Inside the Market’s roundup of some of today’s key analyst actions
BRP Inc. (DOO-T) is well positioned to capture additional market share in the growing powersports market, as it continues to introduce new products and extends its reach into complementary product lines, said Canaccord Genuity analyst Derek Dley as he raised his price target on the stock.
BRP is scheduled to report its fiscal second quarter earnings results on Aug. 27 before market open. For the quarter, Mr. Dley forecasting revenue of $928 million, a 36% decline year over year - in line with company guidance but below consensus of $947 million. He’s forecasting EBITDA of $71 million, below consensus of $75 million and below $168 million from a year earlier largely due to COVID-19
Nevertheless, Mr. Dley reiterated his “buy” rating and increased his target price to $70 from $60.
“Management mentioned several positive indicators on the Q1/F21 earnings call that bode well for BRP’s near-term demand outlook,” Mr. Dley said in a note. “Notably, BRP product sales at retail were up 35% YoY in May, which we believe is representative of a shift in consumers’ discretionary dollars from travel and entertainment (segments impacted by COVID-19) to powersports. As well, the company has seen an uptick of new customers, with 30% of May sales coming from customers new to the powersports category, up from 20% pre-COVID. That said, during Q2/F21 dealers worked through existing inventory, hence our expectation for a decline in sales. We expect wholesale shipments to snap back during the back half of the year, with inventory now likely at historic lows.”
Industrial Alliance Securities analyst Chelsea Stellick initiated coverage on ImmunoPrecise Antibodies Ltd. (IPA-X) with a “buy” recommendation and $2.10 price target, commenting that the company provides “precisely what the pharma world needs.”
IPA is a full-service, end-to-end Contract Research Organization (CRO) in the business of therapeutic antibody discovery. A CRO is a company that supports the biotechnology, pharmaceutical, and medical devices industries in the form of pre-clinical research on an outsourced, contracted basis.
“We see ample upside in IPA given the growth in demand for outsourced services provided in antibody discovery and development,” Mr. Stellick sain in a note. “There is no other CRO like IPA that offers such a full suite of services. Some peers may offer partial expertise in the antibody discovery space but do not offer the full complement of services in antibody optimization, engineering and manufacturing, presenting a significant competitive advantage for the company.”
The analyst also sees significant upside in the stock due to its pipeline of pre-clinical research work, including its COVID-19 antibody program.
IPA was recently awarded a US$1.5-million Bioscience Innovation Grant for Coronavirus research from the North Dakota Department of Agriculture for the development of antibody therapeutics against SARS-CoV-2. On June 29, IPA announced that it had identified a series of lead candidate antibodies using its proprietary technologies.
Desjardins Securities analyst John Chu moved his rating on Meta Growth Corp. (META-X) to “tender” from “buy”, and cut his price target to 14 cents (Canadian) from 25 cents, following High Tide’s offer to buy the Canadian retailer of legal recreational cannabis.
“While our previous target of C$0.25 suggests significant upside potential, it is predicated on Meta winning a significant number of retail licences in the next 24 months, which thus far in 2020, it has not done,” Mr. Chu said in a note. “With the uncertainty and risk of having to consistently win new retail licences and the sales pressure of its Alberta stores, the offer value seems fair.”
Meta shareholders will receive 0.824 of a common share of High Tide (HITI-CN) for each Meta share. This equates to about $0.13.3 a share. Meta’s board is in full support of the offer.
Andrew Semple of Echelon Partners had a similar take on the transaction: “We believe this offer represents a continuation of the Meta Growth thesis in a larger and stronger platform, and therefore recommend Meta shareholders vote to approve the arrangement agreement at the special shareholder meeting to be held in October. Effectively, we believe this warrants a Tender rating,” Mr. Semple said.
Morgan Stanley analyst Katy Huberty raised her price target on Apple Inc. (AAPL-Q) to US$520 from $431, believing the company has more upside after reaching a US$2-trillion market cap last week.
The analyst notes Apple trades at a discount to both tech platforms and strong consumer brands. Apple has achieved growth in revenue, earnings, and free cash flow over the past four quarters despite iPhone revenue dropping, thanks to “Apple’s broad ecosystem of products and services,” she said.
She maintained an “overweight” rating on the stock. The median price target on the Street is US$450, according to Refinitiv Eikon.
BMO analyst Troy MacLean believes the current valuation of Boardwalk Real Estate Investment Trust (BEI-UN-T) is very attractive and units offer upside potential for investors.
“Our net asset value estimate implies a value of ~$151,250/door. At its current unit price, the REIT’s implied value is $133,350/door, which we think is below replacement cost,” Mr. MacLean said in a note.
He maintained a “market perform” rating but increased his target price to $39.25 from $33.65.
ATB Capital Markets analyst Chris Murray has adjusted his 12-month price target on Horizon North Logistics Inc. (HNL-T) after reviewing the company’s latest quarterly results and incorporating a reverse takeover of the company and a one-for-five share consolidation. He maintained an “outperform” rating as his target went to $6 from $1.75.
“HNL announced Q2/20 results reporting revenue, EBITDA and Adjusted FD EPS of $76.1mm, $22.9mm, and $0.31. Net earnings benefitted from a $34.1mm bargain purchase gain representing the difference between the estimated fair value of HNL’s net assets and the consideration received by Fairfax. The Firm announced the resumption of the quarterly dividend at $0.075 per common share payable on October 15 to shareholders of record on September 30. The quarter, with the combination of Dexterra and HNL as a reverse takeover, the impact of COVID-19 and CEWS, and the Firm’s restructuring as well as the associated transition costs, should not be thought of as a baseline. Rather, we believe letting Q2/20 be what it is and more meaningfully, focus on the go forward business with improved cash flow and growth potential and a vastly improved balance sheet,” Mr. Murray said in a note.
In other analyst actions:
Ballard Power Systems Inc. (BLDP-Q): Bernstein initiates with outperform rating with target price of US$22.
Estee Lauder Companies Inc. (EL-N): RBC raises target price to US$240 from $194 and upgrades its rating to “outperform” from “sector perform.”
Facebook Inc. (FB-Q): Citigroup raises price target to US$315 from $275 and Jefferies raises target price to $310 from $300.
Pinterest Inc. (PINS-N): Citigroup cuts to “neutral” from “buy” and raises price target to US$35 from $25
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