape remains uncertain and likely a headwind for much of F23,” said Mr. Petrie.

* Following Thursday’s earnings release, Barclays analyst Adrienne Yih cut Canada Goose Holdings Inc. (GOOS-N, GOOS-T) to US$38 from US$56. Others making changes include: TD Securities’ Meaghan Annett to $46 (Canadian) from $59 with a “buy” rating, CIBC’s Mark Petrie to $45 from $67 with a “neutral” rating and Credit Suisse’s Michael Binetti to $48 from $60, keeping an “outperform” recommendation. The average is $49.

“Q3 results were underwhelming, though it was the Q4 outlook that has the market extrapolating to a slower recovery. We remain comfortable that the company will return to – and exceed – 20% EBIT margins, though the timeline and path to get there are cloudy. Our estimates and target multiple are moderated, and our price target falls ... Though upside remains substantial given GOOS’s weak share price performance, we maintain our Neutral rating given the lack of visibility and seasonality,” said Mr. Petrie.

* RBC’s Geoffrey Kwan increased his target for Definity Financial Corp. (DFY-T) to $35, above the $32.67 average, from $32 with an “outperform” rating.

* RBC’s Michael Harvey moved his Arc Resources Ltd. (ARX-T) target to $18 from $17, keeping an “outperform” rating. The average is $19.19.

* RBC’s Paul Treiber raised his Constellation Software Inc. (CSU-T) target to $2,800, exceeding the $2,537.76 average, from $2,700 with an “outperform” rating, while Raymond James’ Steven Li hiked his target to $2,400 from $2,200 with a “market perform” rating.

“Solid organic growth (up 5 per cent for Q4 and F2021) although the lower FCFA2S (FCF available to shareholders) performance in F2021 might raise some questions. We believe there are some mitigating factors even if the FCFA2S growth rate is lower than recent years. Our target moves higher as we roll forward our estimates,” said Mr. Li.

* Canaccord Genuity analyst Yuri Lynk raised his Toromont Industries Ltd. (TIH-T) to $123, which is 11 cents below the consensus, from $120 with a “buy” rating, while Scotia’s Michael Doumet bumped his target to $122 from $120 with a “sector outperform” rating.

“The ability to consistently deliver 20-per-cent-plus pre-tax ROIC, a debt free balance sheet, and record backlog should warrant a premium valuation, in our view,” Mr. Lynk said.

* Canaccord’s Scott Chan bumped up his Manulife Financial Corp. (MFC-T) target by $1 to $31.50, below the $31.68 average, with a “buy” rating, while Desjardins Securities analyst Doug Young raised his target to $30 from $29 with a “buy” rating and Scotia’s Meny Grauman increased his target to $30 from $29 with a “sector perform” recommendation.

“Given the big move in Manulife shares on earnings day (and even in the lead-up to reporting season) investors sitting on the sidelines are certainly wondering whether now is the time to capitulate and buy,” said Mr. Grauman. “Despite the market’s newfound enthusiasm for this name we believe that caution continues to be warranted, and we do not see Q4′s results changing that view. Our reticence remains grounded in Manulife’s unique risk profile which, in our view, stands as a significant barrier to a further revaluation of the shares. The reality is that while year-end results looked better than peers, they are unlikely to drive material upward estimate revisions. The real news in Q4 was the lack of bad news, which is notable, but not something to build a buy thesis on. As we enter 2022 reporting core investment gains will no longer be a tailwind, and the introduction of IFRS 17 continues to pose a real risk for this name, as does the prospect of a much more volatile rate and equity environment.”

* Mr. Young raised his target for Great-West Lifeco Inc. (GWO-T) to $42, exceeding the average by 11 cents, from $40 with a “hold” rating, while Scotia’s Meny Grauman cut his target to $41 from $42 with a “sector perform” recommendation and Barclays’ John Aiken moved his target to $45 from $42 with an “equal weight” rating.

“Although there are a lot of moving parts in this release, the end result of all of this noise is a neutral quarter that leaves our thesis on the name unchanged,” said Mr. Grauman. “Items to highlight include seasonal and one-time expenses at Empower, a favorable tax item at Putnam that accounts for the majority of the earnings this quarter, and favorable tax provisions in Europe (along with favorable mortality which is notable given COVID headwinds across the sector as a whole). Despite the noise we highlight the fact that the MassMutual and Personal Capital Integrations remain on track, and we also note some favorable trends at Putnam with respect to business mix. Overall, we continue to believe that this stock will remain range-bound until there is more evidence that the lifeco’s longer-term US strategy is delivering.”

* Mr. Grauman cut his target for Sun Life Financial Inc. (SLF-T) to $76, below the $77.88 average, from $78 with a “sector outperform” rating.

“Investors came into lifeco earnings season very worried about the negative impact that COVID would have on year-end results across the group, and that is exactly what Sun Life delivered despite a modest EPS beat that was boosted by an unusually low tax rate,” he said. “As we analyze these disappointing numbers the key question for us is whether we throw in the towel on this name. But we are not prepared to do that just yet, and the reason for that is that we do not believe that anything here is actually broken. Sure COVID is weighing on performance in Sun Life’s US segment in particular, and is likely to remain a factor in Q1 as well, but importantly we do not believe that it will remain a permanent headwind. Instead, we continue to take the long view and see SLF’s US Group Benefits business as a capital-light crown jewel that should only get stronger when the DentaQuest deal closes later in the year.”

* Desjardins Securities’ Gary Ho cut his IGM Financial Inc. (IGM-T) target to $53 from $54, keeping a “hold” rating. The average is $55.63.

* CIBC’s Scott Fromson raised his Colliers International Group Inc. (CIGI-Q, CIGI-T) target to US$190 from USS$185 with an “outperformer” rating, while Scotia Capital’s George Doumet increased his target to US$179.50 from US$173 with a “sector outperform” rating and Raymond James’ Frederic Bastien bumped up his target to US$195 from US$185 with a “strong buy” rating. The average is US$181.58.

“We have every reason to be bullish on Colliers International following the release of strong 4Q21 results [Thursday],” said Mr. Bastien. “The firm is riding favourable industry trends and harnessing the power of its unique partnership model to further expand its recurring activities—per its Enterprise ‘25 Global Growth Strategy. Record capital raises for 2021 set up the high-margin Investment Management (IM) platform for a particularly active next few months of deployment, while the pending acquisitions Antirion and Basalt Infrastructure should add incremental growth throughout the year. Importantly, these investments still leave management with plenty of dry powder to consolidate US engineering and design practices, just as the long awaited push to reimagine, rebuild and upgrade the country’s aging infrastructure is taking shape. As this transpires, we expect CIGI’s valuation to keep moving higher.”

* National Bank Financial analyst Richard Tse trimmed his MDF Commerce Inc. (MDF-T) target to $5 from $6 with a “sector perform” rating, while Laurentian Bank Securities’ Nick Agostino lowered his target to $9 from $11 with a “buy” rating. The average is $8.70.

“We believe that EBITDA margins have likely bottomed and are likely following a U-shaped trajectory, we also improve our EBITDA expectations marginally going forward, as we await better confirmation of headwinds subsiding as they relate to wage inflation and scarce labour resources,” said Mr. Agostino..

* Cowen and Co. analyst Vivien Azer cut her Aurora Cannabis Inc. (ACB-T) target to $7, remaining above the $6.52 average, from $10 with a “market perform” rating, while Canaccord’s Matt Bottomley lowered his target to $5 from $6 with a “sell” recommendation and ATB Capital’s Frederico Gomes moved his target to $5 from $5.75 with an “underperform” rating.

“We continue to like ACB’s margins but we lack visibility over the growth outlook due to lackluster rec. sales, lumpy international markets, and a diminishing Canadian medical market. We maintain our thesis that ACB’s market value implies overly demanding growth expectations, and we keep our cautious stance on the stock,” said Mr. Gomes.

* Scotia’s Mark Neville trimmed his GFL Environmental Inc. (GFL-N, GFL-T) target to US$48 from US$50 with a “sector outperform” rating, while CIBC’s Kevin Chiang cut his target to $56 (Canadian) from $58 with an “outperformer” recommendation. The average is US$43.38.

“The path to $900 million+ (and potentially $1 billion) in annual adj. FCF is becoming increasingly clear, with the levers (i.e., GFL Renewables, incremental M&A, organic initiatives) already in place and/or largely taking shape,” he said. “This would see GFL compound and self-fund, despite higher relative leverage, 20-per-cent-plus growth in adj. FCF through (at least) 2024 – a unique proposition, in our opinion. While we took our one-year target lower, this is purely a result of a reduced valuation multiple given the rise in interest rates. In fact, if anything, we have gained incremental confidence in the longer-term FCF trajectory for GFL. While hard to argue any Waste equity is ‘cheap’, GFL now trades at a sizeable discount to the other majors on our 2022E/2023E, with GFL likely to continue to deliver outsized growth in FCF beyond our forecast horizon. While we can appreciate concerns around the higher relative leverage, we continue to believe the strength and durability of the business can support this – as evidenced by the performance of the business through the pandemic (including its knock-on effects – e.g., inflationary pressures, labour shortages, etc.), since the IPO.”

* Scotia’s George Doumet raised his GDI Integrated Facility Services Inc. (GDI-T) target by $1 to $61 with a “sector perform” rating. The average is $68.36.

* Raymond James’ Brian MacArthur raised his Barrick Gold Corp. (GOLD-N, ABX-T) by US$1 to US$26, which is 38 US cents below the average, with an “outperform” rating.

“Barrick has a controlling interest in numerous high-quality gold mines and copper assets that allows it to generate strong cash flow. The no-premium deal with Randgold provided more tier-one assets and free cash flow, but also increased Barrick’s jurisdictional risk given Randgold’s large African portfolio. The creation of the Nevada JV with Newmont consolidated management at the world’s largest gold complex and provided the opportunity to create meaningful synergies,” he said.

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