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

Citi analyst Jon Tower thinks the turnaround of Tim Hortons in Canada “appears to be gaining momentum, with clear drivers (including greater emphasis on cold beverages and higher ongoing levels of marketing) in place that should support sustained growth.”

In a research note reviewing parent company Restaurant Brands International Inc.’s (QSR-N, QSR-T) third-quarter results, which sent its TSX-listed shares rising by 1.6 per cent on Thursday, he also expressed optimism about Burger King’s performance outside of the United States, saying it “remains healthy and has yet to demonstrate signs of stress that investors have been bracing for (similar to other global players).”

However, he’s concerned about Burger King’s U.S. operations, noting: “It has struggled to keep pace with peers and we worry that recent ramping competitive activity (looking at you MCD) may put a damper on the brand’s idiosyncratic efforts to reclaim the sales/traffic flame.”

“Discussions of de-levering the balance sheet is likely to attract more risk-averse investors to this highly cash-generative name, but also signals that shareholder payouts (ex-dividends) will be impacted as interest rates rise … the of the first highly-franchised concepts to acknowledge this,” said Mr. Tower.

Pointing to slowing unit and same-store sales growth at Burger King and seeing the Street’s estimates “not reflecting reclaim the flame investments,” he cut his 2022 earnings per share estimate by a penny to US$3.13 and his 2023 projection to US$2.95 from US$3.28.

“Key points from the call/management call back: (1) QSR will be prioritizing de-leveraging the balance sheet (potential combo of growth and debt paydown) over repurchase activity, in the near term, with a plan to reach mid-4-times net-debt to EBITDA over the next 2-3 years,” said Mr. Tower. “Reinvestment back into the business (esp. Reclaim the Flame) and absolute dividend growth remain top priorities, while lower leverage levels may provide for greater financial flexibility down the line (and cushion the EPS hit from rising rates on the 14 per cent of debt with floating rates). (2) 9-per-cent year-over-year supply chain profit growth benefitted from timing mismatches between pricing pass-through to franchisees which pushed percent margins higher. Like other companies, Tim Hortons charges a fixed mark-up on goods sold to franchisees and inflation/purchasing timing can impact margins. Inflating input pricing pushes revenues up/margins down and deflation pushed revenues down/margins up, with no net impact to profit dollars. (3) Management remained confident in the LT opportunity for unit growth, but we see outsized macro risks to global unit growth. A shorter track record than MCD/YUM in many markets may make franchisees less confident in what business could look like post-recession/less willing to invest ahead of uncertainty.”

Keeping a “neutral” recommendation for Restaurant Brands shares, he raised his target to US$60 from US$56. The average on the Street is US$64.54..

“Our $60 price target is based upon a 15.5 times NTM 12-months from now EV/EBITDA multiple, 5.5-per-cent FCF yield and represents at 1.15x the S&P 500 multiple (above the long-term average of 0.9 times),” said Mr. Tower. “We believe this multiple accurately balances the company’s improving global unit growth against limited visibility into economics in these newer markets, potential near-term headwinds tied a global economic slowdown and risks of a significant reinvestment cycle ahead for the Burger King U.S. business.”

Elsewhere, CIBC’s Mark Petrie raised his target to US$70 from US$65 with an “outperformer” rating.

“RBI reported solid Q3 results led by strong Tims Canada and Burger King (BK) International same-store sales (SSS) momentum. BK U.S. SSS were modestly disappointing, but we are still early in the turnaround efforts; takeup on programs has been solid and we expect benefits to accrue by H2/23. FX, higher rates and prioritizing de-leveraging over buybacks are headwinds for EPS growth, but we still see upside in valuation supported by robust FCF,” said Mr. Petrie.

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While Citi analyst P.J. Juvekar is “more concerned” about potassium and phosphorus following Nutrien Ltd.’s (NTR-N, NTR-T) third-quarter earnings report, he emphasized the company’s “positive” view of long-term agricultural fundamentals, noting “grower incentives remain high.”

On Thursday, TSX-listed shares of the Saskatoon-based fertilizer giant plummeted 14 per cent after it cut its full-year adjusted earnings forecast for the second time this year as potash prices decline. It now expects EPS of US$13.25 to US$14.50 per share, falling from a previous forecast of US$15.80 to US$17.80.

“Higher potash inventories in US & Brazil are concerning and reflected in the volume miss and guide lower,” Mr. Juvekar said. “NTR expects destocking during the winter but farmers will need to replenish the soil & inventories, especially with current farm economics. While NTR maintained that Russia and Belarus shipments are expected to remain well below 2021 levels, we are concerned more tons may find their into the market right as NTR ramps additional capacity.

“Nitrogen prices in North America have been slow to respond to EU curtailments and a step-up in U.S. net exports of nitrogen fertilizers should tighten NA supply-demand balance into 2023. We expect relatively high spring nitrogen prices, especially as EU NG price remains high.”

The release prompted Mr. Juvekar to drop his fourth-quarter earnings per share forecast by 33 per cent to US$2.65 from US$3.95, citing lower NPK [nitrogen, phosphorus and potassium] price assumptions and lower volume expectations for N&K [fertilizer]. His full-year 2023 and 2024 estimates slid to US$14.02 and US$11.65, respectively, from US$15.43 and US$11.93.

Reiterating a “buy” rating, he slashed his target for Nutrien shares to US$87 from US$102. The average on the Street is US$107.53.

“We rate NTR shares at Buy. Our Buy rating on the shares reflects: 1) Segment diversification by fertilizer, and large exposure to the historically stable nitrogen fertilizer industry. 2) Retail segment, which provides additional earnings stability against the more cyclical fertilizer segments. The Retail segment continues to be an area of growth for NTR, especially its online platform. 3) Emphasis on shareholder return through both dividends and share repurchases. Management has proven itself to be effective capital decision makers, and has successfully executed and integrated M&A as well,” he concluded.

Other analysts making target changes include:

*Scotia’s Ben Isaacson to US$100 from US$110 with a “sector perform” rating.

“While we see a more compelling valuation opportunity in NTR than in all other fert names, what we don’t see, is a reason why the gap should close near-term,” he said. “Simply put, we’re in a bull/bear tug of war, each with equally interesting/valid arguments. [Thursday], we downgraded NTR to SP, as we believe weak investor sentiment, downward potash price momentum, and a lack of catalysts will trump valuation, as it has for several months already (we still see mid-cycle fair value at $110/sh). We also think a nitrogen bull run in the spring is less likely, as EU producers are back in the money + we’re seeing demand destruction in all buckets of ammonia (i.e., N, P, industrial), as producers have highlighted. While EU gas price volatility will keep the N debate active through spring, an elevated energy price differential should support above-average N margins for 2-3 years.”

* BMO’s Joel Jackson to US$110 from US$115 with an “outperform” rating.

“Yes, it seems NTR made poor decisions around the potash opportunity this year on clearly low visibility into the channel in N.America (and Brazil). However, the post Q3 stock price reaction is overdone, and we see value at these levels. Considering the crop price dynamic, we think farmers will farm and potash demand will rebound in 2023 to the benefit of NTR the most,” said Mr. Jackson.

* TD Securities’ Michael Tupholme to US$91 from US$105 with a “buy” rating.

* CIBC World Markets’ Jacob Bout to US$106 from US$112 with an “outperformer” rating.

* Raymond James’ Steve Hansen to US$95 from US$110 with an “outperform” rating.

* JP Morgan’s Jeffrey Zekauskas to US$98 from US$100 with a “buy” rating.

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Citing its recent relative outperformance and valuation, TD Securities’ Menno Hulshof downgraded Canadian Natural Resources Ltd. (CNQ-T) to “buy” from “action list buy” on Friday.

“CNQ shares up 29 per cent since we upgraded the stock to Action List Buy on September 29, 2022: This compares with the peer average of 25 per cent and XEG at 23 per cent,” he said. “We now estimate a 2023 FCF yield of 17 per cent for CNQ (peer average—19 per cent). Our revised target price of $92.00 reflects a 16-per-cent 12-month total return, including NTM [next 12-month] dividends. In our view, this target return no longer justifies an Action List Buy rating. However, CNQ remains our top Integrated pick with upside through best-in-class oil sands operations, gas optionality, and a significant Clearwater footprint. It also offers a competitive shareholder capital return framework.”

Mr. Hulshof raised his target to $92 from $89. The average is $94.48.

“Although now on the more expensive side, we believe that CNQ has one of the most sustainable business models within our coverage and it should remain a core holding for energy investors. We highlight rapid deleveraging and aggressive shareholder returns through buybacks (10-per-cent NCIB), ratable dividend growth, and potential for additional special dividends (2023E cash return yield of 10 per cent vs. peers at 12 per cent), backstopped by significant FCF generation, potential incremental buybacks when ND hits $8-billion, and additional special dividends,” he concluded.

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A group of equity analysts on the Street reduced their targets for Victoria-based Aurinia Pharmaceuticals Inc. (AUPH-Q) after its shares dropped 31.93 per cent on Thursday on a revenue forecast reduction and the introduction of underwhelming 2023 guidance for sales of its drug for a severe form of lupus.

Sicoff: Aurinia stock sinks to three-year low as B.C. biotech cuts sales forecast for lupus drug

Those making changes include:

* RBC Dominion Securities’ Douglas Miehm to US$10 from US$18 with an “outperform” rating. The average is US$15.94.

* Cowen and Co.’s Ken Cacciatore to US$15 from US$30 with an “outperform” rating.

* SVB Securities’ Joseph Schwartz to US$12 from US$17 with an “outperform” rating.

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A day after its shares dropped 16.2 per cent on weaker-than-anticipated third-quarter results and a reduction its full-year guidance, CIBC World Markets John Zamparo downgraded Spin Master Corp. (TOY-T) to “neutral” from “outperformer” previously.

“Overstocked inventory among retailers, sharply softer consumer sentiment and an inability to return capital in a universally approved way cause us to become increasingly bearish on TOY,” he said. “Point-of-sale data has rapidly deteriorated, and promotional pricing has not reduced inventories or spurred consumer demand. TOY continues to take share, but this seems offset by the incrementally worse operating environment. Spin Master deserves credit for a markedly improved business, but we consider valuation as the primary thesis for the stock, and this is increasingly a moot argument for discretionary names. We see limited catalysts near term as we expect investors to pivot to more defensive names.”

The Toronto-based toymaker announced revenue of $624-million, down 10 per cent year-over-year on a constant currency basis and below the Street’s expectations. Adjusted EBITDA dropped 22.9 per cent to $168-million, below the consensus estimate of $170-million.

Spin Master now expects revenue to rise in 2022 at low single digits year-over-year versus its previous expectation of low double digits.

“We see limited catalysts over the near term, as guidance implies minimal EBITDA in Q4, while more traditional seasonality should mean H1/23 faces challenging comparisons in a potentially tough economic environment. On the other hand, H2/23—with a Paw Patrol sequel and spin-off show, and launch of a potential hit, Vida the Vet—should provide some reasons for optimism,” said Mr. Zamparo.

Mr. Zamparo’s target for Spin Master shares fell to $40 from $62. The average target on the Street is $50.

Other analysts making changes include:

* Stifel’s Martin Landry to $51 from $62 with a “buy” rating.

“Spin Master reported Q3/22 results which were mostly in-line with consensus and slightly lower than our expectations,” said Mr. Landry. “Despite in-line Q3/22 results TOY shares decreased by 16 per cent as investor reacted to the revised full year guidance. Management decreased its 2022 revenue and EBITDA margin guidance on soft consumer demand combined with retail discount to clear excess inventory. The revised guidance implies a challenging Q4/22 where EBITDA could be down 60-80 per cent year-over-year . We believe that most consumers have returned to their historical patterns of buying their holiday gifts more last minute vs early purchases last year when we were at the height of the global supply chain glut. This could suggest a better holiday season that currently expected. Our longer-term thesis on Spin Master is unchanged. TOY has a large cash balance, which provides optionality, an appealing valuation heavily discounted vs historical levels, and is growing revenues and generating healthy cash flows.”

* BMO’s Gerrick Johnson to $54 from $64 with an “outperform” rating.

“For the third consecutive non-pandemic year, TOY has lowered its full-year outlook,” said Mr. Johnson. “FX movements and deteriorating retail, combined with higher levels of channel inventory, have forced every publicly traded toy company to revisit their 4Q outlook. This reduction is (mostly) macro-related, and not isolated to TOY, but the level of investor enmity is elevated given repeated annual forecasting errors. TOY has a solid product line up. We’re still optimistic that the holiday season will turn out OK; the toy industry is defensive and parents always buy toys for their kids.”

* Canaccord Genuity’s Luke Hannan to $44 from $62 with a “buy” rating.

“All told, we fully expect the stock to be range-bound in the near term, with an absence of positive catalysts until we move past a challenging H1/23,” he said. “In our view, the lowered guide and overall negative call commentary could be enough to contemplate a downgrade, but we’re opting to remain BUY-rated. The $675 million in cash on the balance sheet is certainly enticing (though it might be difficult to make an accretive acquisition at these levels), but the valuation is the main reason for this view; following the 12-per-cent plunge [Thursday] morning, the stock trades at 5.5 times our lowered 2023 EBITDA estimate.”

* RBC’s Sabahat Khan to $46 from $61 with an “outperform” rating.

* Jefferies’ Stephanie Wissink to $47 from $56 with a “buy” rating.

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After a “mixed” third-quarter from Premium Brands Holdings Corp. (PBH-T), Desjardins Securities analyst Chris Li said he’s maintaining a “positive” long-term view “as another volatile year winds down.”

On Thursday, the Vancouver-based specialty food manufacturing and distribution company reported adjusted earnings before interest, taxes, depreciation and amortization for the quarter of $141-million, matching Mr. Li’s forecast but narrowly missing the consensus of $145-million. Organic growth from its Specialty Foods segment improved to 4 per cent from negative 0.5 per cent in the previous quarter, ahead of the analyst’s 3-per-cent forecast, however EBITDA margin of 7.9 per cent fell below his estimate (8.4 per cent).

“Management continues to expect to reach the low end of its 2022 EBITDA guidance of $510–530-million,” he said. “While the M&A pipeline remains robust, PBH is focused on organic growth investments and will utilize its NCIB, as it views its shares as significantly undervalued.

“Management reiterated its confidence in achieving 2023 sales and EBITDA of more than $6-billion and more than $600-million, respectively, with margin recovering from 8.6 per cent in 2022 to 10 per cent. This is mainly predicated on 6-per-cent organic volume growth and assumes stable commodities. While this might be ambitious against the current macro backdrop, we believe the depth and diversified nature of PBH’s product assortment and channel distribution help make the business resilient to a downturn. In particular, the shift from foodservice to retail during a recession should have a net favourable impact on sales and margins.”

Mr. Li lowered his 2023 EBITDA estimate to $585-million from $601-million, noting: “We do not believe the market is placing a high likelihood of PBH achieving its $600-million EBITDA target, with the stock trading at only 9.8 times EBITDA (five-year trough).”

Keeping a “buy” recommendation, the analyst cut his target to $110 from $130. The average is $122.70.

“Despite mixed 3Q22 results, we remain constructive on the longer-term outlook, supported by (1) margin benefits from pricing catching up with cost inflation and stabilizing commodities; (2) leverage returning to PBH’s target over the next few quarters; (3) strong EBITDA growth in 2023 driven by a reacceleration of organic volume growth; and (4) robust M&A pipeline. With the stock not far from our downside valuation, we believe risk/reward skews to the positive, but patience is required,” said Mr. Li.

Others making changes include:

* Stifel’s Martin Landry to $105 from $120 with a “buy” rating.

“Organic growth remains below the company’s target but is expected to accelerate in Q4 driven by more product featuring and stabilizing prices at retail,” he said. “Overall commodity inflation and supply chain environment appear to have stabilized, which should help PBH’s margins in 2023. Cash generation is also likely to improve in the coming quarters on a reduction in the working capital. This should reduce leverage, which remains elevated at 4.5 times TTM [trailing 12-month] EBITDA, limiting the company to act on M&A, in our view. Demand destruction remains largely isolated and PBH does not expect much slowdown in demand, increasing our conviction on the sustainability of earnings near term.”

* TD Securities’ Derek Lessard to $115 from $150 with a “buy” rating.

“We remain constructive on PBH’s shares given the positive long-term growth outlook. Specifically, we are still forecasting 15-per-cent EBITDA growth in 2023, driven by: 1) PBH successfully leveraging new capacity to win more contracts, given the tight labour market faced by QSR/retail customers; 2) new program launches across its portfolio and U.S. expansions; 3) production efficiencies from higher volume, facility expansions, and increased automation; and 4) price increase catch-up. That said, the tug-of-war between company fundamentals and macro pressure continues, with the latter winning for now,” said Mr. Lessard. “We have seen this playbook from PBH before (2015) when new sales initiatives and capacity investments led to meaningful margin expansion and, in turn, valuation expansion. This time, however, numerous headwinds continue to mask any underlying improvement.”

* Scotia’s George Doumet to $112 from $115 with a “sector outperform” rating.

“We continue to be constructive on the name and anticipate that the share price recovery should gain traction when both volume growth and margins normalize. In addition, we note that the business has shown to be pretty resilient in prior downturns (in 08/09 organic revenues declined by less than 2 per cent),” he said.

* CIBC’s John Zamparo to $87 from $106 with a “neutral” rating.

“We remain skeptical of Premium Brands’ ability to hit EBITDA targets this year and next, as operating conditions remain difficult and M&A seems unlikely given net leverage more than 4 times. Labour shortages, supply chain disruptions and sticky inflation (even if moderating) all pose ongoing, not transitory, challenges. If organic volume growth (OVG) recovers, the stock likely has upside. However, we see too many risks, including those listed above, but also higher interest rates (a ~10% EPS headwind next year), increasingly higher capex and limited FCF generation. PBH benefits if a pivot occurs into staples and away from discretionary, but we believe investors can wait for demonstration of margin expansion or accelerated OVG,” said Mr. Zamparo.

* BMO’s Stephen MacLeod to $117 from $120 with an “outperform” rating.

* RBC’s Sabahat Khan to $107 from $112 with an “outperform” rating.

* National Bank’s Vishal Shreedhar to $122 from $125 with an “outperform” rating.

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In the third-quarter earnings call for Profound Medical Corp. (PROF-Q, PRN-T), Raymond James analyst Rahul Sarugaser said the Mississauga-based company revealed “some very promising glimmers of traction and broadening clinical applicability across its installed base.”

“Multiple sites are reporting 4-6 month, fully-scheduled wait lists for the TULSA procedure,” he added. “One teaching hospital reports that 25 per cent of all prostate cancer removals are being performed using the TULSA (75 per cent surgery). Another teaching hospital now uses TULSA for BPH [benign prostatic hyperplasia], and yet another for palliative prostate cancer treatments (beyond TULSA’s core application in intermediate prostate cancer).”

Mr. Sarugaser upgraded his recommendation for Profound to “strong buy” from “outperform” with a US$15 target. The average is US$16.24.

“We are raising our rating on Profound Medical (PROF-Nasdaq) to Strong Buy given our base case scenario analysis implying a 5 times return on PROF’s stock over the next 24 months. Even our bear case scenario implies a 3 times return over 24 months,” he said.

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While Information Services Corp.’s (ISV-T) third-quarter was “stable,” Raymond James analyst Stephen Boland says “challenges to growth are mounting,” leading him to downgrade its shares to “market perform” from “outperform.”

“While the outlook for the remainder of 2022 is for further stable results, the 2023 picture is less clear. Although the Saskatchewan real estate sector has largely outperformed the rest of Canada YTD, we suspect the impact of rising interest rates is beginning to take hold. For example, CREA estimates residential sales in Saskatchewan will underperform the broader industry in 2023 (Exhibit 1). As such, we believe there is some risk surrounding revenues across ISV’s Registry businesses next year. While we still forecast growth across Services, this is typically a lower margin segment. Consequently, ISV could struggle to offset lost Registry EBITDA with Services growth.”

His target slid to $26 from $28. The average is $28.21.

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In other analyst actions:

* Scotia Capital’s Mark Neville initiated coverage of MDA Ltd. (MDA-T) with a “sector perform” rating and $10 target. The average target on the Street is $10.60.

“The space economy is large and growing, and MDA operates across most segments of the space ecosystem,” he said. “MDA is seeing robust top-line growth and is highly profitable. However, the company is currently going through a heavy capital expenditure period to support its growth initiatives, which should continue through 2024. As a result, we do not expect MDA to generate positive free cash flow (FCF) until 2025. Importantly, we do not believe the company will need equity to help finance this growth as, in our opinion, it should be able to rely on its operating cash flow (CFO), its balance sheet, and other potential sources of nondilutive funding. On an EV/EBITDA basis, the shares look compelling, but, in our opinion, the lack of near-term FCF justifies a discounted multiple relative to the company’s larger, more diversified peers. We believe a positive resolution regarding Telesat Lightspeed funding represents the most meaningful potential positive catalyst for the shares in the near term.”

* Piper Sandler’s Clarke Jeffries downgraded Lightspeed Commerce Inc. (LSPD-N, LSPD-T) to “neutral” from “overweight” with an US$18 target, down from US$32. Others making changes include: CIBC’s Todd Coupland to $34 from $40, TD’s Daniel Chan to US$25 from US$30 with a “buy” rating, BTIG’s Mark Palmer to US$35 from US$45 with a “buy” rating, BMO’s Thanos Moschopoulos to US$26 from US$35 with an “outperform” rating, Scotia’s Kevin Krishnaratne to US$28 from US$30 with a “sector outperform” rating,Credit Suisse’s Timothy Chiodo to US$21 from US$25 with an “outperform” rating, National Bank’s Richard Tse to US$40 from US$65 with an “outperform” rating, Barclays’ Raimo Lenschow to US$20 from US$27 with an “overweight” rating and RBC’s Daniel Perlin to US$30 from US$34 with an “outperform” rating. The average is US$32.36.

Lightspeed shares sink on quarterly loss, outlook

* RBC Dominion Securities’ Luke Davis downgraded Headwater Exploration Inc. (HWX-T) to “sector perform” from “outperform” with a $9 target. The average is $10.

“Q3 results were in line with expectations and featured strong exploration results around the core Marten Hills area. We believe the initiation of a RoC policy was widely expected (and likely priced in) but will be well-received, though a softer medium-term outlook could weigh on the stock near-term. We have reduced our estimates to reflect management’s updated guidance and downgrade the stock,” said Mr. Davis.

* BMO’s John Gibson upgraded Akita Drilling Ltd. (AKT.A-T) to “outperform” from “market perform” with a $3.25 target, up from $2.50. The average is $3.75.

“Akita reported strong Q3/22 results, driven by impressive day rates and margins from its U.S. platform, while Canada is also driving higher,” said Mr. Gibson. “Post quarter, we are increasing estimates as well as our target price to $3.25 ($2.50 prior), which reflects 3.5 times 2023 EV/EBITDA. Given its inexpensive valuation (more than 3 times 2023 EV/EBITDA) coupled with its solid fleet of AC Triple rigs in the U.S., we are upgrading the shares.”

* Cowen and Co’s Ken Cacciatore cut his Bausch Health Companies Inc. (BHC-N, BHC-T) target to US$35 from US$40, exceeding the US$12 target, with an “outperform” rating.

* CIBC’s Anita Soni cut her Barrick Gold Corp. (GOLD-N, ABX-T) target to US$25 from US$26 with an “outperformer” rating, while TD’s Greg Barnes cut his target to US$21 from US$24 with a “buy” rating. The average is US$21.49.

* RBC’s Drew McReynolds bumped his BCE Inc. (BCE-T) target to $64 from $63 with a “sector perform” rating. Other changes include: BMO’s Tim Casey to $68 from $75 with an “outperform” rating, Scotia’s Maher Yaghi to $66.75 from $65.50 with a “sector outperform” rating and Canaccord’s Aravinda Galappatthige to $62 from $63 with a “hold” rating. The average is $66.23.

“With a scale advantage, BCE consistently delivers an attractive balance of growth and profitability while continuing to make significant investments to future-proof the business and returning excess capital to shareholders through annual dividend growth,” said Mr. McReynolds. “In addition to major strategic initiatives anchored around FTTH, we are impressed by BCE’s execution and extensive array of tactical initiatives. We continue to believe BCE’s competitive position relative to peers could see the greatest gains over the medium term driven by FTTH expansion and 5G deployment across Canada’s largest integrated wireline-wireless network footprint, and growth in 5G B2B IoT. Coupled with the substantial completion of the FTTH build in 2025, we see the mid-2020s as a potential major inflection point for NAV growth and FCF generation reinforcing BCE as a core longterm holding within Canadian telecom.”

* Scotia Capital’s Konark Gupta hiked his Bombardier Inc. (BBD.B-T) target to $55 from $52 with a “sector outperform” rating. Others making changes include: BMO’s Fadi Chamoun to $65 from $63 with an “outperform” rating, RBC’s Walter Spracklin to $58 from $49 with an “outperform” rating and National Bank’s Cameron Doerksen to $61 from $59 with an “outperform” rating. The average is $52.42.

“Q3 results were mixed but we are incrementally positive on margin and FCF outlook post-quarter as execution remains solid amidst normalization in the book:bill ratio,” said Mr. Gupta. “We think BBD is well-positioned to exceed 2022 guidance, provide strong 2023 outlook, and advance/raise/beat 2025 targets. Management expressed high confidence in managing operations even during a global economic crisis given solid backlog and strong supply chain control. Meanwhile, the balance sheet is de-risking fast with room for more improvement. We realize some investors still have the old perception about Bombardier or are shying away due to its leverage/bizjet cyclicality, but our conviction in the stock continues to improve as the bizjet industry is structurally in a sweet spot for at least two more years and management is capitalizing on liquidity windfall by retiring loads of debt. With slightly improved estimates, we are raising our target to $55 (was $52) but see the blue-sky valuation at $120 (3 times from current levels), based on a reasonable 8.0 times BBD’s 2025 EBITDA target and our 2025 net debt estimate.”

* CIBC’s Mark Petrie moved his Canada Goose Holdings Inc. (GOOS-T) target to $30 from $36, above the $29.27 average, with a “neutral” rating.

* CIBC’s Dean Wilkinson trimmed his Dream Residential REIT (DRR.UN-T) target to $12 from $13.50 with an “outperformer” rating. The average is $11.42.

* CIBC’s Anita Soni cut his Equinox Gold Corp. (EQX-T) target to $4.40 from $4.90, above the $4 average, with a “neutral” rating. Others making reductions include: Scotia’s Ovais Habib to $6 from $6.50 with a “sector perform” rating, Desjardins Securities’ John Sclodnick to $4.75 from $5.75 with a “hold” rating and Canaccord Genuity’s Dalton Baretto to $4.25 from $7 with a “buy” rating.

“We view the Q3/22 results as a negative for EQX shares, and believe that while investors will be encouraged by Greenstone remaining on budget and schedule, this will be tempered by higher realized costs at other portfolio assets that could reduce the company’s ability to generate cash flow in the context of the current gold price environment,” said Mr. Habib.

* CIBC’s Nik Priebe raised his Fairfax Financial Holdings Ltd. (FFH-T) target to $950 from $900 with an “outperformer” rating, while BMO’s Tom MacKinnon bumped his target to $800 from $780 with a “market perform” rating. The average is $922.62.

“Good quarter but still a ‘show me’ story. A more consistent track record is needed before becoming more constructive,” said Mr. MacKinnon.

* CIBC’s Dean Wilkinson cut his First Capital REIT (FCR.UN-T) target to $19 from $19.50 with an “outperformer” rating. The average is $18.75.

* RBC’s Sabahat Khan reduced his target for Gildan Activewear Inc. (GIL-N, GIL-T) to US$39 from US$40 with an “outperform” rating. Others making changes include: BMO’s Stephen MacLeod to US$42 from US$58 with an “outperform” rating, Canaccord Genuity’s Luke Hannan to US$39 from US$42 with a “buy” rating, Desjardins Securities’ Chris Li to $52 from $53 with a “buy” rating and CIBC’s Mark Petrie to US$37 from US$42 with an “outperformer” rating. The average is $38.82.

“We believe the combination of stronger margins as a result of Back to Basics cost savings, GIL’s low-cost manufacturing footprint, a healthy FCF generation profile and an attractive valuation creates a favourable risk/reward profile for GIL shares,” said Mr. Hannan.

* Desjardins Securities’ Doug Young cut his Great-West Lifeco Inc. (GWO-T) target to $31, below the $33.11 average, from $32 with a “hold” rating. Other changes include: BMO’s Tom MacKinnon to $32 from $33 with a “market perform” rating and Scotia’s Meny Grauman to $34 from $37 with a “sector perform” rating.

“Despite a sizable big miss to both us and the Street, we believe that the market reaction to GWO’s Q3 results was overdone,” said Mr. Grauman. “And yet we remain cautious on this name as macro headwinds continue to limit relative multiple expansion here. GWO is the only name we cover with material European exposure, and while most of its businesses in the region are relatively recession resilient, including its large annuities unit, the reality is that this exposure is still likely to weigh on valuation in the near term. The temporary suspension of the firm’s UK ERM (equity release mortgage) sales only feeds into the market’s cautious stance on this geography. Meanwhile, Empower is also a headwind for the shares as investors continue to take a wait and see approach on the firm’s ability to turn group members into individual wealth clients. While commentary that the MassMutual integration is complete and the Prudential integration is on track is encouraging, earnings momentum at Empower continues to be weighed down by challenging market conditions that only feeds into investors’ generally cautious stance on this business.”

* Scotia’s Phil Hardie bumped his IGM Financial Inc. (IGM-T) target to $44 from $42 with a “sector perform” rating. The average is $41.57.

“The asset and wealth management industry faced a challenging environment in the third quarter that was characterized by significant market volatility across financial markets and industry-wide outflows for the domestic mutual fund industry,” said Mr. Hardie. “IGM’s earnings were down almost 20 per cent year-over-year from a record Q3/21, but still managed to deliver the third-highest quarterly EPS on record. Third quarter earnings came in about 6 per cent ahead of consensus as IGM demonstrated better-than-expected resilience.

“Challenging operating conditions have likely weighed on asset & wealth manager valuations throughout much of the year, and the recent decline in assets has put pressure on earnings and likely dampened the near-term outlook. Relative to its closest peers, we view IGM as the most defensive name and believe it is well positioned to navigate challenging market conditions. IGM stock is down 23 per cent year-to-date, and given the expected impact on earnings from the recent decline in AUM&A, we estimate the stock is trading at just 4.7 times EV/EBITDA (NTM), below its average of 6.2 times. We remain on the sidelines for now, given a challenging operating environment and uncertain market outlook.”

* Scotia’s Benoit Laprade trimmed his Interfor Corp. (IFP-T) target to $40 from $42 with a “sector outperform” rating. The average is $39.50.

* Scotia’s Orest Wowkodaw cut his Labrador Iron Ore Royalty Corp. (LIF-T) target to $31 from $33 with a “sector perform” rating. The average is $32.36.

* CIBC’s Hamir Patel cut his Loop Energy Inc. (LPEN-T) target to $2 from $2.75 with a “neutral” rating. The average is $3.95.

* RBC’s Jimmy Shan cut his Morguard Corp. (MRC-T) target to $150, matching the average, from $175 with a “sector perform” rating.

“Morguard Corp reported a better-than-expected quarter,” he said. “The short duration lease segments (hotels & residential accounting for roughly half of NOI) continue to outperform while its retail/office segments are largely stable to modestly weakening. We expect this trend to remain in the near term. While MRC’s valuation remains largely depressed with FFO trading multiple nearing GFC lows, we think, in this environment, MRC is likely to continue to lag the sector materially.”

* CIBC’s Jamie Kubik increased his Paramount Resources Ltd. (POU-T) target to $40 from $37.50 with a “neutral” rating, while Stifel’s Cody Kwong trimmed his target to $42 from $43 with a “buy” rating. The average is $40.60.

* CIBC’s Robert Catellier raised his Pembina Pipeline Corp. (PPL-T) target to $49 from $47 with a “neutral” rating, while Raymond James’ Michael Shaw cut his target to $46 from $49 with a “market perform” rating. The average is $50.88.

“The company is performing well and marketing results caused a material beat versus our estimate during the quarter, and the company raised guidance again. Stronger commercial opportunities following the Pembina Gas Infrastructure (PGI) transaction, lower cash taxes and solid volumes lead us to raise our DCF-based price target,” said Mr. Catellier.

* RBC’s Drew McReynolds raised his target for shares of Quebecor Inc. (QBR.B-T) to $34 from $32 with an “outperform” rating. The average is $33.52.

“Underlying Q3/22 results excluding VMedia were slightly ahead of our expectations driven by both Internet and wireless. We continue to believe Quebecor is well positioned to be a national telecom operator,” he said.

* CIBC’s Jamie Kubik raised his Secure Energy Services Inc. (SES-T) target to $9.50 from $8.50 with an “outperformer” rating. The average is $10.07.

* National Bank’s Travis Wood raised his Suncor Energy Inc. (SU-T) target to $54 from $53 with a “sector perform” rating. The average is $54.53.

* CIBC’s Paul Holden increased his target for Sun Life Financial Inc. (SLF-T) to $65 from $62 with an “outperformer” rating. Others making changes include: Canaccord Genuity’s Scott Chan to $68.50 from $64.50 with a “buy” rating, RBC’s Darko Mihelic to $75 from $78 with a “sector perform” rating and Desjardins Securities’ Doug Young to $69 from $67 with a “buy” rating. The average is $66.58.

“SLF’s Q3/22 results were strong across all segments,” said Mr. Mihelic. “We are now using a future book value per share and a higher ROE for valuation (i.e., after IFRS 17 impact). As the risk of a potential recession, continued market volatility, and the remaining uncertainties of the IFRS 17 transition loom ahead, we modestly increase our discount rate. The end result is that we lower our price target to $75 to reflect these uncertainties.”

* CIBC’s Jacob Bout bumped his Toromont Industries Ltd. (TIH-T) target to $111 from $107, below the $118.50 average, with a “neutral” rating.

* Scotia’s Mario Saric trimmed his Tricon Residential Inc. (TCN-N, TCN-T) target to US$12.75 from US$15.25 with a “sector outperform” rating. The average is US$12.94.

* CIBC’s Nik Priebe raised his Trisura Group Ltd. (TSU-T) target to $60 from $55 with an “outperformer” rating, while Raymond James’ Stephen Boland raised his target to $56 from $55 with an “outperform” rating. The average is $56.86.

“With hard market conditions expected to persist and the potential for new partnerships across both the US and Canadian fronting operations, the growth outlook for TSU remains robust. In addition, the recent equity raise has added capacity and should allow the company to pursue larger programs in the future,” said Mr. Boland.

* CIBC’s Dean Wilkinson reduced his True North Commercial REIT (TNT.UN-T) target to $6 from $6.75 with a “neutral” rating. The average is $6.30.

* RBC’s Walter Spracklin increased his Waste Connections Inc. (WCN-N, WCN-T) target to US$153 from US$150 with an “outperform” rating. Others making changes include: Scotia’s Mark Neville to US$145 from US$132 with a “sector perform” rating, JP Morgan’s Stephanie Yee to US$155 from US$154 with a “neutral” rating and CIBC’s Kevin Chiang raised his target to $156 from $155 with an “outperformer” rating. The average is US$154.16.

“We have increased our 2023E adj. EBITDA by approximately 5.5 per cent, post the Q3 c/c,” said Mr. Neville. “Our revised forecasts now sit broadly in line with the company’s early 2023 indications, which suggests double-digit growth in revenue and adj. FCF, as well as adj. EBITDA margin expansion. Our one-year target goes to $145 as we move our valuation base to our 2024E but reduce our valuation multiple (to equivalent of a 4.0% FCF yield) given the continued move up in rates (US10yr = 4.1 per cent). In our opinion, the Q and outlook speak to the reasons why investors want to own WCN: results and 2022 guidance were ahead of expectations, 2023 indications were reaffirmed (with seemingly greater conviction) despite recent incremental headwinds, tuck-in M&A remains elevated with no concerns around leverage, etc.”

* Scotia’s Trevor Turnbull reduced his Wheaton Precious Metals Corp. (WPM-N, WPM-T) target to US$60 from US$62 with a “sector outperform” rating, while BMO’s Jackie Przybylowski raised her target to US$52 from US$49 with an “outperform” rating. The average is US$50.56.

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