Inside the Market’s roundup of some of today’s key analyst actions
While valuations for Canadian insurance companies now “appear modest,” National Bank Financial analyst Gabriel Dechaine does not think an attractive investing opportunity has emerged, warning third-quarter earnings are likely to disappoint.
“Do we see a short-term opportunity for a valuation re-rating? In short, no,” he said in a report released Friday. “We expect Q3/22 results to be weak, due mainly to weak Wealth earnings, which represent approximately 30 per cent of average lifeco earnings.
“From a short-term trading standpoint, we see no appealing opportunities heading into earnings season. From a longer-term perspective, we continue to favour IAG for its lower risk profile and cheaper relative valuation. IAG also expects a neutral to near favourable impact on EPS/BVPS from IFRS 17 at transition, which is an added positive.”
Mr. Dechaine reduced his third-quarter earnings per share projections across the sector by 9 per cent with Great-West Lifeco Inc. (GWO-T) falling 18 per cent (to 74 cents from 91 cents) and Manulife Financial Corp. (MFC-T) down 17 per cent (to 66 cents from 79 cents) due largely to hurricane-related catastrophic reinsurance losses. That led him to lower his full-year expectations for both fiscal 2022 and 2023.
With those changes, he cut his target prices for the companies’ stocks by an average of 3 per cent. His changes were:
* Great-West Lifeco Inc. (GWO-T, “sector perform”) to $35 from $36. The average on the Street is $34.11.
What to watch: “: 1) UK exposure once again in the spotlight; 2) Weak markets offset expense synergies at Empower; 3) Palpable pain at Putnam.”
* IA Financial Corp. Inc. (IAG-T, “outperform”) to $80 from $81. Average: $83.33.
What to watch: “1) Consensus (& NBF) is below IAG’s guidance range; 2) Higher rates are a net positive; 3) Headwinds facing P&C businesses.”
* Manulife Financial Corp. (MFC-T, “sector perform”) to $24 from $25. Average: $26.43.
What to watch: “1) Many moving pieces should result in wide reported vs. core EPS; 2) Asia reopening helps the outlook (though not the quarter); 3) Hurricane Ian could lead to $200-million(+) loss.”
* Sun Life Financial Inc. (SLF-T, “sector perform”) to $65 from $67. Average: $66.88.
What to watch: “1) Group insurance segment could see less favourable shift in mortality experience; 2) MFS weighing on SLF; 3) Another quarter of strong “yield enhancement” expected.”
A day after its TSX-listed shares surged 17.1 per cent following the premarket release of better-than-anticipated third-quarter financial results, a group of equity analysts on the Street raised their target prices for Shopify Inc. (SHOP-N, SHOP-T).
Those making changes include:
* Wells Fargo’s Jeff Cantwell to US$42 from US$38 with an “overweight” rating. The average target on the Street is US$40.73.
“After the ‘reset’ last quarter, we had a positive view on SHOP going into the print,” he said. “From here, we see the company continuing to expand its revenue at above-peer rates driven by Merchant, while also driving toward sustainable profitability next year and beyond. With shares currently valued at 6.3 times 2023 estimated revenue, we think this combination presents an attractive buying opportunity.”
* CIBC World Markets’ Todd Coupland to US$40 from US$35 with a “neutral” rating.
“Shopify’s Q3 results came in above expectations as merchant adoption of its ancillary solutions reached a record,” he said. “Revenue growth was 22 per cent year-over-year despite a two percentage point drag from the strong U.S. dollar and a shift in consumer spend towards discount retailers amidst the inflationary environment. These trends are carrying over into the seasonally stronger Q4 and, together with opex discipline, support our view that investors should hold Shopify shares.”
* DA Davidson’s Tom Forte to US$34 from US$29 with a “neutral” rating.
* Morgan Stanley’s Keith Weiss to US$42 from US$40 with an “equal-weight” rating.
* TD Securities’ Daniel Chan to US$38 from US$35 with a “hold” rating.
* Baird’s Colin Sebastian to US$50 from US$47 with an “outperform” rating.
* Piper Sandler’s Clarke Jeffries to US$36 from US$32 with a “neutral” rating.
While continuing to see Teck Resources Ltd. (TECK.B-T) “as a high quality miner with multiple Tier 1 assets (met coal, Antamina stake, Red Dog, QB2),” Citi analyst Alexander Hacking lowered his recommendation for its shares to “neutral” from “buy” on Friday following largely in-line quarterly results.
“Our reasons for downgrading are : 1. The stock has achieved our target price with FCF yield now modeled less than 10 per cent in 2023-24; 2. The stock has been the best mid/large-cap performer in the sector this year (up 20 per cent in USD), 3. The stock is consensus overweight from sell-side and buy-side based on our conversations, 4. The Fort Hills sale catalyst is achieved, 5. The FCF inflection is pushed out by 6-12 months due to QB2 capex overruns, 6. Met coal at $305 per ton is above Citi’s target for 2023; 7. Citi is ST bearish copper,” he said.
Mr. Hacking maintained a $45 target for Teck shares, which is below the $53.26 average.
“Investment positives include a solid portfolio of mining assets including the world’s second biggest export met coal business; growth in copper; a strong balance sheet; increased capital returns in recent years. Negatives include risk of lower met coal demand in future; a history of questionable M&A and dual class share structure. On balance we see equal upside than downside at current levels,” he concluded.
Others making target changes include:
* National Bank’s Shane Nagle to $56 from $60 with an “outperform” rating.
“We reiterate our Outperform rating supported by strong coking coal prices, transformational growth in the copper business and a balance sheet capable of weathering a volatile commodity price environment without sacrificing nearterm growth objectives and continuing to support supplemental shareholder distributions,” said Mr. Nagle.
* Scotia’s Orest Wowkodaw to $53 from $55 with a “sector outperform” rating.
“TECK reported in-line Q3/22 results and issued revised 2022+ guidance that was largely in line with our expectations. QB2 remains on track for start-up in late Q4/22 or early 2023; however, the capex budget was further increased to US$7.40-$7.75-billion or by 9 per cent. Fort Hills was divested for $1.0-billion in cash. Overall, we view the update as mixed for the shares,” said Mr. Wowkodaw.
* Raymond James’ Brian MacArthur to $51 from $53 with an “outperform” rating.
“We believe Teck offers good exposure to coal, copper, and zinc. We also expect significant growth in copper with the start up of QB2,” he said.
* Barclays’ Matthew Murphy to $45 from $47 with an “equal-weight” rating.
“TECK beat slightly in Q3, however the market will be focused on what we think is a disappointing exit price from Fort Hills (0.6 times our NAV, 2.1 times annualized Q3 EBITDA) and negative update on QB2 with a 9-per-cent capex bump and lower 2023 production outlook. Medium term coal guidance was also cut 1Mtpa,” he said.
Stifel’s Martin Landry considers Aritzia Inc. (ATZ-T) “a core holding for Canadian small/mid-cap managers with long-term compounder characteristics.”
In a research note titled The busiest store at the mall, he said he came out of Thursday’s Investor Day event in Vancouver believing the clothing retailer’s “strategy and market positioning will position the company for continued growth over the years to come” after its management set a target of earnings per share compound annual growth of over 20 per cent through 2027.
“Having reached its initial 5-year plan established in FY16 roughly 2-3 quarters later than expected due to the COVID pandemic, Aritzia is setting new targets to FY27,” he said. “Revenues are expected to range between $3.5 to $3.8 billion, representing a 15-17-per-cnet CAGR, while Adj. EBITDA margins are expected to be approximately 19 per cent. EBITDA margins appear conservative at first glance given potential for scale benefits, geographic mix and higher proportion of online sales. Online sales are expected to double and reach 45 per cent of total sales up from 35 per cent currently. Assuming that all the FCF generated is used to buyback shares, we estimate that Aritzia’s EPS could reach over $4.00 per share in FY27.”
Mr. Landry said Aritzia is currently experiencing “rapid” growth, due, in large part, to increasing brand awareness south of the border, noting its clients have triple in numbers over the last two years in the United States (and doubled overall).
“Ariztia’s competitive positioning to provide high quality clothes at attainable prices remains the key source of distinction for the company and management expects the strategy to drive growth over the coming years,” he said. “The strategy is simple and is focused on what customers see (i.e. the products, the stores and the surrounding services). Hence, Aritzia focuses its efforts and capital on elevating its brand through great quality products, beautifully designed stores and specialized customer service, rarely seen from the competition. In our view, this strategy resonates with customers and increases brand loyalty. U.S. geographic expansion.”
“Growing its real estate footprint remains Aritzia’s number one customer acquisition tool and the company is planning to continue its U.S. expansion. Aritzia plans to enter 18 new U.S. markets, an increase of 70 per cent from the 26 currently. When entering a new market, Aritzia’s has historically seen online sales increase by 80 per cent in the region. Hence, the geographic expansion should also drive e-commerce in the USA. Aritzia appears to be increasingly sought after by landlords given its recent successes, providing the company with not only more opportunities but also more negotiating power. Hence, Aritzia has been able to lower its leasing costs and thus improving store economics. Payback now ranges from 12-18 months (24 months in 2016), with some being under 12 months. Aritzia remains highly disciplined with its real estate strategy and all of its stores are profitable currently, an impressive feat.”
Maintaining a “buy” recommendation for the retailer’s shares, Mr. Landry raised his target to $59 from $57. The average target is $61.86.E
Elsewhere, RBC’s Irene Nattel increased her to $63 from $56 with an “outperform” rating.
“Presentation of ATZ’s strategic plan and site visits was among the most highly attended investor event in recent memory,” said Ms. Nattel. “The event highlighted the long tenure and deep bench of management and reinforced our favourable view of company strategy, U.S. runway and related halo effect on global brand awareness, online opportunity, and ability to sustain the growth trajectory. We are raising our forecasts, conservatively toward the low end of target range, reflecting our cautious stance on the cadence of growth as recession looms large.”
Independent power producers are “attractive at current levels,” according to Desjardins Securities’ Brent Stadler, despite reducing his target prices for stocks in the sector ahead of third-quarter earnings season given the current macroeconomic environment.
“We are roughly in line with consensus for a majority of our coverage names,” he said. “Our best idea heading into the quarter is CPX, where estimates are up almost 25 per cent since we first communicated that 3Q would likely be another strong quarter; while consensus looks more reasonable, we believe there is still some upside potential. We also expect that NPI could beat the Street by almost 5 per cent.”
“We have increased our discount rates by 50 basis points, which is the primary driver of our targets declining by 7 per cent on average. We are aligning our discount rate with the consensus view that the US 10-year bond yield could be 3.50 per cent in 12 months’ time (from 4 per cent today). However, we continue to see assets transact at levels that imply upside vs our valuations, which could suggest that buyers are paying a lower IRR or ascribing more value to the tails or growth potential. We would be buyers in the space on (1) a likely lower US 10-year yield in 12 months, (2) continued strong demand for renewables, and (3) an ever-expanding TAM.”
Mr. Stadler’s target changes are:
* Brookfield Renewable Partners LP (BEP.UN-T, “hold”) to $48 from $50. Average: $53.69.
* Boralex Inc. (BLX-T, “buy”) to $48 from $52. Average: $48.69.
* Capital Power Corp. (CPX-T, “buy”) to $55 from $58. Average: $51.38.
* Innergex Renewable Energy Inc. (INE-T, “hold”) to $18.50 from $20.50. Average: $20.92.
* Northland Power Inc. (NPI-T, “top pick”) to $49 from $54. Average: $48.71.
* TransAlta Renewables Inc. (RNW-T, “hold”) to $17 from $18.50. Average: $17.35.
“We are sticking to our guns and maintaining our ratings. NPI is our Top Pick, while BLX and CPX are our preferred names. We also see AQN’s valuation as attractive,” the analyst said.
As the market for land drillers “continues to improve,” ATB Capital Markets analyst Waqar Syed sees an “attractive” valuation for Precision Drilling Corp. (PD-T) after Thursday’s release of stronger-than-anticipating third-quarter release.
He raised his forecast “sharply” higher for the Calgary-based company, seeing rig utilization and rates poised to continue to increase after it reported quarterly adjusted earnings per share of $1.66, blowing past his 98-cent projection and the consensus estimate of $1.23.
“It is good to see PD return to profitability after many years,” said Mr. Syed.
In response to the results and bullish view of the industry’s fortunes, he raised his EBITDA estimates for 2022, 2023, and 2024 EBITDA by 13 per cent, 19 per cent and 14 per cent respectively.
“After reporting drilling margin improvements of approximately $2,300 per rig-day in Canada and US$2,400 per rig-day in the US in Q3/22, PD is guiding to a $2,000/rig-day increase in Canada and a US$2,000/rig-day increase in the U.S. for Q4/22,” he said. “For Q1/23, it expects another $1,000-$2,000 quarter-over-quarter increase in Canada and another US$1,000-US$2,000 increase in the US. Despite these increases, margins in the US should still be only U.S. $13,000/rig-day, well below the leading-edge margins of US$18,000-US$20,000/rig-day, offering significant opportunity for further margin improvement as rigs reprice at leading-edge rates. PD remains on track to pay down $75-million in debt in 2022 and $400-million between 2022-2025.”
Reiterating his “outperform” rating for Precision Drilling shares, Mr. Syed moved his target to $140 from $137. The average on the Street is $137.13.
“PD is priced at 5.9 times 2022 and 3.6 times 2023 estimated EV/EBITDA versus its 6.5-7.3 times historical trading range,” he said. “We estimate that the Company’s super-spec rig fleet is being valued at US$14.0mm/rig and US$12.0mm/rig based on year-end 2022 and YE2023 balance sheet, a deep discount to the US$30mm-US$35mm replacement value.”
“PD is a premier NAM driller, with the largest market share in Canada, and it is one of the top-five largest drillers in the U.S.. We like the drilling business, because the NAM land drilling market is highly consolidated, with high barriers to entry. We expect the Company to generate $682-million in cumulative FCF during the 2022-2024 time period, equaling roughly 50 per cent of its market capitalization.”
Other analysts making changes include:
* National Bank’s Dan Payne to $135 from $120 with an “outperform” rating.
“The outlook remains stout as the recovery in demand for services gain momentum (albeit cautiously given the macro backdrop), and activity, pricing & margins are expected to press higher into 2023 (under the backdrop of tight capacity & relatively full utilization, with complements coming from recent Int’l re-contracting and accelerating LNG demand),” he said. “Specifically, management guided towards re-contracted pricing for high-spec rigs in the high-$30,000/day range, and a 10-15-per-cent sequential expansion to field margin in the U.S. & CDN through the winter drilling season (i.e., Q422/Q123 $13,000/day vs. $10,000/day U.S. & $13,500/day vs. $10,000/day CDN), with further complement to be noted through it C&P business line (each of which would present upside to our forecasts). Level-loaded activity levels may be the only moderating force in this market, with producers extending drilling into otherwise quiet seasonal periods to avoid premium pricing.”
* Stifel’s Cole Pereira to $165 from $140 with a “buy” rating.
“PD’s quarterly results landed ahead of Stifel and consensus estimates, and it reaffirmed peer commentary that leading edge day-rates in the U.S. continue to reach record highs around US $40,000/day,” said Mr. Pereira. “North American rig fundamentals continue to tighten and PD’s updated drilling margin guidance was well ahead of prior guidance and Stifel estimates. Impressively, we expect both its Canadian and U.S. drilling margins to reach record all-time highs in 1Q23″
* CIBC’s Jamie Kubik to $115 from $110 with a “neutral” rating.
“Precision posted a healthy EBITDA beat versus expectations this quarter, driven by stronger day rates combined with good field activity,” he said. “PD also indicated another rig move from Colorado to Alberta on a longer-term LNG contract, which highlights the tight market for super spec triples in Canada. Capital spending, however, continues to ratchet higher with PD increasing 2022 spending to $165-million from $149-millionprior, which mutes some of the free cash flow impact of the higher EBITDA generation. We take our 2023 estimates higher on an increase to our margin assumptions and slightly stronger activity in the Canadian segment. Our price target increases to $115 ($110 prior). We expect this quarter will mark the biggest step change in margins for PD, and the stock has performed well leading into this update. While we take this update as a positive, we also expect the stock could trade at a weaker forward multiple than prior given activity rates beginning to plateau along with the specter of a potential recession in 2023, and maintain our Neutral stance on the shares.”
* Piper Sandler’s Luke Lemoine to US$128 from US$74 with an “overweight” rating.
After a “tough” year for small-cap stocks, Desjardins Securities analyst Frederic Tremblay notes “valuations have pulled back near the Great Recession’s trough.”
“Fears about a weakening economy, geopolitical uncertainty, inflation and rising interest rates have already hit small-cap stocks hard, with the S&P/TSX SmallCap Index declining 14.4 per cent year-to-date (vs down 8.8 per cent for the S&P/TSX Composite) and trading at a multiple close to the trough observed in 2008,” he said. “Based on the depressed multiple, macrorelated concerns appear largely priced in for the small-cap group. That said, we acknowledge that consensus EBITDA expectations could move lower if the business environment further deteriorates.”
In a quarterly earnings preview for his diversified industries coverage universe titled Prudent trick-or-treating in a spooky small-cap market, Mr. Tremblay warned results could scare investors, however he thinks “compelling opportunities are available when using a selection process that includes business resilience, internal or external tailwinds to fuel profitable growth, cost discipline, balance sheet strength and valuation.”
He raised his recommendation for 5N Plus Inc. (VNP-T) to “buy” from “hold” with a $3 target, up from $2.50 and above the $2.80 average on the Street.
“We are impressed by recent contract announcements as they bolster VNP’s growth and margin profiles in addition to signalling that the company should play an increasingly important role in the secular ‘friend-shoring’ trend for critical industries,” he said. “A compelling valuation of 5.6 times 2023 EBITDA also supports our view that the stock can outperform.”
Mr. Tremblay also made these target changes:
* Cascades Inc. (CAS-T, “hold”) to $10 from $11. Average: $11.21.
* KP Tissue Inc. (KPT-T, “hold”) to $10 from $11. Average: $10.17.
* Savaria Corp. (SIS-T, “buy”) to $21.50 from $25. Average: $21.21.
In other analyst actions:
* Desjardins Securities’ Benoit Poirier trimmed his Aecon Group Inc. (ARE-T) target to $15 from $17, remaining above the $13.27 average on the Street, with a “hold” rating, while RBC’s Sabahat Khan cut his target to $11 from $12 with a “sector perform” rating.
“Aecon’s 3Q results came in slightly weaker than expected.” said Mr. Poirier. “The company has a market-leading position in the growing Canadian infrastructure market as well as a strong operational track record. However, given the length of possible disputes/litigation is unknown and given the possibility of future project adjustments due to the current environment, visibility on consistent future cash flows is less clear and more difficult to predict.”
* “Materially” reducing his forecast ahead of the release of its third-quarter results, National Bank Financial’s Michael Robertson lowered his target for shares of Airboss of America Corp. (BOS-T) to $15 from $30, below the $21.25 average on the Street, with an “outperform” rating.
“While Q3 readthroughs from rubber compounding peer HEXPOL AB (SEK: HPOL.B, not rated) point to widespread year-over-year and sequential improvements in sales, industry challenges continued in Q3 owing to ongoing inflationary pressures surrounding raw material and energy costs as well as production stoppages in automotive space, reinforcing our relatively muted expectations for BOS’s [Airboss Rubber Solutions and Airboss Engineered Products] segments in Q3.” he said. “We trim our Q3 EBITDA estimate to $6.0-million (from $6.9-million), now 15 per cent below respective consensus estimate.”
* RBC Dominion Securities’ Pammi Bir cut his Allied Properties REIT (AP.UN-T) target to $37 from $44 with an “outperform” rating. Other changes include: Raymond James’ Brad Sturges to $38.50 from $45 with an “outperform” rating and iA Capital Markets’ Gaurav Mathur to $38 from $44 with a “buy” rating and CIBC’s Dean Wilkinson to $36 from $43 with an “outperformer” rating. The average is $38.08.
“Given the slowdown in the downtown office markets, rising real rate environment and amid a tough macro tape, we have decreased our NOI estimates and modestly increased our cap rate by 35 basis points, bringing our NAV to $42.00/unit,” said Mr. Mathur. “While the REIT has traded at a 6-per-cent premium to NAV over the long term (2011 to date), the oncoming slowdown in the sector leads us to apply an 10-per-cent discount to our NAV estimate, bringing our target price to $38.00/unit. The REIT still trades at an 33-per-cent discount to NAV and offers an attractive entry point for investors looking for a resilient blue-chip office REIT. We reiterate our Buy rating on the stock.”
* CIBC’s Mark Jarvi raised his target for Atco Ltd. (ACO-X-T) to $50 from $49 with an “outperformer” rating. The average is $50.57.
* Mr. Jarvi also increased his target for Canadian Utilities Corp. (CU-T) to $37 from $36, below the $38.44 average, with a “neutral” rating.
“ACO.X and CU continue to benefit from strong results from the distribution utilities (particularly in Australia), plus Structures & Logistics (S&L) which adds to ACO.X results,” he said. “These trends should continue into year end (we increase our 2022 estimates), but utility earnings will probably fade in 2023 given rebasing in Alberta and results normalizing in Australia. Energy transition investments will pick up and help backfill lower utility earnings, but EPS likely declines in 2023 by 10 per cent plus for CU and ACO.X, a reset that is generally appreciated by the market. With a deeper discount and some more earnings upside drivers, we are more positive on ACO.X with an Outperform rating. CU remains Neutral rated.”
* Scotia’s Benoit Laprade cut his targets for Canfor Corp. (CFP-T) to $36 from $42 and Canfor Pulp Products Inc. (CFX-T) to $6.50 from $7, keeping “sector perform” ratings for both stocks. The averages on the Street are $32.83 and $6.80, respectively.
* Scotia’s Divya Goyal lowered her Converge Technology Solutions Corp. (CTS-T) target to $11 from $12, remaining above the $10.41 average, with a “sector outperform” rating, while Raymond James’ Steven Li cut his target to $8.50 from $9.50 with an “outperform” rating.
“We had a chance to recently connect with management on the upcoming quarter primarily discussing the current macroeconomic trends, FX movement, supply chain backlog and some recent acquisitions. As per our discussion, we have updated our financial outlook for CTS for Q3/22 and onwards,” said Ms. Goyal.
“Based on our revised estimates, we expect Q3/22 to be a softer than anticipated quarter for the company, primarily due to the macroeconomic headwinds which have continued to cause supply chain delays which is expected to cause increased backlog and slower revenue conversion. Additionally, recent acquisition integrations esp. TIG are taking longer than anticipated given the size and private nature of the enterprise pre-acquisition.”
* Mr. Li also lowered his target for VerticalScope Holdings Inc. (FORA-T) to $20 from $26 with an “outperform” rating. The average is $23.29.
* Prior to its third-quarter earnings release, National Bank’s Endri Leno reduced his Dentalcorp Holdings Ltd. (DNTL-T) target to $15.50 from $18 with an “outperform” rating to account for higher interest rate environment and lower peer valuations. The average is $16.55.
“We have a positive view on DNTL given 1) attractive and stable industry fundamentals; 2) opportunity to participate in the consolidation of the Canadian dental market; 3) long-term visibility for acquisitions; 4) relative quality of assets; and 5) continued organic growth,” said Mr. Leno. “These attributes do override at-the-moment potential concerns including leverage, a tight dental labour market, and federal deliberations on dental care.”
* CIBC’s Paul Holden raised his Element Fleet Management Corp. (EFN-T) target to $20 from $17 with an “outperformer” rating. The average is $20.39.
* National Bank’s Maxim Sytchev raised his North American Construction Group Ltd. (NOA-T) target to $22 from $20 with an “outperform” rating. The average is $23.80.
* RBC’s Luke Davis raised his Tamarack Valley Energy Ltd. (TVE-T) target to $7 from $6.50 with a “buy” rating. The average is $7.33.
“Tamarack posted stronger than expected Q3 results despite third party outages,” said Mr. Davis. “We expect management will remain focused on integration of recent acquisitions with well results in the Clearwater and Charlie Lake trending favourably. Debt repayment remains at the forefront and we continue to look through to the company’s shift to its three-stage RoC plan highlighted with the Deltastream acquisition.”
* With a quarterly earnings beat “driven by impressive cost control in spite of volume declines,” Credit Suisse’s Ariel Rosa raised his TFI International Inc. (TFII-N, TFII-T) target to US$119 from US$116 with an “outperform” rating. The average is US$121.18.
“We continue to see risks related to weakness in the macro environment, M&A related execution risk, union challenges in its U.S. LTL business, and competition eroding pricing power. The increases to our EPS targets reflect our rising confidence that TFI can navigate through these challenges while controlling costs and maintaining pricing discipline,” he said.
* Scotia’s Phil Hardie raised his TMX Group Ltd. (X-T) target to $165 from $155, above the $152.71 average, with a “sector perform” rating.
“The key take from the third quarter was likely that it provided yet another data point to demonstrate the company’s resilience and ability to post solid profitability across a range of market conditions,” he said. “The quarter saw a few moving parts, with Adj. EPS coming in line with Street expectations, but after reflecting a few unusual items, underlying earnings were likely about 6per cnetahead of the Street. Despite increasingly challenging financial market conditions, TMX posted Adj. EPS growth in the upper-single-digits.”
“We believe investors are recognizing TMX for its resilience, and the next leg up for the stock is to gain improved recognition for its growth potential. That said, TMX faces tough year-over-year comparables, and likely a reduced benefit of operating leverage in the near term.”