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

HEXO Corp.’s (HEXO-T) strategic partnership with Tilray Brands Inc. (TLRY-T) is a positive move for its shareholders, according to ATB Capital Markets analyst Frederico Gomes.

Believing “it materially de-risks the company’s balance sheet, removes the going concern overhang on the stock, and provides additional liquidity to execute ‘The Path Forward’ plan,” he raised his rating for Hexo shares to “sector perform” from “underperform.”

On Thursday, shares of Ottawa-based Hexo jumped 4.1 per cent after the premarket announcement of the deal, which sees Tilray agree to buy $211-million of its debt from HT Investments MA LLC, a fund run by New Jersey investment management firm High Trail Capital. Tilray will have the rights to convert its notes into common shares based on an initial price of 90 cents a share, bringing its ownership in Hexo to about 37 per cent.

“HEXO would gain access to US$80-million in cash that is currently restricted on its balance sheet. In addition, HEXO entered into a standby commitment with KAOS Capital (private, NR) for an equity backstop of up to $180-million (subscription of $5-million of common shares per month over a period of 36 months, to be issued at a 10-per-cent discount to the 20-day VWAP [volume-weighted average price] at the time the demand is made),” said Mr. Gomes.

“The companies expect up to C$50-million in savings over the next two years, to be equally split. These savings would come through cultivation and processing services, certain cannabis 2.0 products, and establishing a joint venture to provide services to both companies (e.g. procurement, distribution, transportation, insurance).”

The analyst thinks the deal de-risks Hexo’s outlook. That led him to raise his target for Hexo shares to $1.10 from 80 cents. The average on the Street is $1.45.

“Overall, we view the strategic alliance as a positive step with two of the leading Canadian LPs looking for potential economies of scale in key areas of their operations, and evidence that the sector needs to consolidate,” he said. “However, we remain cautious considering that, historically, larger LPs have struggled to realize scale benefits and compete with smaller LPs; larger LPs, including TLRY and HEXO, continue to lose market share. Our thesis for the overall sector remains that consolidation will take over two years to happen; meanwhile, we view LPs struggling due to competition and pricing pressure.

“TLRY’s potential ownership of 37 per cent of HEXO’s basic common shares falls short of a combination, but nothing in the agreement impedes TLRY from acquiring a controlling position in HEXO. We believe that, if successful, the alliance could lead to an even closer relationship between the two companies.”

Elsewhere, Canaccord Genuity analyst Matt Bottomley called the alliance “mutually beneficial,” leading him to upgrade both companies “largely on valuation given the sizable share price declines as of late.”

He moved Hexo to “speculative buy” from “hold” with a $1.25 target, up from $1.

“Given that HEXO has seen its share price decline by 30 per cent since reporting FQ1 and with potential increased flexibility in managing its convertible notes, we are also upgrading HEXO on valuation,” he said.

Mr. Bottomley also raised Tilray to “buy” from “hold” with a US$9 target (unchanged), which exceeds the US$8.65 average.

“With shares of TLRY coming off by more than 25 per cent since its FQ2 reporting, we believe pressure on the stock is overdone as of late, and we are upgrading our recommendation,” he said.


While he still sees “big upside” potential for SNC-Lavalin Group Inc. (SNC-T), National Bank Financial analyst Maxim Sytchev says his “confidence of getting there is still foggy.”

“One is still buying an Excel model when looking at SNC,” he said after the Montreal-based firm reported quarterly results that it acknowledged were “messy.”

“Management presented $300-million of (potential) cumulative losses as the worst-case scenario, in which another strain of COVID emerges, inflation/supply chain issues continue to escalate, etc,” the analyst added. “While the number appears large, let’s not forget that cumulative losses in LSTK have amounted to $1.2-billion (on EBIT) over the last three years.

“Due to percentage of completion accounting, when provisions get taken in a particular quarter, they have to be cumulative in nature; cash profile on LSTK project stipulates further outflows even though Consulting will marginally outweigh that dynamic. Versus FCF inflection arriving in 2022, this dynamic gets pushed by at least another year. Very disappointing.”

Calling it a “brutal end to the year,” Mr. Sytchev cut his target to $42 from $44, maintaining an “outperform” rating. The average is $41.

“If one is long the shares, we think it makes sense to see this through until we get into the consulting transition,” he said. “If one is observing from the sidelines, there is no need to buy given the level of uncertainty. With all the COVID impacts, we suspect Q1/22E will not be stellar either. This is a rightfully frustrating situation that only fits the most patient investors.”

Others making changes include:

* BMO’s Devin Dodge to $31 from $34 with a “market perform” rating.

“Though a meaningful portion of the LSTK backlog should burn off over the next 12 months, the cash flow drain from these projects is expected to continue resulting in another year of FCF usage. Valuation is undemanding, but a catalyst to support a rerating isn’t clear to us. We would consider a more constructive rating should visibility into an efficient wind-down on SNC’s remaining LSTK projects improve, all else equal,” said Mr. Dodge.

* TD Securities’ Michael Tupholme to $41 from $42 with a “buy” rating.

“We continue to be constructive on SNCL Services’ outlook (SNC’s future focus). Although LSTK project run-off risks remain, we see these risks as more than adequately priced into the stock. We continue to view SNC’s valuation as compelling,” he said.

* Raymond James’ Frederic Bastien to $38 from $40 with an “outperform” rating.

“We turned sufficiently positive on SNC-Lavalin’s journey to simplify and de-risk its business to upgrade the stock halfway through 2021. Although we knew the remaining LSTK backlog would continue to consume significant working capital and management resources, our rationale at the time was that SNC had much better visibility over what it oversaw, leaving investors with too compelling an opportunity to pass up. While this scenario has largely played out, with the core engineering services business consistently performing in-line or better than anticipated, a perfect storm of macro factors have recently overwhelmed the firm’s remaining lump-sum turnkey (LSTK) projects. These came to a head in 4Q21, forcing yet another set of downward adjustments to reflect higher expected costs to see through SNC’s last LSTK jobs. To the extent these industrywide headwinds are beyond management’s direct control, our conviction level on the stock remains elevated. It might just take longer than we originally had planned for SNC’s multiples to re-rate structurally higher,” said Mr. Bastien.

* RBC’s Sabahat Khan to $37 from $39 with an “outperform” rating

* CIBC’s Jacob Bout to $37 from $40 with an “outperformer” rating.


A day after its first-quarter results largely fell in line with the Street’s expectations, Veritas Research analyst Nigel D’Souza raised his rating for shares of Toronto-Dominion Bank (TD-T) to “reduce” from “sell” with a $100 target, which sits below the $110.45 average.

Analysts making target changes include:

* Stifel’s Mike Rizvanovic to $105 from $109 with a “hold” rating.

“While TD’s earnings were better than we (or consensus) had expected in the quarter, it was a less impressive EPS beat than what we saw from the bank’s peers,” said Mr. Rizvanovic. “That relative underperformance, coupled with lingering headwinds that are specific to TD such as falling overdraft fees in the US that we believe could ultimately go to zero (management noted about US$250-million of that revenue line disappearing after the latest changes to the account features), as well as moderation in insurance revenue post-COVID, paints a less rosy outlook for the bank’s growth trajectory in the near-term on a relative basis. As such, we believe TD’s valuation warrants a lower multiple (we now use a group average target multiple rather than a premium.”

* RBC Dominion Securities’ Darko Mihelic to $113 from $104 with a “sector perform” rating.

“TD’s Q1/22 results were relatively in-line with our forecast though its results generally lagged peers with respect to revenue on both sides of the border. We believe TD’s relative performance can improve with higher rates and higher consumer activity. We increase our 2023 estimates for the First Horizon acquisition,” he said.

* Desjardins Securities’ Doug Young to $113 from $110 with a “buy” rating.

“Adjusted pre-tax, pre-provision (PTPP) earnings were above our estimate, and while the beat wasn’t as big vs peers, TD has a smaller capital markets business, which is what drove the vast majority of outperformance this quarter for the banks. And, we get less excited about capital markets beats. We revised our estimates (includes a contribution from First Horizon in FY23), increased our target price,” said Mr. Young.

* Scotia’s Meny Grauman to $116 from $117 with a “sector perform” rating.

“Heading into Q1 reporting season TD shares enjoyed the largest premium of the group thanks to peer-leading rate sensitivity and peer-leading excess capital,” he said. “But a lot has changed over the past two weeks including fading rate expectations and the announcement that the bank would acquire Memphis-based First Horizon for US$13.4-billion. Those same factors have now combined to put downward pressure on the shares which through earnings season have underperformed the peer group by 490 basis points. Not helping matters was a Q1 result that, despite beating expectations, stacked up less favorably to most peers on most metrics. Most concerning to us was lagging loan growth in Canada (especially in the booming RESL market) and contracting commercial loan volumes in the U.S., even adjusting for PPP loan forgiveness. Although Management is working to boost volumes on both sides of the border and highlighted a number of growth initiatives on the call, we believe that this period of underperformance is likely to persist. As a result we continue to forecast further relative multiple contraction for this name.”

* Barclays’ John Aiken to $119 from $115 with an “overweight” rating.

“Not surprisingly, the stock fell on the relative strength of its earnings vs. peers. That said, we believe that the valuation pressures will be fleeting as investors focus on the bank’s outlook and, primarily, its rate sensitivity. The quarter was solid enough to generate a lift in our estimates, and, consequently, we are increasing our target,” said Mr. Aiken.

* BMO’s Sohrab Movahedi to $100 from $105 with a “market perform” rating.

* Canaccord Genuity’s Scott Chan to $106 from $110.50 with a “hold” rating.


Needing “more clarity” on its outlook after weaker-than-anticipated quarterly results, Raymond James analyst Michael Glen lowered Martinrea International Inc. (MRE-T) to “market perform” from “outperform” on Friday.

“Over the course of the past two years, Martinrea has faced considerable challenges and headwinds related to a number of items, the largest of which (COVID-19, chip shortages, raw material inflation, and now escalating geopolitical concerns), can be considered as out of the control of the company,” he said. “From that perspective, while we want to remain optimistic regarding the direction of the business over the coming years, we are in need of much more clarity regarding the outlook for both North American and European auto production. This will be particularly true as we need to assess how an escalating gas price and general inflationary environment impact product mix and consumer demand for new vehicle purchases. We recognize that this is not an ideal time to downgrade the stock to Market Perform, but at the same time we need to assess what are an escalating number of risks emerging in the background.”

“he most important focal point for investors over 2H22 will be the balance sheet. Specifically, Martinrea finished 4Q21 with net debt of $913.5 mln and a net debt / EBITDA = 3.1 times (vs a covenant of 3.0 times). Covenant relief has been obtained from lenders with a maximum net debt/EBITDA of 4.0 times in 1Q22, 4.5x in 2Q22 and 3.75 times in 3Q22. Within our forecast, we have leverage hitting 3.35 times in 2Q22 before starting to move lower through 2H22. Regarding the outlook, management indicated that so far during 1Q22 the situation on production continues to improve, which we view as quite encouraging overall. That said, we will need to assess how recent developments impact the global production, Europe in particular. Additionally, we remain focused on Martinrea’s ownership in NanoXplore (GRA-T, Outperform), and upcoming news with respect to the VoltaXplore JV. Specifically, we are anticipating an update on the pilot plant during March to be followed by a battery investor day during April (per GRA management).”

Mr. Glen reduced his target to $11 from $15. The average is $15.39.

“The stock remains deep-value in nature, and we continue to believe there are gains to be made on items more at the control of Martinrea (i.e. Metalsa, operational improvement efforts, 2H22 cycling of launch costs),” he said. “In that regard, management reiterated an 8-per-cent target operating margin in 2022 with upwards of $200-million of free-cash. This would clearly be an exceptionally positive outcome for investors, but we need much more visibility on the outlook before forecasting that outcome.”

Others making changes include:

* Scotia Capital’s Mark Neville to $16 from $17.50 with a “sector perform” rating.

“Q4 results were below forecast, but directionally consistent with expectations,” Mr. Neville said. “There was nothing too surprising in the release as the long list of headwinds were well known in advance – i.e., lower industry production volumes, supply chain shortages, inflationary pressures (for material, labor, energy, freight, etc.), higher launch costs, mix issues, etc. Importantly, management indicated Q1 was expected to be ‘notably better’ (than Q4) with incremental improvements expected through the year (and into 2023, with management reiterated targets) as volumes improve, production schedules stabilize, sales mix normalizes, inflationary costs are recovered, and launch costs moderate. While consistent with our expectations, we take it as an incremental positive – especially considering significantly heightened geopolitical risk with the conflict in Ukraine. Post results, we have made largely offsetting forecast revisions.”

* TD Securities’ Brian Morrison to $14 from $15.50 with a “buy” rating.

“We believe that Martinrea is compelling at the current share price. The underlying issue, however, is macro, in our view. That is, the escalating conflict in Ukraine is further clouding the visibility into the timing of the supplychain improvement and potentially pushing this dynamic to the right. We believe that Martinrea can financially/operationally manage through this added uncertainty. Although we expect ongoing volatility, we see attractive mid-term upside potential,” he said.

* CIBC World Markets’ Krista Friesen to $14 from $16 with an “outperformer” rating.

* BMO’s Peter Sklar to $10 from $11.50 with a “market perform” rating.


Despite its shares falling 5.9 per cent on Thursday following the release of its third-quarter financial results, National Bank Financial analyst John Shao maintained his bullish view on Tecsys Inc. (TCS-T), pointing to its “strong pipeline, steady execution, the partnership opportunities and continued tailwind in the supply chain industry.”

After the bell on Wednesday, the Montreal-based supply chain management software as a service company reported revenue of $35.4-million, narrowly missing Mr. Shao’s $35.8-million estimate but in line the $35.2-million consensus on the Street. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $2.7-million was below projections ($3.0-million and $2.9-million, respectively).

“Tecsys reported what we consider an essentially in-line quarter,” the analyst. “In our view, those in-line results coupled with the unfavourable sentiment towards tech names these days largely explained why the stock was down [Thursday]. However, if we look beyond face value and consider the headwinds from Omicron and a weak U.S. dollar, we believe these results were decent, especially for a shorter quarter care of the peak of Omicron and the holidays in December. On a constant currency basis, total revenue should be approximately $1.7-million higher to $37.1-million while adj. EBITDA should be $1.6-million higher to $4.3-million, both of which were above our previous FX-neutral estimates. When it comes to the growth driver, both SaaS revenue and SaaS bookings remained solid, and if we consider the post-quarter win of a new IDN client, we believe SaaS bookings are tracking well to our estimated $5-million in H2.”

Mr. Shao now expects a re-acceleration in the pace of growth, seeing SaaS as the main driver but also “partnerships to play an increasingly important role in the ecosystem.”

Maintaining an “outperform” rating, he cut his target for Tecsys shares to $55 from $65, acknowledging “the recent pullback in the tech sector has unfavourably impacted the valuation on this name despite the opportunities ahead.” The average on the Street is $56.60.

“Time has allowed Tecsys to scale and expand its platform into a growing logistics powerhouse within the healthcare vertical,” the analyst said. “That fortification along with growth initiatives that include strategic and operational investments and acquisitions are putting Tecsys in a position to scale into broader markets. We believe Tecsys is on the cusp of scaling into a bigger company. We maintain our Outperform rating given the strong pipeline and the Company’s leadership in the supply chain execution market.”

Elsewhere, Stifel’s Suthan Sukumar reduced his target to $52 from $62 with a “buy” recommendation.

“TCS reported in-line FQ3 results, showcasing steady execution despite FX headwinds and Omicron-related deal slippage in the quarter,” he said. “Importantly, SaaS revenue and bookings growth remained healthy, with growth of 50 per cent year-over-year and 130 per cent year-over-year, respectively, providing comfort that the SaaS transition is progressing well. Further, underlying growth on a constant currency basis revealed better than expected organic growth strength, which when combined with new client wins and bookings activity post the quarter, suggests they’re gaining momentum as the company heads into the remainder of 2022. We have made modest changes to our forecast to reflect larger declines in traditional license and support revenues, offset by higher growth in SaaS and pro services, alongside a more conservative ramp in growth investments. On net, our estimates remain largely unchanged.”


A group of equity analysts on the Street raised their target prices for shares of Tricon Residential Inc. (TCN-N, TCN-T) following its release of better-than-expected fourth-quarter 2021 results and guidance for the current fiscal year.

“TCN’s 4Q21 results were strong across the board, with higher fee income generating a quarterly beat,” said RBC Dominion Securities’ Brad Heffern. “2022 guidance was above consensus, making TCN the first SFR reporter to pull that off. A new 2024 core funds from operations per share target demonstrates that high growth isn’t just a 2021-2022 phenomenon, with existing loss to lease, higher fee income and acquisition accretion all contributing significantly. A potential recapitalization of the U.S. multifamily assets also represent a possible 2H22 catalyst.”

Keeping an “outperform” rating, Mr. Heffern increased his target to US$18 from US$17. The average is US$16.69.

Others making changes include:

* Canaccord’s Christopher Koutsikaloudis to US$17 from US$16.75 with a “buy” rating.

“Tricon Residential (Tricon) reported solid financial and operating results for Q4/21 which highlight the extremely strong fundamentals for single-family rental housing (SFR) in U.S. Sunbelt markets, in our view, as well the company’s success in growing its base of asset management fees,” he said. “While operating at lower leverage was a drag on cash flow per share in the quarter, same-property NOI rose 10.3 per cent year-over-year and rental rates on new leases were 19.1 per cent above the previous rental rates. Solid quarterly results capped off an exceptionally active year for Tricon, which included growing its third-party assets under management from $2.9 billion in 2020 to $6.8 billion, completing a US IPO, and acquiring 6,574 homes in its SFR portfolio. In addition, the company has made meaningful progress towards reducing leverage, with net debt-to-assets declining from 55.3 per cent at the end of 2020 to 34.9 per cent currently.”

* BMO’s Stephen MacLeod to $22.50 from $20 with an “outperform” rating.

“Tricon has multi-year growth opportunities to drive Core FFO and shareholder value,” said Mr. MacLeod. “Momentum was strong in Q4 capping off a busy year, continuing into 2022E. Notably, SFR demand remains strong, and Tricon is on a path to almost double the size of its portfolio to 50,000 homes by 2024E. Complementing this are value creation opportunities in MFR and development. Tricon is well-positioned to drive 15-per-cent core FFOPS CAGR [funds from operations compound annual growth rate] through 2024 following $2.1-billion third-party capital raises in 2021, with sufficient liquidity, and favourable growth tailwinds.”

* CIBC’s Dean Wilkinson to $22 from $21 with an “outperformer” rating.

* KBW’s Jade Rahmani to US$17.50 from US$16.75 with an “outperform” rating.


In other analyst actions:

* “Expecting more turbulence ahead,” Canaccord Genuity analyst Michael Fairbairn lowered Argonaut Gold Inc. (AR-T) to “hold” from “speculative buy” with a $2.50 target, down from $3.25. The average is $3.53.

“We are lowering our target price ... and reducing our rating to HOLD from Spec Buy following a flurry of recent news from AR (2021 results, 2022 guidance, updated tech. reports, exploration update, and equity raise),” he said. “In our view, the news underscored the long-term value that remains in AR’s large portfolio of projects, but sacrificed near-term profitability and highlighted upcoming turbulence at several operating mines. This, along with continued leadership uncertainty and a (now larger) funding gap to finish the Magino build, presents challenges to overcome before the market gives AR full credit for its portfolio, in our view.”

* Citing “an elevated risk environment” and “currently stagnating cannabis business,” Stifel analyst Andrew Partheniou downgraded Village Farms International Inc. (VFF-Q) to “hold” from “buy” with a US$5, down from $20 (Canadian). The average is US$14.96.

“VFF reported in-line Q4/21 results, benefitted by volatile cannabis wholesale sales with organic REC sales up 3 per cent quarter-over-quarter after last quarter being stable (ROSE partial contribution up 8 per cent quarter-over-quarter), pointing to a low quality print,” he said.” This is despite VFF introducing new strains and expanding capacity by 50 perf cent with Headset suggesting a continuing trend. ROSE could provide a new avenue for growth, but not at levels to fill existing expansions which do not seem destined for Quebec, resulting in excess supply risk. Matched with 1) delayed planting of Delta2′s second half, 2) growth H2/22 weighted and 3) an elevated risk VFF is burdened by input cost inflation for both cannabis and produce businesses, a protracted period of negative profitability is likely in our view. While we believe VFF could endure amid LPs exiting the industry over the medium to long term, the near-term outlook seems unfavourable.”

* RBC Dominion Securities analyst Walter Spracklin cut his target for Andlauer Healthcare Group Inc. (AND-T) to $52 from $56 with a “sector perform” rating. Others making changes include: National Bank Financial’s Endri Leno to $49.50 from $49 with a “sector perform” rating; Scotia’s Konark Gupta to $54 from $51 with a “sector perform” rating and CIBC World Markets’ Kevin Chiang to $56 from $54 with a “neutral” rating. The average on the Street is $53.08.

“While, in our view, AND is a well-run healthcare logistics/transport market-leader in Canada, the current valuation appropriately reflects our concerns (Canadian pharma industry outlook, limited/transitory Covid-19 vaccine opportunity, etc.) and what we like (well-run, strong margins),” said Mr. Leno.

* CIBC’s Krista Friesen cut her Autocanada Inc. (ACQ-T) target to $46, below the $57.51 average, from $49 with an “outperformer” rating. Others making changes include: National Bank Financial’s Maxim Sytchev to $52 from $59 with an “outperform” rating; Stifel’s Maggie MacDougall to $50 from $65.50 with a “buy” rating and Scotia’s Michael Doumet to $47 from $45.50 with a “sector outperform” rating.

“We don’t know when the chip shortage will fully abate and how the buying behaviour will evolve on the used side of things given the pricing dynamic; but we think over the next 6-9 months, the bear thesis around used pricing collapse does not appear to be in the cards,” said Mr. Sytchev. “Another question to consider is whether investors are privileging now “experience” (i.e., travel, dining out, etc.) vs. ‘things’ (like cars) stocks. More importantly, in our view, is ACQ’s margin / productive metrics convergence with the U.S. peers while not benefitting from ability to charge above MRSP on New. The turnaround dynamic is taking hold while M&A / NCIB optionality should provide further impetus. We like the story at this pricing level. We reiterate Outperform rating (but compress the forward multiple to 7 times EV/EBITDA from 8 times to account for any unforeseen and more rapid used pricing declines in order to stay grounded when it comes to potential upside).”

* JP Morgan analyst Phil Gresh raised his Canadian Natural Resources Ltd. (CNQ-T) to $67 from $66 with a “neutral” rating. Others making changes include: Desjardins Securities’ Justin Bouchard to $85 from $75 with a “buy” rating; BMO’s Randy Ollenberger to $80 from $68 with an “outperform” rating and Raymond James’ s George Huang to $77 from $70 with an “outperform” rating. The average is $72.59.

“If there’s anything that’s certain, it’s that CNQ is firing on all cylinders,” said Mr. Bouchard. “The company posted another strong quarter and announced a massive increase to the dividend. It’s doing a bit of everything—net debt is going lower, shareholders are getting rewarded and capex spend/production growth is modest. But tougher questions are on the horizon. What is the appropriate debt level? Is the stock price reaching levels that challenge the formulaic approach to buybacks? Are special dividends in the cards?”

* CIBC’s Hamir Patel lowered his Canfor Pulp Products Inc. (CFX-T) target to $6 from $7, below the $6.90 average, with a “neutral” rating.

* RBC’s Michael Harvey increased his Crescent Point Energy Corp. (CPG-T) target to $12 from $11 with an “outperform” rating. Others making changes include: Raymond James’ Jeremy McCrea to $10 from $9 with a “market perform” rating; BMO’s Ray Kwan to $13 from $11 with an “outperform” rating and Stifel’s Cody Kwong to $13.75 from $11.50 with a “buy” rating. The average is $11.27.

“Crescent Point’s 4Q21 results were inline expectations and reaffirm the company’s commitment to rapid debt repayment,” said Mr. Kwong. “This, in combination with higher prices, should see the Company achieve its $1.3-$1.4-billion debt target much faster than originally expected, where we would then expect to see a step change/acceleration in return of capital policy. Ahead of this, Crescent Point has elected to increase planned share buybacks to $150-million by mid-year (was $100-million previously). Positive news on Duvernay well IP rates and well costs was the key takeaway from the operational update.”

* Canaccord Genuity’s Matt Bottomley cut his Curaleaf Holdings Inc. (CURA-CN) target to $15.50 from $18 with a “buy” rating. The average is $23.30.

“After lowering our near-term estimates for CURA’s softened 2022 outlook and adding another 50 basis points premium to our overall SOTP discount rate to account for continued macro-level headwinds to start 2022, we are lowering our PT,” he said.

* Coming off research restriction following its $30-million of public offering of convertible unsecured subordinated debentures, National Bank Financial’s Ryan Li cut his Goodfood Market Corp. (FOOD-T) target to $4.25 from $4.50 with an “outperform” rating, while Scotia’s George Doumet reduced his target to $3 from $3.50 with a “sector perform” rating. The average is $3.94.

“Despite recent underperformance and uncertainty associated with the shifting business model, we highlight that management has executed successfully against plans in the past. Goodfood is still predominantly a meal-kit business, which has been proven to be profitable (this business remains stable),” said Mr. Li. “The focus with on-demand and grocery provide credible drivers to grow sales/earnings over the medium term; however, investors will require sustained traction with revenue and margin improvement in addition to a reduction in cash burn over the coming quarters.”

* Scotia’s Phil Hardie raised his Guardian Capital Group Ltd. (GCG.A-T) target to $52 from $49 with a “sector outperform” rating. The average is $51.50.

“Guardian remains our top pick small-cap value play,” he said. “The stock enjoyed a 30-per-cent run through 2021 and is up 17% in 2022. Despite the solid rally, we believe valuation remains attractive and likely offers solid upside potential. Guardian closed out a record 2021 with strong growth in operating earnings driven primarily by continued expansion of its UK-based GuardCap platform and IDC WIN, its life insurance MGA platform.

“Guardian shares continue to trade at a steep discount, with the market ascribing less than a 3.6 times EBITDA multiple to its investment and wealth management platforms. We estimate the stock trades at a 38-per-cent discount to NAV, and expect that increased earnings from its operating subsidiaries will structurally tighten the discount over time.”

* Canaccord Genuity’s Carey MacRury raised his Iamgold Corp. (IMG-T) target to $4 from $3.50 with a “hold” rating. The average is $3.89.

“IAMGOLD reported Q4 EBITDA and EPS beats, largely attributable to lower G&A, exploration expenses, and taxes,” he said. “Production was pre-released while costs and capex were in line. Despite the quarterly beat, we would like to see further progress on the Côté Gold project and see what moves, if any, the company plans to undertake to boost its available liquidity, and as it looks for a new CEO, before becoming more constructive on the stock. We note the company has flagged the potential for further Côté capex and as such we increase our estimate by a further 10 per cent.”

* After it halted work in Russia, National Bank Financial analyst Mike Parkin cut his Kinross Gold Corp. (K-T) target to $11 from $11.50 with an “outperform” rating, while Scotia’s Tanya Jakusconek cut her target to US$7.50 from US$9 with a “sector outperform” rating. The average is $10.59.

“We are assuming the two Russian assets remain in a state of care & maintenance in our model, costing the company US$9-million per annum to keep in this state,” he said. “In our view, any success of transferring ownership of these two assets to a third party (we assume zero value in exchange for them) could prove a re-rating catalyst for the share price. In our opinion, Kinross’ historic discount to the senior peers was largely a function of its exposure to Russia, and thus, we believe we are at the cusp of a potential re-rating in the valuation of Kinross that could see it trade more in line with its senior peers.”

* BMO’s Randy Ollenberger increased his target for shares of MEG Energy Corp. (MEG-T) to $20, above the $18.50 average, from $18 with an “outperform” recommendation, while Raymond James’ George Huang bumped his target to $18 from $17.50 with an “outperform” rating.

“MEG reported slightly stronger-than-expected cash flow on lower operating costs and generated $160 million of free cash flow this quarter. The company also issued a notice to redeem US$171 million of senior notes and filed an NCIB application. We believe that MEG offers investors significant leverage to heavy crude oil prices as well as a potential equity re-rating as the company reduces its financial leverage and initiates its share buyback program,” he said.

* CIBC’s Jamie Kubik raised his Paramount Resources Ltd. (POU-T) target to $35, exceeding the $33.15 average, from $30 with a “neutral” rating.

* RBC’s Irene Nattel raised his Park Lawn Corp. (PLC-T) target to $53 from $50 with an “outperform” rating. The average is $47.25.

“PLC valuation remains compelling, in our view, with shares trading at 11.5 times our calendar 2022 estimated EBITDA, one turn below the industry average and SCI and at the low end of the five-year range, notwithstanding stronger FCF, B/S and earnings,” he said. “Key catalysts for valuation re-rating likely, in our view: i) upward revision to consensus, ii) more substantive M&A announcements. PLC is included on the RBC CM Small Cap Conviction List.”

* RBC’s Pammi Bir raised his Plaza Retail Real Estate Investment Trust (PLZ.UN-T) target to $5 from $4.75 with a “sector perform” rating. The average is $5.16.

* RBC’s Luke Davis raised his Tamarack Valley Energy Ltd. (TVE-T) target to $7, above the $6.69 average, from $6.50 with an “outperform” rating, while BMO’s Ray Kwan bumped his target to $6 from $5.25 with a “market perform” rating.

“Q4 results were in line with expectations on previously disclosed production/ capex. As mentioned previously, we believe Tamarack will be aggressive from an M&A perspective for 2022, and we wouldn’t be surprised to see further consolidation in the Clearwater Jarvie-Newbrook trend,” said Mr. Kwan.

* RBC’s Sam Crittenden raised his Turquoise Hill Resources Ltd. (TRQ-T) target to $32 from $25 with a “sector perform” rating. Other changes include: Canaccord’s Dalton Baretto to $31 from $28 with a “buy” recommendation and Scotia’s Orest Wowkodaw to $30 from $26 with a “sector outperform” rating. The average is $28.43.

“TRQ reported in-line Q4/21 results and reconfirmed its previously issued 2022 guidance,” said Mr. Wowkodaw. “More important, TRQ reaffirmed all of its previously released guidance pertaining to the ongoing development of the Oyu Tolgoi (OT) Phase II underground project and noted that it was not seeing signs of material inflation. Overall, we view the update as positive for the shares given our improved valuation.”

* Canaccord’s Robert Young cut his target for Wecommerce Holdings Ltd. (WE-X) to $12.50, below the $17.25 average, from $16.50 with a “buy” rating.

“WeCommerce announced the tuck-in acquisition of KnoCommerce [Thursday] morning for an undisclosed consideration. A close is expected within 45 days,” he said. “KnoCommerce provides tools for merchants to collect zero-party customer data and build customer profiles to better reach, engage, and understand their customers. We expect the economic contribution to be nominal in the short term but we believe it fits well with the existing Review & Ratings (Stamped) business, and we expect WeCommerce will be able to drive cross-sell. We believe WeCommerce is paying a small quantum of cash upfront at a reasonable valuation that leaves room for further M&A in the near term, which we believe will continue to be focused on smaller recurring subscription (apps) targets. We are also using this opportunity to revisit our near-term estimates and valuation in light of a more difficult ecommerce environment.”

* CIBC’s Hamir Patel raised his Winpak Ltd. (WPK-T) target to $45 from $42 with a “neutral” rating. The average is $47.50.

Follow David Leeder on Twitter: @daveleederOpens in a new window

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