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

Following “solid” second-quarter financial results, ATB Capital Markets analyst Chris Murray now sees Stantec Inc.’s (STN-T) accelerating organic growth “more reasonably priced.”

Accordingly, he raised his rating for the Edmonton-based firm to “outperform” from “sector perform” previously.

After the bell on Wednesday, Stantec reported adjusted earnings before interest, taxes, depreciation and amortization of $1.1-billion, matching the forecast from both Mr. Murray and the Street. Adjusted fully diluted earnings per share of 83 cents topped the analyst’s forecast by 10 cents and the consensus by 3 cents.

“STN delivered organic revenue growth of 9.4 per cent in Q2/22, well ahead of ATB estimates and Q2/21 levels, with growth occurring across all geographies and verticals,” he said. “While we expect to see some moderation to more normalized levels in H2/22 and 2023, particularly in Global, we expect healthy levels of organic growth to remain in place given STN’s geographic and end-market exposure, which was reinforced by 13 per cent (organic) backlog growth in H1/22. Management reiterated its full-year guidance for organic growth (i.e., mid-single digit), which is in line with our estimates.”

Mr. Murray also emphasized management released “positive commentary around the integration of Cardno, the demand environment, and its outlook for H2/22 despite elevated macro uncertainty.”

“Margins were above our expectations in the quarter, and we view them as sustainable given improving organic growth trends and a lower cost structure, which position the Company to meet full-year guidance, which was reaffirmed by management,” he added. “We have become increasingly positive on valuations given strengthening organic growth trends and potential synergies around the Cardno transaction, and we are therefore upgrading our rating to Outperform given the wider 21.7-per-cent return to target.”

Also pointing to moderating overhead costs and a “flexible” balance sheet, which allows it to “remain opportunistic in an active M&A environment without equity issuances,” Mr. Murray raised his 2022 and 2023 EBITDA and EPS projections, leading him to raise his target for Stantec shares to $75 from $70. The average target on the Street is $73.42.

Elsewhere, others making changes include:

* BMO’s Devin Dodge to $75 from $72 with an “outperform” rating.

“Demand is accelerating, margins are shifting higher, and confidence around M&A prospects continues to improve. The stock trades at a 2 turn discount to the global peer average on 2023 EPS, and we believe there is a strengthening case for the valuation discount to narrow/close,” said Mr. Dodge.

* RBC’s Sabahat Khan to $67 from $65 with a “sector perform” rating.

“Stantec and the broader engineering sector remain well positioned through H2 and into 2023, in our view, supported by significant infrastructure spend globally and the important (and growing) role of Engineering firms in addressing climate change,” said Mr. Khan.


Echelon Capital Markets’ Ryan Walker is now calling Wesdome Gold Mines Ltd. (WDO-T) a “show-me” story after sequential quarters of “significant” operational challenges.

With weaker-than-anticipated financial results alongside a reduced implied return to his target price for his shares, the analyst downgraded the Toronto-based miner to “hold” from “buy” previously.

On Wednesday after the bell, Wesdome reported earnings of a loss of 4 cents per share for its second quarter, below Mr. Walker’s estimate of a 4.5 cent profit. Cash flow per share of 8 cents was also well below his forecast (23 cents). Operational issues at its Eagle River mine in Ontario and Kiena mine in Quebec pushed all-in sustaining costs to US$1,582 per ounce, up from US$1,339 in the previous quarter.

“After a similarly soft Q122, year-to-date production totals 52,851 ounces (105Koz annualized), compared with previous 2022 guidance of 160-180Koz at AISC of US$1,015-1,125/oz,” the analyst said. “As such, WDO has revised consolidated 2022 production guidance lower, now forecasting 120-140Koz. At the same time, AISC guidance has increased to US$1,370-1,520/oz. Eagle River is forecast to produce 85-95Koz (prev. 95- 105Koz), with lower grades expected from the Falcon Zone during H222. Kiena is now expected to produce 34-43Koz (64-73Koz) reflecting slow mining rate ramp-up owing to a delay in commissioning of the paste fill plant (now Q422) due to delayed key electrical components.

“WDO notes that at Eagle River, a very high-grade stope in the Falcon zone returned lower grades than expected (and exhibits greater grade variability than previously expected based on drilling), impacting gold production. Looking ahead, WDO has adopted more conservative grade assumptions here for H222. At Kiena, new equipment delivered in Q222 is performing well with steadily improving overall fleet reliability. Development performance has been tracking up and is expected to ramp up to full capacity later this year in H2, as bolting equipment is delivered and improvements to the ventilation system are put in place. Importantly, key electrical components for the mine’s paste fill plant are now expected in Q422 and should allow for much higher mining rates than those currently being achieved.”

With those lower expectations, Mr. Walker cut his production and financial projections for the full year, leading him to cut his target for its shares to $11.75 from $13.50. The average on the Street is $13.71.

“Despite the recent operational challenges (exogenous and home grown), we continue to highlight WDO’s organic production growth profile solely in a Tier 1 jurisdiction and the potential for continued positive exploration results from aggressive drilling at both Kiena and Eagle River,” he said. “WDO currently trades at 16.2 times our ‘22 CFPS (5.4 times comps avg.) and 1.0 times our adj. NAV5% (0.6 times) estimates. We believe demonstration of improved operational performance and exploration success are required to warrant such premiums and look forward to the realization of both.”

*Elsewhere, Desjardins Securities’ John Sclodnick cut his target to $11.50 from $13 with a “hold” rating.

“We currently have a Hold rating on the stock due to the significant premium vs peers, combined with the relatively aggressive growth assumptions embedded in our NAV, which is based on 175 per cent of reserves at Eagle River and 200 per cent of reserves at Kiena, even though the Eagle River reserves grade is 50 per cent higher than M&I and Kiena reserves grade is 130 per cent higher than M&I,” he said.


In a research report titled Okay (okay)’s About BAM Time, RBC Dominion Securities analyst Geoffrey Kwan said “solid” results from Brookfield Asset Management Inc. (BAM-N, BAM.A-T) “underscores the strength of the Brookfield franchise.”

“Although financial metrics (OFFO and FRE) were in line with our forecast, the evidence suggests BAM is not facing fundraising issues certain players in the industry are facing as BAM fundraised US$56-billion since Q1/22,” he said. “The asset manager spin-off remains on track to be done by year-end, which we view as a positive for the stock. Despite an uncertain macro outlook, we think BAM offers investors an attractive blend of defensive attributes but also significant NAV-growth driven valuation upside.”

On Thursday, Brookfield reported operating funds from operations of 69 US cents, up 38 per cent year-over-year and just a penny below Mr. Kwan’s forecast. Consolidated fee bearing capital came in at US$392-billuon, up 3 per cent sequentially and 21 per cent from the same period a year ago.

To a reflect higher-than-forecast second-quarter net asset value, Mr. Kwan raised his target for Brookfield shares to US$66 from US$63. The average is US$66.85.

Other analysts making changes include:

* BMO’s Sohrab Movahedi to US$71 from US$69 with an “outperform” rating.

“Flagship fundraising is progressing well and private market valuations are holding up for ‘stable cash generative assets’, a positive for carried interest realizations,” he said. “Fundamentally, we have argued those drivers of shareholder value should remain intact as long as interest rate increases are cyclical, and not structural. Rightly or wrongly, BAM’s valuation has come under pressure in periods of rising rates. Should the recent decrease to bond yields be sustained, a re-rating would be additive to mid-teens feerelated earnings growth potential; we derive a 35-per-cent total return potential to target.”

* Scotia’s Mario Saric to US$69 from US$68.50 with a “sector outperform” rating.

“We view BAM as a cash generating machine that can work in good times and in bad, with below-average valuation across most metrics,” he said. “We still see 15-per-cent-plus upside from the asset manager spin in (likely) Q4 and remain buyers.”

* KBW’s Robert Lee to US$65 from US$59 with an “outperform” rating.

* CIBC’s Dean Wilkinson to US$66 from US$68 with an “outperformer” rating.


While Canadian Tire Corp. Ltd.’s (CTC.A-T) performance in the second quarter fell “short,” National Bank Financial analyst Vishal Shreedhar struck an optimistic tone given signs of sustained consumer demand.

Shares of the retailer dropped 4.6 per cent on Thursday following the premarket release of its financial report. That included earnings per share of $3.11, missing both Mr. Shreedhar’s $3.62 estimate and the consensus forecast on the Street of $3.61 and down from $3.72 during the same period a year

“We consider Q2/22 results to be light, largely due to higher SG&A than modeled and an increase in ECL allowance in Financial,” said Mr. Shreedhar. “A low tax rate vs. NBF added $0.17 to EPS. There was also an F/X loss associated with Helly Hansen which drained EPS by $0.15.”

Saying he accepts Canadian Tire’s “view on a solid consumer backdrop,” Mr. Shreedhar pointed to four factors that are driving the bullish view on demand: “(1) Triangle Rewards, one of CTC’s key strategic priorities, continues to show momentum, attracting 594k new members from almost 400k last quarter. (2) CTC believes that consumer demand remains strong despite pervasive macroeconomic concerns. It cited unseasonable weather as holding back Q2. (3) Heightened adj. SG&A growth of 10.2 per cent year-over-year was attributed to lapping year-over-year restrictions, higher marketing expenses, and investments in strategic drivers (incl. supply chain and I.T.). CTC has the ability to adjust spend should the backdrop become more challenging. (4) Inventory growth was 18 per cent year-over-year, in part due to higher in-transit purchases (more than $260-million) related to fall and winter merchandise. CTC does not anticipate heightened discounting.”

However, he did trim his full-year EPS estimate for 2022 to $18.30 from $18.88 and 2023 to $19.29 from $19.55.

“On balance, we believe that CTC has executed well throughout the pandemic. While we acknowledge macroeconomic risk, we note that most of our discretionary retailers have recently issued largely favourable outlooks,” he said.

Maintaining an “outperform” rating for Canadian Tire shares, Mr. Shreedhar cut his target to $213 from $215. The average is $218.60.

Elsewhere, others making target adjustments include:

* Desjardins Securities’ Chris Li to $215 from $225 with a “buy” rating.

“Solid sales growth and margin management were partly offset by higher expenses and allowance provision. We have moderated our estimates to reflect a slowdown but we believe this is largely priced in. While ongoing macro concerns will likely keep the stock range-bound in the near term, we believe long-term investors will be rewarded. We believe near-trough valuation and the 4-per-cent dividend yield should provide some downside support,” said Mr. Li.

* RBC’s Irene Nattel to $234 from $235 with an “outperform” rating.

“Ability of CTC retail banners to deliver strong revenue growth despite very tough comps and tardy spring/summer weather that delayed demand for certain seasonal categories, and ability to maintain stable gross margins despite supply chain headwinds, indicative of CTR unique positioning and benefit of owned brands strategy. In our view, muted share price reaction to Q2 results suggests stock has found its bottom,” said Ms. Nattel.


In other analyst actions:

* Scotia Capital’s Michael Doumet increased his Ag Growth International Inc. (AFN-T) target to $55 from $52 with a “sector outperform” rating. Others making changes include: Desjardins Securities’ Gary Ho to $53 from $48 with a “buy” rating and CIBC’s Jacob Bout to $52 from $51 with an “outperformer” rating. The average on the Street is $52.85.

“AGI reported a strong 2Q beat fuelled by broad-based growth,” said Mr. Ho. “As near-record backlogs, robust pipelines and climbing win rates provide excellent visibility into 2H, AGI increased its 2022 EBITDA guidance to at least $215-million (we forecast $219-million), with growth most pronounced in 3Q. With multiple overhangs dissipating (steel, leverage, bin litigation), augmented by a bullish outlook, AGI is becoming a compelling organic-focused, deleveraging story.”

* RBC Dominion Securities’ Paul Treiber raised his Altus Group Ltd. (AIF-T) target to $70, above the $65.88 average with an “outperform” rating, from $61, while CIBC’s Scott Fletcher bumped his target to $58 from $54 with a “neutral” rating.

“Q2 was slightly ahead of RBC/consensus on better than expected Altus Analytics (AA) revenue and profitability. While headline AA bookings growth appeared soft, we believe investor visibility has in fact improved regarding AA’s data opportunity: recurring AA bookings were strong, cloud users are more than 50 per cent, AA margins are expanding, and Altus’ data platform is poised for launch,” said Mr. Treiber.

* Acumen Capital’s Trevor Reynolds reduced his AutoCanada Inc. (ACQ-T) target to $50 from $60 with a “buy” rating. The average is $48.79.

“Q2/22 results in-line with recently pre-released numbers. Overall, a positive quarter in our view given the challenges now facing the industry. While uncertainties remain in terms of new inventory, declining used vehicle values and rising rates, we believe ACQ is well positioned to weather the storm based on their established dealership model,” he said.

* CIBC’s Krista Friesen bumped her Badger Infrastructure Solutions Ltd. (BDGI-T) target to $32 from $31.50 with a “neutral” rating, while Acumen Capital’s Trevor Reynolds raised his target to $39.25 from $26.25 with a “speculative buy” rating and Scotia’s Michael Doumet trimmed his target to $38 from $40 with a “sector outperform” rating. The average is $34.78.

“Q2/22 results reflect managements’ goal of increased utilization with revenue tracking ahead of our estimates but with slightly lower than expected margins. Overall, a positive quarter with more consistent demand and utilization projected go forward with the implementation of the commercial marketing strategy,” said Mr. Reynolds.

* CIBC’s Mark Petrie reduced his Canada Goose Holdings Inc. (GOOS-T) target to $36, exceeding the $35.36 average, from $37 with a “neutral” rating, while Credit Suisse’s Michael Binetti moved his target to $39 from $37 with an “outperform” rating.

“While peers in our coverage (that have reported earnings) have either seen slower demand or significantly increased promotions, GOOS was clear in its message of strong demand with no sign of any slowdown nor order cancellations.” he said. “Instead, GOOS indicated encouraging June trends in China, with stores being re-opened. 2Q and FY32 guidance embeds ongoing intermittent lockdowns at the low end and resumption of full trading at the high end in China (but not assuming the return of international tourists).”

“While 1Q is inconsequential to the year, we were encouraged by solid demand trends for all regions (no signs of slowing in North America/China; increased tourism spend in Europe). In framing GOOS against the key risks for all the global brands in our sector: 1) Inventory risk: excluding the Japan JV impact, GOOS inventory was up 18 per cent year-over-year —relatively in line with the high end of 2Q and 3Q revenue guidance, and 2) Ongoing China volatility (re-open trends have been solid since June). We think the stability in GOOS’ outlook in an increasingly volatile macro was encouraging. And at today’s valuation (15 times our FY23E EPS), valuation is attractive for a brand with a relatively visible path back to margin upside based on historical levels and improving productivity. Finally, we think consensus (FactSet) is mismodeling GOOS’ growth beyond FY23.”

* Jefferies’ Owen Bennett reduced his targets for Canopy Growth Corp. (WEED-T) to $4.20 from $5.50 with a “hold” rating and Cronos Group Inc. (CRON-T) to $3.90 from $4.30 with a “hold” rating. The averages are $4.78 and $5.64, respectively.

* Echelon Capital Markets’ David Chrystal lowered his CAP REIT (CAR.UN-T) target to $60 from $62.50 with a “buy” rating. Other changes include: CIBC’s Dean Wilkinson to $54 from $55 with a “neutral” rating and TD Securities’ Jonathan Kelcher to $60 from $58 with an “action list buy” rating. The average is $60.03.

“Despite only modest top line growth, moderating cost pressure resulted in a return to positive year-over-year organic NOI growth in Q2,” said Mr. Chrystal. “Though top line growth was modest, we note that lifts on turnover continue to accelerate, highlighting the underlying fundamental strength across CAPREIT’s core markets. Management remains committed to pruning the portfolio of assets deemed ‘fully valued’ and re-deploying the proceeds into immediately accretive newer-generation assets and stock buybacks.”

* Scotia’s Ben Isaacson raised his Chemtrade Logistics Income Fund (CHE.UN-T) target to $10.50 from $10.25. Other changes include: BMO’s Joel Jackson to $9 from $8 with a “market perform” rating and Desjardins Securities’ Gary Ho to $11.75 from $11 with a “buy” rating. The average is $10.61.

“We believe CHE is poised for relative outperformance near-term,” said Mr. Isaacson. " First, chlor-alkali remains tighter than most other chemical chains, with caustic still up 50 per cent year-over-year, despite recent moderation. This is the main reason for the 31-per-cent H2-implied guidance raise (17 per cent for ‘22 overall). Second, refinery rates remain strong; and now that gasoline prices have eased, we no longer see incremental regen acid demand risk. Third, the water solutions business (relatively stable margins through a recession) will now get a boost from sulphur costs improving dramatically over the past 3-4 weeks, while CHE is proactively pushing for higher prices to partially compensate for the spike. Fourth, we’re bullish on CHE’s opportunity to benefit from the U.S. build-out of semi-conductor capacity, both from its legacy ultra-pure business and the new JV. Fifth, at 3.2 times and improving, leverage is much better today than when CHE’s B/S struggles led to meaningful share price deterioration. Sixth, we believe CHE’s board could increase the distribution in time (7-per-cent yield already), given a sustainable sub-50-per-cent payout. So, we like the stock, but also understand why some past shareholders remain skeptical/cautious, and need to see further improvement.”

* RBC’s Pammi Bir raised his CT REIT (CRT.UN-T) target to $18 from $17.50, keeping a “sector perform” rating. The average is $17.79.

“On the back of in-line Q2/22 results, our stable view on CRT is intact. Set against a decelerating economy and heightened macro uncertainty, we believe the portfolio remains well-positioned to manoeuvre with steady organic growth, underpinned by its long-term CTC leases and annual rent steps. As well, its nearly full pre-leased development pipeline provides good visibility into an additional source of earnings growth through 2024. Low leverage and minimal debt maturities also provide good insulation from a higher rate environment,” said Mr. Bir.

* CIBC’s Nik Priebe raised his ECN Capital Corp. (ECN-T) target to $8.75 from $7.50, above the $7.91 average, with an “outperformer” rating. Elsewhere, other changes include: Raymond James’ Stephen Boland to $8 from $7 with an “outperform” rating, BMO’s Tom MacKinnon to $8 from $7 with an “outperform” rating and National Bank Financial’s Jaeme Gloyn to $8.50 from $8 with an “outperform” rating.

* Mr. Priebe also increased his target for Fiera Capital Corp. (FSZ-T) to $10.50, exceeding the $10.36 average, from $10 with a “neutral” rating, while Scotia’s Phil Hardie bumped his target to $10 from $9.50 with a “sector perform” rating.

* CIBC’s Cosmos Chiu cut his Fortuna Silver Mines Inc. (FVI-T) target to $5 from $5.50 with a “neutral” rating. The average is $5.20.

* Scotia Capital’s Tanya Jakusconek lowered her Franco-Nevada Corp. (FNV-N, FNV-T) target to US$178 from US$179 with a “sector perform” rating. The average is US$149.48.

* Scotia Capital’s Phil Hardie raised his Goeasy Ltd. (GSY-T) target to $160 from $140 with a “sector perform” rating. Others making changes include: BMO’s Étienne Ricard to $234 from $225 with an “outperform” rating, Desjardins Securities’ Gary Ho to $185 from $175 with a “buy” rating and TD Securities’ Marcel Mclean to $200 from $195 with a “buy” rating. The average is $203.44.

“GSY reported solid 2Q results despite broad macro uncertainty, with robust loan book growth carrying over into 3Q, most notably in secured auto, home equity and powersports lending. Management is confident in the ability to perform well through economic headwinds. Despite making proactive credit enhancements, management targets 70-per-cent loan book growth (to $4-billion) by 2024, leading to a 20-per-cent EPS growth CAGR,” said Mr. Ho.

* CIBC’s Sumayya Syed lowered her Granite REIT (GRT.UN-T) target to $98 from $102 with an “outperformer” rating. The average is $98.90.

* iA Capital Markets’ Johann Rodrigues cut his Killam Apartment REIT (KMP.UN-T) target to $21 from $23 with a “buy” rating. Others making changes include: CIBC’s Dean Wilkinson to $22 from $22.50 with an “outperformer” rating, TD Securities’ Jonathan Kelcher to $22 from $21 with a “buy” rating and National Bank Financial’s Matt Kornack to $20.50 from $19.25 with an “outperform” rating. The average is $22.21.

“Atlantic Canada was accelerating into never seen strength prior to the pandemic and that seems to have returned as we exit out of it,” said Mr. Rodrigues. “The region provides Killam with certain advantages over its Ontario-focused peers: higher turnover (30 per cent in Q2/22), lack of rent control (traditionally only PEI has rent control), newer assets (the REIT has the youngest portfolio of the Canadian peer set and lowest capex requirements), higher cap rates (thus less of an impetus to increase – Killam saw no IFRS cap rate movement this quarter while each of the Ontario peers had bumps), and better affordability ratios (providing a higher celling to raise rents). As development becomes more of a focus of the industry given a tough acquisitions market, Killam has by far the most experience doing so. Having generated 4.8-per-cent SPNOI growth through H1/22, Killam is expected to exceed its 2-3-per-cent guidance for the year. We expect similar strength through 2023. As a sometimes-forgotten REIT when stacked against typically higher growth Ontario peers, that’s no longer the case. Killam’s time is now.”

Desjardins Securities’ Doug Young bumped his target for shares of Manulife Financial Corp. (MFC-T) to $25 from $25 with a “hold” rating. The average is $27.04.

* CIBC’s John Zamparo raised his MTY Food Group Inc. (MTY-T) target to $75 from $68 with an “outperformer” rating. The average is $70.64.

* CIBC’s Nik Priebe bumped his Onex Corp. (ONEX-T) target to $80 from $75 with a “neutral” rating. Others making changes include: Scotia’s Phil Hardie to $105 from $118 with a “sector outperform” rating and RBC’s Geoffrey Kwan to $102 from $98 with an “outperform” rating. The average is $96.20.

“We view Q2/22 as a mixed bag,” said Mr. Hardie. “We were certainly encouraged by the better-than-expected resilience of the investment NAV with the company’s invested capital per share declining just 2% sequentially against a challenging backdrop. That said, the elevated market volatility and sell-off along with a number of other factors have likely contributed to the delay and likely extended fundraising period for Onex’s large- cap private equity fund with near-term private credit fundraising and AUM growth also lagging our expectation.

“Management remains confident in its ability to attain its 5-year AUM and Fee-Related Earnings (FRE) targets. Given the shift in the operating environment, the near-term trajectory appears to be more modest than we had hoped with the bigger step up likely more back-ended. The expansion of the asset management platform and FRE likely play a key role in narrowing Onex NAV discount, and while our fundamental thesis remains intact, the investment horizon has likely been extended. With the stock trading well below the value of its invested capital, we see little downside related to the asset management business but significant optionality.”

* RBC’s Irene Nattel cut her Park Lawn Corp. (PLC-T) target to $49 from $50 with an “outperform” rating. The average is $45.69.

“PLC delivered an unusually soft quarter as lower mortality rates negatively impacted the cemetery segment,” she said. “Despite the disappointing Q2 print, in our view mortality rates will inevitably normalize, which combined with successful execution of PLC’s M&A strategy, should enable the Company to achieve its 5-year target of doubling EBITDA to US$150-million, supported by annual acquisition activity of US$75-125-million, implying 5-year EBITDA CAGR of 15 per cent.”

* CIBC’s Todd Coupland reduced his target for shares of Quarterhill Inc. (QTRH-T) to $3.50 from $4 with an “outperformer” rating, while Raymond James’ Steven Li cut his target to $2.75 from $3.25 with an “outperform” rating. The average is $3.25.

* National Bank Financial’s Endri Leno raised his Rogers Sugar Inc. (RSI-T) target to $6 from $5.75 with a “sector perform” rating, while Scotia’s George Doumet bumped his target to $6.50 from $6 with a “sector perform” rating. The average is $6.20.

“RSI’s Q3 results came in ahead of expectations, with sugar outperforming and maple remaining soft (similar trends as the last few quarters),” said Mr. Doumet. “The company nudged up its F22 sugar volume guidance (yet again) and continues to expect a lag between pricing and costs (in addition to muted volume growth) at maple to continue. Finally, RSI announced its anticipated expansion of the Montreal refining capacity (to add 100K tonnes annually) at an estimated cost of $160-million. All in all, our view on RSI remains unchanged: we like it for its stability and dividend yield (6 per cent) but see limited upside to the shares given its current valuation (11 times EBITDA F22E).”

* CIBC’s Cosmos Chiu lowered his target for Sandstorm Gold Ltd. (SSL-T) to $12.50, above the $12.19 average, from $13.50 with an “outperformer” rating.

* TD Securities’ Derek Lessard raised his Savaria Corp. (SIS-T) target to $20 from $19 with a “buy” rating, while Scotia’s Michael Doumet bumped his target to $17.50 from $16.50 with a “sector outperform” rating. The average is $22.56.

* RBC’s Alexander Jackson cut his Stelco Holdings Inc. (STLC-T) target to $47 from $48 with a “sector perform” rating. Others making changes include: Stifel’s Ian Gillies to $40 from $39 with a “hold” rating and National Bank’s Maxim Sytchev to $48 from $51 with a “sector perform” rating. The average is $52.02.

“We continue to like Stelco for its low cost leverage to the North American steel market, however given our outlook for flat prices and risk around the demand outlook we remain neutral on the shares. We see upside potential if steel prices are stronger than we forecast or Stelco is able to deploy its excess cash to grow earnings in a meaningful way. We have revised our estimates, lowering our H2/22 & 2023 steel prices (down 8 per cent, down 3 per cent),” said Mr. Jackson.

* CIBC’s Hamir Patel raised his Stella-Jones Inc. (SJ-T) target to $46 from $41 with an “outperformer” rating. The average is $48.75.

* RBC’s Keith Mackey raised his Step Energy Services Ltd. (STEP-T) target to $11 from $10 with an “outperform” rating. The average is $10.32.

* KBW’s Jade Rahmani reduced his Tricon Residential Inc. (TCN-N, TCN-T) target to US$15.50 from US$16.50 with an “outperform” rating, while BMO’s Stephen MacLeod cut his target to $19 (Canadian) from $23 with an “outperform” rating. Conversely, CIBC’s Dean Wilkinson raised his target to $21 (Canadian) from $20.50 with an “outperformer” rating. The average is US$14.17.

“Tricon has multi-year growth opportunities to drive core FFO and shareholder value. Q2 continued the strong momentum from Q1 and 2021. Notably, SFR demand remains strong, and Tricon is on track to increase the size of its portfolio to 50,000 homes by 2024. Complementing this are value-creation opportunities in MFR and development. Tricon is well-positioned to drive 15-per-cent core FFOPS CAGR even with higher rates, while maintaining stable leverage, with sufficient liquidity and favourable growth tailwinds,” said Mr. MacLeod.

* BMO’s Mike Murphy raised his target for Vermilion Energy Inc. (VET-T) to $40 from $35 with a “market perform” rating, while Raymond James’ Jeremy McCrea bumped his target to $40 from $38 with an “outperform” rating. The average is $38.29.

“Our thesis on VET has historically been, and continues to be, one of profitability,” said Mr. McCrea. “Although the share price has seen plenty of volatility, much of it relates to high leverage (that only recently has been right-sized). Although commodity prices have helped expedite this improving balance sheet, high quality, conventional reservoirs are also aiding the financial improvement (that typically produce better well economics than high frack intensity resource plays). The name now has one of the highest FCF yields in the sector (29 per cent) as uncertainty over European gas prices continue (23 per cent of production is European based natural gas). In any event, as reflected by the 2Q results, debt continues to move lower and as such, not only did we see a 33-per-cent bump to the dividend, but the Company also laid out a return framework based on debt levels (i.e., when mid-cycle debt less than 1.0 times, 75 per cent of FCF will be deployed back to shareholders). Assuming 75-per-cent redeployment for 2023, we see VET able to buy back 25 per cent of its O/S next year based on strip prices today. With a slight beat on FFO and only a modest bump to capex guidance (due to inflation), investors should have increasingly more confidence that there is further room for VET’s share price to run.”

* CIBC’s Cosmos Chiu cut his Wheaton Precious Metals Corp. (WPM-N, WPM-T) target to US$60 from US$65.50 with an “outperformer” rating, while BMO’s Jackie Przybylowski cut her target to US$52 from US$54 with an “outperform” rating. The average is US$53.60.

“In line or modest negative. Wheaton reported a quarter that met expectations — earnings fell short of our results, though our forecasts were admittedly high in an effort to bring estimates to the previous guidance range. Guidance is now lowered, and so we have removed any expectation that gold production will outperform our asset-level tally,” said Ms. Przybylowski.

* National Bank Financial’s Rupert Merer trimmed his target for Xebec Adsorption Inc. (XBC-T) to $1.75 from $2 with a “sector perform” rating. Other changes include: BMO’s John Gibson to 85 cents from $1.75 with a “market perform” rating and Desjardins Securities’ Frederic Tremblay to $1.20 from $3 with a “buy” rating. The average is $1.48.

“With the weight of legacy RNG contracts (hopefully) off its shoulders and other ongoing improvement initiatives, the company should be better-positioned on its journey to profitability, although patience could be required. With several options seemingly being considered, the exact path to a stronger balance sheet is unclear at this time,” said Mr. Tremblay.

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

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