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

Desjardins Securities analyst Brent Stadler said he struggles to “make a compelling case” to own Algonquin Power & Utilities Corp. (AQN-N, AQN-T) based on fundamentals, declaring “recommending the name is difficult at this point.”

On Thursday, shares of Oakville, Ont.-based utility and renewable power producer fell 4.2 per cent following the announcement of a 40-per-cent reduction to quarterly dividend (to 10.85 U.S. cents a share from 18.08 U.S. cents). It said it will reduce its capital expenditures by about 15 per cent and target about US$1-billion in asset sales. Also, it will end new common equity issuance for the next two years and suspend its dividend reinvestment plan to put a brake on shareholder dilution.

“Guidance for 2023 was well below expectations, headwinds are anticipated through 2025 with very little earnings growth (unless it is successful with KP rate cases) and we believe the current valuation is fair,” said Mr. Stadler

In a research report released before the bell, he downgraded Algonquin shares to “sell” from “hold” after “significantly” lowering his financial projections.

“AQN provided 2023 EPS guidance of US$0.55–0.61, which is lower than 2022 guidance (US$0.61 adjusted for gains on asset sales), and a big miss (approximately 17 per cent) vs our estimate (US$0.70) and consensus (US $0.68),” Mr. Stadler said. “We have reduced our 2023 EPS estimate to US$0.57, primarily due to pressure on utility results and flat renewables earnings, higher interest costs and a 15-per-cent decline in capex. Continued earnings pressure is expected in 2024 and 2025, and we model EPS of US$0.57 in both years. We understand that the clearest path to earnings growth is if AQN closes on KP and successfully implements rate cases; however, at this point, it remains unclear if AQN plans to close the deal — and investors would clearly prefer if it did not.”

With his model changes, the analyst cut his target for Algonquin shares to US$7 from US$10. The average on the Street is US$10.64, according to Refinitiv data.

“The 2023 guidance ultimately took our numbers and the Street down by 30 per cent (from EPS of US$0.80 prior to 3Q results), making it difficult to model an ordinarily stable utility such as AQN,” he said. “Further, headwinds are expected through 2025. With limited visibility on potential growth, a lack of catalysts and a relatively fair valuation, we are moving to a Sell rating. Our 2023 estimated EPS implies a current 12.5 times P/E multiple. Peers are trading as low as 14 times, but a discount is warranted, in our view.”

Elsewhere, iA Capital Markets analyst Naji Baydoun thinks Algonquin is “taking a step in the right direction” but warns “more could be required.”

“Despite these positive developments, we believe that (1) additional clarity on certain aspects of the announced actions is required, and (2) incremental strategic initiatives are needed to surface fair value for investors,” he said. “In our view, further steps could be taken to enhance shareholder returns, including (1) providing supplemental details on expected asset sales and long-term funding plans, (2) a larger capital recycling program (potentially including non-core regulated utilities and Atlantica Sustainable Infrastructure [AY-N, Not Rated, 42 per cent owned by AQN]), (3) walking away from the Kentucky transaction, all of which could support a stronger balance sheet, a self-funded growth model, and a potentially large and accretive share buyback at current depressed valuation levels.”

Maintaining a “hold” rating for Algonquin shares, Mr. Baydoun cut his target to $10 from $14.

Others making changes include:

* Credit Suisse’s Andrew Kuske to US$10.50 from US$11 with an “outperform” rating.

“Algonquin Power & Utilities Corp. (AQN) took some clear (and largely expected) steps to help re-gain investor confidence, in our view,” said Mr. Kuske. “Some of the actions may have been on the lighter side of expectations (i.e. the low end of the dividend cut) and some questions were raised on future earnings growth along with the magnitude of selected headwinds. These dynamics combined with some potential technical and retail flow factors translated into a 3.5-per-cent negative return on the day for the stock. In our view, the re-rate potential is meaningful – albeit the road is likely to be rocky. In any event, a compelling value at the core of the asset base and a path of catalysts ahead translates into a very interesting situation for return potential. As a result, we reiterate our Outperform rating and keep focused on the re-rating roadmap ahead.”

* Scotia Capital’s Robert Hope cut his target to US$9 from US$11 with a “sector perform” rating.

“Algonquin’s update call reduced, but did not fully remove the uncertainty surrounding the shares. We again move down our 2023 estimates to reflect the softer-than-expected guidance. Our longer-term estimates also move down to reflect asset sales, higher taxes, and lower capital expenditures. Commensurate with our lower estimates, our target moves down to $9.00 from $11.00. We keep our Sector Perform rating, though acknowledge we believe the risk / return for the share price is skewed to the upside. We could become incrementally more positive on the shares once there is additional clarity on the Kentucky Power acquisition and progress has been made on the 2023 funding plan,” said Mr. Hope.

* Raymond James’ David Quezada to US$10 from US$11.50 with an “outperform” rating.

“While we do not diminish the headwinds facing the company, trading at 12.1 times 2023 P/E we believe shares of AQN largely reflect these challenges and see value in the company’s regulated and renewable assets,” said Mr. Quezada. “We see asset sales as a near-term catalyst, as well as a potentially re-negotiated price for the Kentucky Power (“KP”) acquisition. While difficult to handicap, we also believe the stock would react positively if the KP acquisition did not close.”

* BMO’s Ben Pham to US$7.50 from US$7 with a “market perform” rating.

“After dropping almost 50 per cent during 2022 and with the reset of EPS/dividend growth expectations, AQN stock is now trading below our sum-of-the-parts analysis and continues to screen inexpensive on forward P/E (approximately 11.5 times vs. utility peer average of 18 times),” said Mr. Pham. “In a sense, the business update was adequate enough to support the current share price especially in the context of various moving assumptions; however, credibility issues and lack of visibility on Kentucky Power could keep the shares inexpensive.”


The outlook for Bombardier Inc. (BBD.B-T) entering 2023 appears “solid,” according to National Bank Financial analyst Cameron Doerksen.

“At the end of Q3 Bombardier’s backlog was $15.0-billion and at the current aircraft delivery rate, we estimate that the backlog equates to more than two years of production,” he said. “Importantly, orders in the backlog have meaningful cancellation penalties ($10-15 million for a Global 7500) so the risk of cancellations is low, in our view. Bombardier expects to deliver 15-20 per cent more jets in 2023 and we believe there is good visibility on this increase as delivery slots are essentially all filled. Higher deliveries should drive increased revenue and margins, which will be further supported by the full-year impact from the company’s cost reduction initiatives.”

In a research note released Friday previewing the company’s Feb. 9 release of its fourth-quarter financial results, Mr. Doerksen warned the business jet market is “softening a bit, but still healthy.”

“We expect new jet order activity will slow in 2023 relative to what was a very strong 2022, but overall, the business jet market remains quite healthy,” he said. “Recent data from WINGX showed that December was the second most active on record for business jet flying activity, with flights down 2 per cent year-over-year, but up 15 per cent versus 2019. Used jet inventory for sale also remains low.”

“Bombardier’s FCF in the first nine months was $566 million so the company should handily exceed its full year 2022 target for $515+-million. We believe the company is now structurally FCF positive which will support ongoing deleveraging. In Q4, the company paid down another $200-million in debt (2024 and 2025 maturities) and in Q1/23 another $400-million in restricted cash will be freed that can be put towards debt reduction. Bombardier is on pace to reduce leverage to less than 3.0 times ahead of its original target of 2025 (we forecast 2022 year-end leverage at 6.1 times falling to 2.9 times at year-end 2025).”

For the quarter, Mr. Doerksen predicts Bombardier’s jet deliveries will fall short of his forecast (41 versus 47) and full-year deliveries will narrowly miss its guidance (115 versus 120), which he attributed to “a timing issuing.” He trimmed his revenue and EBITDA estimates to $2.071-billion and $269-million, respectively, from $2.299-billion and $299-billion and also made modest reductions to his full-year 2022 and 2023 projections.

However, Mr. Doerksen expects Bombardier’s market cap and financial performance to “attract more investor interest,” leading him to raise his target for its shares to $65 from $61 with an “outperform” rating.

“With profitability improving, FCF now consistently positive and leverage coming down, we believe 2023 will see more institutional investors showing interest in Bombardier shares,” he said. “The market cap of the company now sits at $5.5-billion, which makes it a much more relevant stock to investors.”

“Bombardier was one of the top-performing stocks in our coverage universe in 2022, up 24.5 per cent (versus TSX down 8.7 per cent) and the stock has continued its upward trend so far early in 2023. Given this outperformance, we no longer categorize Bombardier as one of our Top Picks (as it was in 2022), but we nevertheless maintain our positive view.”


Seeing its stock “now only moderately attractive” on a risk-reward basis, Desjardins Securities analyst Jerome Dubreuil lowered his recommendation for Shaw Communications Inc. (SJR.B-T) to “hold” from “buy” on Friday.

He said the move was not in response to the company’s “underwhelming” first-quarter results, which were released after the bell on Thursday and fell below his expectations.

“The earnings release has not changed our view of the deal approval process and SJR did not provide material incremental information on the process,” he said. “However, we believe the regulatory uncertainty could create share price volatility until the deal is approved and/or until the outside date on January 31. While we thought the Competition Tribunal’s decision was unmitigated and very much in favour of RCI/SJR/QBR, investors should consider that the Competition Bureau could also have in mind the potential impact of the decision on competition law jurisprudence, which could suggest that the Bureau may not fold easily. Moreover, while we do not believe Minister François-Philippe Champagne (his approval of the deal is still pending) opposes the transaction, he may only approve it once all regulatory uncertainty has been cleared. Our point here is that the deal should ultimately be approved, but the timing is difficult to predict.”

“1Q FY23 results missed expectations, with revenue matching consensus but adjusted EBITDA and FCF missing. Subscriber numbers were mixed, with a noticeable year-over-year improvement in Internet net additions, but disappointing wireless net additions. SJR has maintained elevated capex in wireline, but wireless investments were low, similar to previous quarters.”

Mr. Dubreuil kept a target of $40.50 per share. The current average is $40.35.

“We believe the stock primarily trades on the probability that regulators will green light the takeout by RCI, which we see as highly probable at this stage,” he concluded.

Elsewhere, Scotia Capital’s Maher Yaghi downgraded Shaw to “sector perform” from “sector outperform” with a target price of $40.50 (unchanged).

“Shaw reported weak Q1/23 results. Both the cable and wireless businesses showed a downtick in momentum leading to lower-than-expected EBITDA and FCF production. Having followed the company for a long time it is quite clear that it is not business as usual. Some investors might react to these results and begin to wonder if Rogers and/or Quebecor could be having buyer’s remorse. We don’t think the results are a true reflection of the underlying business but rather suffering from management’s focus being spent on merger-related activities as regulatory approval continues to extend in time. We are taking this opportunity however to lower our recommendation on the stock as upside from these levels has become limited,” said Mr. Yaghi.


Citi analyst Paul Lejuez thinks Lululemon Athletica Inc.’s (LULU-T) brands “remains in good shape with the consumer,” but he sees “little room for error” during the current fiscal year given the lofty sales expectations of the Street and the current valuation of its shares.

He lowered his forecast for the Vancouver-based athletic apparel company in response to Monday’s announcement that it expects holiday gross margins to decline by 0.9-1.1 per cent in its fourth quarter of 2022 versus a previous expectation of 0.1-0.2 per cent as it grapples with a higher-than-expected mix of markdowns, which Mr. Lejuez said implies lower-than-planned full price sales. It also cut his earnings per share guidance to US$4.22-$4.27 from US$4.20-$4.30.

That led the analyst to trimmed his full-year 2022 and 2023 EPS projections to US$9.89 and US$11.60, respectively, from US$10.03 and US$11.96.

He said: “Incremental info from management convo: (1) While clearance sales came in higher than expected (which drove the gross margin miss), given the magnitude of the GM miss, our math suggests full priced sales also came in weaker than expected (or else EPS would have been raised on the sales beat); (2) The amount of markdown product as proportion of sales was similar to 4Q19 but a higher percentage sold at markdown; (3) Mgmt called out the highly promotional retail environment in Dec which drove more customers looking for deals; (4) Mgmt sounds more optimistic about GM after they get past the Jan clearance period when inventory across retail will be in much better shape; (5) Mgmt is confident that they incorporated the right assumptions for Jan and that they will deliver against their new GM plan in 4Q; (6) Mgmt does not believe it makes sense to do a warehouse sale since the inventory they have is not bad or aging.”

Maintaining a “neutral” rating, Mr. Lejuez cut his target for Lululemon shares to US$350 from US$400. The average is US$383.34.

“Comp momentum has been among the best in retail and margins have expanded singificantly over the years,” he said. “Product innovation continues to drive strong results in seemingly developed categories such as women’s pants, the men’s business is a big opportunity, and the customer has given LULU license to broaden into new categories. However, with the LULU being valued as one of the most expensive specialty retail concepts ever, we believe the risk/reward is fairly balanced.”


In a research report released Friday titled Time to Shine, National Bank Financial’s mining equity research team announced “2023 is the year to be overweight gold equities.”

“In the very near term, we may see some gold price volatility around key U.S. economic data point releases, but we are generally shifting to become more positive on the spot gold price outlook as we move through 2023 as we see the potential for the U.S. real rate to peak (if it has not already) and potentially decline, which should be good for gold. We also see a rising risk of a U.S. recession forming, which based on historical analysis has tended to drive the spot gold price to outperform. Inflationary pressures facing the mining industry are generally starting to show signs of improving, and thus we do not expect to see the same level of year-over-year cost pressures impacting 2023 as we saw with 2022 vs. 2021. Based on our coverage universe, profit margins are generally robust and financial leverage remains largely manageable.”

Also saying it’s time to be overweight on silver equities, the firm revised its 2023 and 2024 price deck for both metals with long-term gold and silver prices rising to US$1,600 per ounce and US$20 per ounce, respectively, from US$1,575 and US$19.75.

“We made several target price revisions, driven mostly by the new price deck, with higher near-term gold and silver prices for 2023 and 2024 versus our prior price deck,” it said. “We also tweaked our valuation target multiples to better align with broader industry trends. Companies with target price changes of more than 10% include: Torex Gold (+38.7%), i-80 Gold (+29.4%), Dundee Precious Metals (+29.4%), Endeavour Mining (+27.8%), Royal Gold (+25.0%), Marathon Gold (-25.0%), Barrick (+20.0%), Wesdome (-19.6%), Agnico Eagle (+18.7%), Lundin Gold (+17.9%), Alamos Gold (+16.7%), Wheaton Precious Metals (+16.7%), Aya Gold & Silver (+15.6%), OceanaGold (+15.4%), Fortuna Silver (+14.3%), Equinox Gold (+13.6%), Yamana Gold (+13.4%), Newmont (+13.2%), SSR Mining (+13.0%), First Majestic (+11.5%) and Liberty Gold (+11.1%). Note, we have not made any upgrades or downgrades as a result of this outlook.”

National Bank’s “top picks” are now:


* Endeavour Mining Corp. (EDV-T, “outperform”) with a $46 target, up from $36. The average on the Street is $39.84.

Don DeMarco: “Top pick, supported by elevated FCF, stable production base in the medium term, growth opportunities and pipeline upside, plus visibility for resource accretion.”

* Kinross Gold Corp. (K-T, “outperform”) to $8.50 from $8.25. Average: $7.70.

Mike Parkin: “Kinross trades at a significant discount to senior peers on a P/NAV and EV/EBITDA, which we continue to believe is unwarranted, especially given Kinross’s successful exit from Russia last year, as well as the sale of the Chirano mine in West Africa, which we view as a supporting factor in an expected re-rating of the company’s valuation (especially on a P/NAV basis) on an improved overall geo-political risk profile. Additionally, Kinross maintains significant opportunities for growth within its North American portfolio, that will further help improve its geopolitical risk profile.”


* Alamos Gold Inc. (AGI-T, “outperform”) to $17.50 from $15. Average: $15.04.

Mr. Parkin: “Alamos is our Top Pick in the intermediate producer space given its well-funded production growth profile, the likelihood that it will deliver on its 2022 guidance, ability to manage costs and its strong exploration upside. Alamos previously messaged to expect a back-half weighted production year in 2022 with expectations for Q4 to be the quarter of the year, which we believe it is well positioned to achieve given it was one of the few companies in our coverage that did not revise its 2022 guidance down and delivered La Yaqui Grande on time and has ramped up the asset very well vs. expectations. 2023 guidance could call for cash costs to decline Y/Y, something we expect to be unique amongst our coverage universe given the elevated cost environment facing the industry.”

* Aya Gold & Silver Inc. (AYA-T, “outperform”) to $13 from $11.25. Average: $12.86.

Mr. DeMarco: “Top pick, supported by NAV expansion from production growth at the Zgounder mine, peaking at 9 million ounces in 2028, 5 times the FY22G midpoint of 1.7 mln oz Ag; resource accretion with an expanded 2022 exploration program, regional potential, pipeline prospects in Boumadine and Imiter-Bis; discounted valuation vs. silver producers; and the only pure-play silver producer.”

* K92 Mining Inc. (KNT-T, “outperform”) to $12 from $11.25. Average: $11.31.

Mr. DeMarco: “Top pick, supported by production growth outlook, exploration upside and discounted valuation”

Royalty Companies

* Osisko Gold Royalties Ltd. (OR-T, “outperform”) to $23 from $22. Average: $22.35.

Mr. DeMarco: “OR remains our top pick in the royalty space given the strong near-term growth pipeline, driven by expansion initiatives at producing operations including Canadian Malartic, Eagle, Island Gold, Mantos Blancos and the CSA mine while longer-term growth from assets like Back Forty, Cariboo, San Antonio and Windfall remain a free option at its current valuation. With acquisitions throughout the royalty sector being completed at a premium to OR’s valuation, we continue to see scope for a re-rating, with more sustainable multiple accretion as the company’s equity holdings (primarily in Osisko Development) become less significant over time.”

For senior producers, the firm’s other changes were:

  • Agnico Eagle Mines Ltd. (AEM-T, “outperform”) to $89 from $75. Average: $65.58.
  • Barrick Gold Corp. (ABX-T, “sector perform”) to $30 from $25. Average: $28.38.
  • B2Gold Corp. (BTO-T, “outperform”) to $7.25 from $6.75. Average: $6.96.
  • Newmont Corp. (NGT-T, “outperform”) to $86 from $76. Average: $69.


Touting “solid fundamentals at a discount,” Raymond James analyst Michael Glen initiated coverage of Linamar Corp. (LNR-T) with an “outperform” rating on Friday, seeing “a fairly attractive set-up for growth, despite the macro concerns that some investors may have.”

“On terms of the Industrial business, growth will stem from a combination of capacity expansion (Mexico and China), as well as satisfying pent-up demand,” he said. “Both SkyJack and MacDon faced fairly notable supply chain challenges over 2022, which the company has indicated are now easing. Specifically for SkyJack, recent comments referenced 12 months of order visibility vs. a more typical environment of 4 months. The company is also targeting a rebound in margins to the 14-18-per-cent range from 2022 levels of 10.2 per cent (RJL forecast).

“As we think about the mobility/automotive segment, we do believe the industry will see growth in 2023 versus 2022. This is really a function of ‘easy comps’ as both the North American and European markets have seen notable volume pressure over the past 3 years. As such, we view some industry forecasts for 15 mln U.S. SAAR as quite reasonable. Similar to margins in the Industrial segment, management is targeting a return to a normalized range of 7-10 per cent in 2023 from 2022E levels of 6.5 per cent (RJL forecast). Looking a bit longer-term with the mobility business, we also believe the business could ‘overearn’ in coming years on its legacy ICE platforms. This is due to reductions in invested capital on the part of the OEMs towards such platforms, and running these platforms beyond their originally intended lifespan.”

Mr. Glen set a target of $82 per share. The current average is $79.20.

“All in all, we believe Linamar stock is attractively valued in the context of the market coupled with an assessment of the near-term growth prospects,” he said. “Additionally, we strongly believe that if the company is consistent with its share repurchase program this will we recognized favorably by investors. Putting everything together, we rate the stock Outperform.”


Citi analyst Itay Michaeli has “greater confidence” that 2023 will mark the first of a multi-year earnings per share inflection for Magna International Inc. (MGA-N, MG-T), driven by rising auto production and new business.

“We’re updating several automaker & supplier models ahead of Q4 reporting,” he said. “No changes to our prior stock setup views from earlier this week, with the overall setup improving slightly as street estimates continue to come down and with latest U.S. auto demand datapoints looking encouraging. Our refreshed 2023 supplier EPS estimates are 1-4 pr cent below consensus, our GM/Ford estimates remain above consensus and Tesla modestly below.”

“We’re trimming Tier-1 supplier estimates on slightly lower 2023 global light vehicle production (LVP) assumptions, primarily in Europe where we model flat production. Our latest estimates incorporate annual ‘23-’25 LVP of 3 per cent. On a regionally weighted basis across covered suppliers, this equates to roughly 2 per cent in ‘23, 4 per cent in ‘24E and 4 per cent in ‘25. As a result, our 2023 EPS estimates are trimmed and are slightly below consensus, with some exceptions such as Mobileye. We’ve been encouraged to see street estimates come down, though we caution that company outlooks might still embed more conservative LVP assumptions than ours (though FX could provide a tailwind). We remain tactically selective on suppliers with preference for verticals where we see strongest new business momentum (ADAS/AV & related content) and where post-Q4 catalysts exist.’

Though he reduced his 2023 and 2024 EPS estimates to reflect his lower LVP assumptions, Mr. Michaeli raised his target to US$66 from US$62 with a “neutral” recommendation. The average is US$71.44.

“While we are fundamentally constructive on the story based on the company’s strong positioning and relative defensiveness, we view risk/reward to be balanced,” he said.


Scotia Capital analyst Maher Yaghi thinks Cineplex Inc. (CGX-T) stocks are “likely lacking positive catalysts in the short term” after December box office results fell below his recently reduced expectations and expecting pressure “until a more steady movie release schedule.”

“We lowered our estimates after reviewing the updated release schedule for movies for the first half of 2023,” he said. “We anticipate a continuing recovery in box office revenues however at a slower pace than before. As we look into Q1, we see only a handful of blockbuster movies that are expected to be released besides horror movies. Evil Dead Rise is seeing elevation in interest, Ant-Man, John Wick, and Shazam also are promising but overall the number of strong movies remain lacking.”

“Over the next few months we expect investor interest in Cineplex will likely be muted. Recent quarterly results have not been strong, especially Q4 which was supposed to be a big catalyst for the stock a few months ago. Moviegoers are responding and going out to theaters, however the industry is still struggling with a backlog in movie production. We see releases in the second half of 2023 firming up, which could set the stage for better trends. Until then and while the stock is cheap, we think upside will likely be limited.”

Keeping a “sector outperform” recommendation for Cineplex shares, Mr. Yaghi cut his target to $11.50 from $13. The average on the Street is $12.88.


In other analyst actions:

* Raymond James’ Stephen Boland lowered Home Capital Group Inc. (HCG-T) to “market perform” from “outperform” with a $44 target, down from $47. The average on the Street is $43.

“We are updating our target price and recommendation to reflect certain milestones that have occurred regarding the proposed acquisition of HCG by Smith Financial Corporation (SFC) — a holding company controlled by Stephen Smith,” he said. “Firstly, the go-shop period is now over with no competing superior bids. This increases the chances that the $44.00 offer will proceed. While there is still a possibility of a superior bid coming in before the deal closes, we view it as unlikely at this point.

“Secondly, the circular has now been published. One of the talking points surrounding the deal concerns the financing behind the SFC bid. Within the circular, there is mention of a debt financing package and debt commitment letters. While it does not provide a full list of lending partners, Bank of Montreal is mentioned as they are providing both a fairness opinion and financing for the deal. This provides us with more confidence that the large banks could be providing support. This would be logical since the banks are good partners with First National, another public Smith company.”

* Stifel’s Andrew Partheniou upgraded Organigram Holdings Inc. (OGI-T) to “buy” from “hold” with an unchanged $1.50 target, below the $2.03 average.

“OGI reported strong Q1FY23 results that beat profitability expectations with meaningful cash generation, the first time in over 3 years and ahead of its late-FY23 guidance established at the end of Nov. 2022,” he said. “More impressively, this was done despite being impacted by the market-wide disruption in ON and while building inventory after expanding production in its Moncton facility from 45 to 85 tonnes. Going forward, we welcome managements’ potentially conservative guidance of stable gross margin as distressed competitors may drive price compression, offsetting OGI’s future scale and efficiency gains across its infrastructure. Combined with strong cost controls and sales growth likely H2FY23-weighted as favourable seasonality meets the Lac-Supérieur expansion (doubling) coming online, we expect OGI to sustainably demonstrate profitability. Given an industry that is starved for profitability, we believe OGI’s bright outlook could attract fund flows, re-rating shares.”

* CIBC World Markets’ Anita Soni lowered Equinox Gold Corp. (EQX-T) to “underperformer” from “neutral” with a $4.20 target, down from $4.40 and below the $5.50 average on the Street.

“Our model now reflects the weaker-than-expected Q4/22 operating results as well as lowered 2023 production assumptions and our updated financing assumptions for the Greenstone build, which now includes full use of the $100M ATM,” she said. “As a result of the changes, our NAV5% decreases from $5.81 per share to $5.37 per share and our 2023 estimated CFPS decreases from $0.81 to $0.43 (including dilution from the ATM).

“While EQX has enough liquidity to build the Greenstone project (assuming no capex escalation), if the current higher costs structure persists for the next two years, the company will need to make some choices between growth options (Castle Mountain and Los Filos Expansions) and sales of non-core assets in order be able to repay its debt obligations. To that end, EQX has a number of options for asset sales including RDM, Fazenda, Los Filos, and Castle Mountain. Asset sales would not only help with liquidity but would help management focus on remediating higher cost but more viable assets. Lowering the cost profile would in turn help improve liquidity.”

* CIBC’s Cosmos Chiu raised his targets for Alamos Gold Inc. (AGI-T) to $17.50 from $15 and Torex Gold Resources Inc. (TXG-T) to $18.50 from $16.50, keeping “outperformer” ratings for both. The averages on the Street are $15.04 and $20.44, respectively.

* Following meetings with its executive team at the firm’s Investor Conference, ATB Capital Markets’ Chris Murray bumped his Bird Construction Inc. (BDT-T) target to $11 from $10, keeping an “outperform” rating. The average on the Street is $10.

“Management was upbeat on the Company’s outlook heading into 2023 given its expanded self-perform capabilities, geographic reach, and improving project mix embedded in its $2.90-billion backlog, which it expects to underpin significant earnings growth in 2023/2024 and contributed to the recent 10-per-cent increase in the Company’s monthly dividend,” he said. “We remain constructive on Bird’s operational execution, evolving project mix, and earnings growth profile entering 2023, and we see a compelling opportunity at current valuations.”

* Mr. Murray lowered his Cargojet Inc. (CJT-T) target to $185, below the $197 average, from $200 with an “outperform” rating.

“Management was constructive on the Company’s longer-term outlook but highlighted some softness in volumes on its domestic network in December, with more normal trends returning in January,” he said. “Management acknowledged that macro conditions have weakened since its investor day, though we see the contracted nature of its volumes, ability to optimize capacity, and domestic franchise supporting activity levels and margins in 2023 and beyond. We view CJT as an intriguing GARP opportunity with an attractive risk/reward setup at current valuations.”

* TD Securities’ Arun Lamba raised his target for Filo Mining Corp. (FIL-T) to $32 from $31 with a “speculative buy” recommendation. The average is $29.73.

* CIBC’s John Zamparo lowered his Guru Organic Energy Corp. (GURU-T) target to $3 from $5, maintaining a “neutral” rating. The average is $5.21.

* Following weaker-than-expected fourth-quarter production results and guidance, BMO’s Jackie Przybylowski trimmed her Lundin Mining Corp. (LUN-T) target to $8 from $9 with a “market perform” rating. The average is $9.61.

* IA Capital Markets’ Neehal Upadhyaya initiated coverage of Vancouver-based MediaValet Inc. (MVP-T) with a “buy” rating and $1.50 target. The average is $2.13.

“MVP provides a scalable, secure, and easy-to-use cloud-based DAM [Digital Asset Management] solution to enterprise clients,” he said. “While the DAM market is highly competitive, MVP has been able to grow its ARR [annual recurring revenue] by 113 per cent to $13.6-million since 2019 due to strong product differentiators such as in-house AI/ML capabilities, ability to facilitate companies that have multiple geographic locations, and its unlimited user pricing strategy. We believe the Company has further untapped potential due to market concentration and falling valuations opening up M&A opportunities for MVP to add material scale to its already robust ARR.”

* Raymond James’ Steve Hansen cut his target for Nutrien Ltd. (NTR-N, NTR-T) to US$90 from US$95 with an “outperform” rating. The average is US$99.65.

“We are trimming our target on Nutrien Ltd .... prior based upon a protracted buyer strike in key NPK markets, further downward pressure on prices, and commensurate revisions to our financial forecasts,” he said. “Notwithstanding these changes, global crop fundamentals remain robust, in our view, and key tranches of global potash production remain sorely compromised, conditions that ultimately support a sustained Ag/NPK cycle—albeit with clear moderation vs. last year’s ‘fly-up’ highs. Coupled with Nutrien’s robust free cash flow outlook and attractive valuation, we reiterate our OP2 rating.”

* CIBC’s Jamie Kubik cut his Tourmaline Oil Corp. (TOU-T) target to $85 from $100 with an “outperformer” rating. The average is $96.33.

“Tourmaline’s $2-per-share special dividend came in above our expectations, underpinned by strong Q4/22 cash flows. The guidance revisions for 2023 and 2024 we take as being directionally negative for estimates, which could weigh on the shares. While we believe the downdraft in natural gas pricing is over done at these levels, it has been a headwind for the stock over the last month. That said, we continue to see Tourmaline as offering the most appealing natural gas market exposure versus its peers in 2023, and the forward curve continues to show contango pricing to support the build-out of North American LNG by mid-decade. We take our price target lower owing to reduced production expectations and weakness in forward strip pricing,” said Mr. Kubik.

* Following the completion of the sale of its plant in Tilly, Belgium, Raymond James’ Michael Glen raised his 5N Plus Inc. (VNP-T) target to $4.50 from $4 with an “outperform” rating. The average is $3.40.

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

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