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

BMO is initiating coverage on two Canadian packaging companies.

It started coverage on Intertape Polymer Group (ITP-T) with an “outperform” rating and a price target of $23.

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The median price target is $22.25, according to Zack’s Investment Research.

“As Intertape shifts from a multi-year investment phase to a stage of execution, we see a path to improved EBITDA [earnings before interest, taxes, depreciation and amortization] margins and FCF [free cash flow] acceleration (integrating recent margin-dilutive acquisitions, ramping up greenfield investments). Combined with an attractive valuation, we see favourable risk-reward for the stock as management executes and progresses towards its 2022E financial targets,” said analyst Stephen MacLeod.

The analyst also initiated coverage on Winpak Ltd. (WPK-T) with a “market perform” rating and a price target of $48. The median is $51.

“While we recognize Winpak’s pristine balance sheet, strong FCF generation, and close to industry-leading ROIC [return on invested capital] and gross margins, we believe the stock is reasonably valued in light of our expectation for modest top-line and low-single-digit EBITDA and EPS [earnings per share] growth forecasts, and absent a catalyst.”

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BMO analyst Keith Bachman boosted his price target on Accenture Plc (ACN-N) as he feels the company will continue to see higher revenues.

He raised his target price to US$195 from US$185 on continued conviction in the durability of revenue growth. He thinks signings will bounce back in the next few quarters.

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“We believe that Accenture had a net positive quarter, with continued strength in revenues but weak signings, which we view as largely due to timing rather than demand issues in the pipeline, particularly when looked at over the last three quarters,” he said. “We have continued confidence in the model, although we think the stock wanted more from this quarter.”

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After Shaw Communications Inc. (SJR-B-T) posted “noisy but in-line” third quarter results, CIBC analyst Robert Bek kept his “outperformer” rating on the stock and his $31 price target.

The median target $32.

“In our eyes, this quarter’s print validates the bull thesis on the name that is focused on its unique wireless growth angle. Shaw clearly continues to win wireless market share and we see a runway for this to continue over the next few years. We continue to see room for Shaw’s valuation to improve as it executes on its strategy to harvest wireline EBITDA/FCF to fund its wireless growth opportunity,” he said.

“Shaw reported Q3 results that were a touch light on revs ($1,324-MM vs. $1,336MM consensus), however EBITDA (reported as $530MM, but clean at $545MM vs. $547MM consensus) was bang on consensus after a one-time $15MM charge. EPS were stated at $0.44, well ahead of consensus at $0.32, but not comparable given a host of one-timers.”

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“Notwithstanding the in-line but noisy financials, we believe investor focus should be on the strong wireless execution in Q3, as Shaw handily beat on PostPay net adds (+62.1k vs. +48.4k cons.) and did so without comprising on ABPU [average billing per user] growth ($+6.2% vs. +6.0% est.). These wireless results are in recent contrast to Shaw’s competitors (who are coping with wireless maturity) and highlight the unique wireless growth angle at play at Shaw. Internet loading was also strong in FQ3, and despite shedding Wireline RGU’s [revenue generating unit], Shaw was actually able to grow Wireline revenues, which speaks to the improving quality of its subscriber base. The overall story in Q3 is bang on our positive thesis for Shaw: 1) Cede market share in Wireline, but in a stable and controlled fashion (with Internet remaining solid); 2) However focus hard on protecting Wireline EBITDA; 3) While exploiting the huge Wireless opportunity over the next five years. All elements were on display this quarter.”

Canaccord Genuity analyst Aravinda Galappatthige cut Shaw’s target price by $1 to $28 “based on Shaw’s sale of its holding of CJR shares and purchase of 600MHz spectrum.”

“We maintain 7.0 times EV [enterprise value]/F20 EBITDA valuation on cable and value wireless using a DCF [discounted cash flow] that translates into 14.9 times EV/F20 EBITDA. Our valuation now represents a blended 8.2 times EV/ F20 EBITDA multiple,” the analyst said.

Desjardins kept a “buy” rating on Shaw and a target of $32.50.

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Desjardins analyst Keith Howlett kept his hold rating on Empire Co. Ltd. (EMP-A-T) but boosted his price target after the company showed “good progress” in its latest earnings release.

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“Adjusted EBITDA from the food business (excluding other income within the segment) increased by 5.8 per cent to $930.8-million in FY19. The increase of $50.5-million was significantly less than the Project Sunrise savings achieved during the year of $200-million. The company also benefited in FY19 from the full-year impact of the $100-million of cost savings achieved in FY18. We find it challenging to estimate the translation of projected future cost savings ($250-million) to EBITDA,” said the analyst.

He raised his price target to $31 from $30.50. The median is $32.

“Our EPS estimate remains $1.92 in FY20, and we are introducing our FY21 EPS estimate of $2.15. Our target price is based on 7.5 times FY20 adjusted EBITDA from the food segment, plus the value of interests held in Crombie REIT and other investments,” he said.

Other analyst actions:

Wolfe Research analyst Scott Group downgraded Canadian Pacific Railway Ltd. to “peer perform” from “outperform.”

Almaden Minerals: National Bank of Canada cuts rating to sector perform from outperform

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Atco Ltd: RBC raises rating to sector perform from underperform

Detour Gold: National Bank of Canada cuts rating to sector perform from outperform

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