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

A group of equity analysts on the Street raised their target prices for shares of Laurentian Bank of Canada (LB-T) in response to better-than-anticipated fourth-quarter results.

Before the bell on Friday, Laurentian reported cash earnings per share of 91 cents, exceeding the consensus expectation of 73 cents.

“It is worth noting that this metric has bounced around a lot over the past few years as the bank worked through various iterations of restructuring initiatives, and the gap between reported and cash remains wide,” said Desjardins Securities analyst Doug Young. “What drove the beat? A few items—stronger capital markets results, net gain on the securitization of a mortgage portfolio and lower noninterest expenses (NIX).”

Mr. Young raised his target to $33 from $31 with a “hold” rating. The current average on the Street is $31.40, according to Refinitiv data.

“We were encouraged by the remarks made by Rania Llewellyn, LB’s new CEO,” he said. “However, this bank has gone through many iterations of restructuring over the years, and we’ll have to wait for more colour on what’s next in this journey.”

“We remain cautious on the name. We are interested to hear more on the new CEO’s strategy.”

Others increasing their targets included:

* Scotia Capital’s Meny Grauman to $33 from $30 with a “sector perform” rating.

“Despite a 20-per-cent beat versus our Q4 estimate, we come out of reporting season still neutral on this name given the significant strategic questions that continue to confront this bank,” said Mr. Grauman. “Laurentian Bank’s challenges pre-date the pandemic, and even as capital and credit concerns fade into the rear-view mirror, newly installed CEO Rania Llewellyn still has to figure out how to reverse declines in loan and deposit balances and reign in expenses while ensuring that the bank is investing in the right technological capabilities to compete in a changing world. The good news, as we heard on the Q4 call, is that everything is on the table, but that also increases the level of uncertainty and risk in the short-run. One particular area of concern we have is the decision to pause the implementation of the next phase of LB’s core banking system. Meanwhile, the announcement that the bank will split its Personal and Commercial banking business into two units makes sense, but there will no doubt be more significant decisions to be made in the months and quarters ahead.”

* Credit Suisse’s Mike Rizvanovic to $30 from $28 with an “underperform”

* CIBC’s Paul Holden to $32 from $30 with an “underperformer” rating.

“LB made solid progress with expense reductions and loan growth this quarter,” said Mr. Holden. “The bleed in retail deposits shows that the Personal Banking franchise has yet to stabilize. The valuation opportunity may be interesting, but we will wait for more clarity on a new strategy. We see significant upside potential with the bigger banks, which comes with less idiosyncratic risk.”

* TD Securities’ Mario Mendonca to $35 from $32 with a “hold” rating.


Analysts had a mixed reaction to the better-than-expected fourth-quarter results from Canadian Western Bank (CWB-T).

Citing concerns over elevated expenses in 2021, BMO Nesbitt Burns analyst Sohrab Movahedi downgraded the stock to “market perform” from “outperform” with a $31 target, falling from $36. The average is currently $32.73.

Raymond James’ Stephen Boland lowered his target to $33.50 from $34, maintaining an “outperform” rating.

“Overall, the results continue to be impacted by the overall economic conditions and the investment the company has put into the operations,” said Mr. Boland. “We expect this to continue next year and management has guided to flat earnings growth. Normally this would cause us to take a second look at our outlook. However, looming in the near future (fiscal 2022) is the final conversion to AIRB. This should result in higher growth or a material return of capital. We have not factored either into our F2022 estimates as yet though it is hard to discount the conversion in our recommendation. While the stock is up 24 per cent since the end of October (TSX up 12.4 per cent) we believe there is still upside for the stock which is still trading below book value.”

Conversely, these analysts raised their ratings for CWB:

* Desjardins Securities’ Doug Young to $35 from $31, keeping a “buy” rating.

* RBC Dominion Securities’ Darko Mihelic to $32 from $28 with a “sector perform” rating.

* CIBC’s Paul Holden to $34 from $33 with a “neutral” recommendation.

“We think the macro environment, namely the conditions for commercial loan growth, is moving in CWB’s favour. The outlook for a stable NIM is also favourable. However, the delay on AIRB adoption, expense growth, and lack of capital optionality hold us back from being more positive,” said Mr. Holden.

* TD Securities’ Mario Mendonca to $34 from $33 with a “buy” rating.

CIBC World Markets analyst Kevin Chiang made a series of target price changes to stocks in his coverage universe on Monday.

His changes included:

* Air Canada (AC-T, “outperformer”) to $32 from $25. Average: $26.22.

“Our positive view on AC is driven by: 1) improving outlook for air travel in 2021, especially the back half of the year, reflecting the combination of COVID-19 vaccines becoming available and rapid testing; 2) its strong market positioning in Canada; 3) ample liquidity which sits at $8.2B; and 4) declining cash burn as demand begins to pick up and the benefit from AC’s $1.5B cost cutting and capital deferment program,” he said. “We expect the improved sentiment around airline equities exhibited since early-November to continue into next year.”

* Linamar Corp. (LNR-T, “outperformer”) to $73 from $71. The average is $62.33.

“Our positive view on LNR reflects: 1) an improving outlook for auto production over our forecast period as the industry recovers from COVID-19; 2) strong demand for agricultural equipment as farmer incomes improve; 3) a proven management team and operating culture as evidenced by the strong FCF generation during the pandemic and ability to adapt its product line as OEMs pivot towards manufacturing more EVs; and 4) positive re-rating opportunity. On this last point, we derive a ~$100/share equity value for LNR on a sum-of-the-parts basis,” he said.

* Magna International Inc. (MGA-N/MG-T, “outperformer”) to US$75 from US$68. Average: US$68.08.

“Our positive view on MGA reflects: 1) the company’s standing as the bellwether amongst the Canadian auto suppliers; 2) it being well-positioned for the technology evolution occurring within the automotive industry; 3) strong FCF generation and long history of returning cash to shareholders; and 4) proven management team and operating culture,” he said.

* Martinrea International Inc. (MRE-T, “outperformer”) to $20 from $16.50. Average: $18.38.

* NFI Group Inc. (NFI-T, “outperformer”) to $25 from $21. Average: $21.71.

* Parkland Corp. (PKI-T, “outperformer”) rose to $51 from $49. Average: $47.38.

* GFL Environmental Inc. (GFL-T, “outperformer”) to $42 from $32. Average: $32.35.

“While we recognize that GFL has a higher leverage ratio and lower margin profile than the other Big 3 waste names, it does benefit from a faster earnings growth trajectory (which is partially being driven by its improved pricing and margin expansion) and improving FCF conversion, which will be prioritized toward deleveraging. We continue to see GFL as a catalyst-rich story while also benefiting from scarcity value given the lack of large cap Canadian industrial companies,” he said.

* TFI International Inc. (TFII-T, “neutral”) to $78 from $70. Average: $76.44

“TFII is well-positioned to benefit from the healthy freight environment, which is driving good pricing momentum heading into 2021 along with its cost-cutting initiatives. The company also has a deep M&A pipeline and we expect the company to remain active on the acquisition front given it has ample liquidity,” he said.

* Transat AT Inc. (TRZ-T, “neutral”) to $7 from $5. Average: $4.88.

* Bombardier Inc. (BBD.B-T, “neutral”) to 50 cents from 40 cents. Average: 45 cents.

* Chorus Aviation Inc. (CHR-T, “outperformer”) to $5.50 from $5. Average: $4.81.

“We continue to argue the market has been overly punitive on expectations around future impairments at CHR, and as flight activity improves, so will its rent collection rates within CAC. We believe that its CPA with AC remains secure. CHR’s earnings and cash flow have proven to be more resilient relative to a traditional airline,” he said.

* Canadian Pacific Railway Ltd. (CP-T, “outperformer”) to $490 from $444. Average: $454.13.

“We continue view CP as having the most balanced earnings algorithm given its revenue growth opportunities as it leverages its expanding network and land holdings, line of sight to a mid-50-per-cent OR, and improving FCF conversion,” he said.

* Canadian National Railway Co. (CNR-T, “neutral”) to $153 from $141. Average: $129.56.

“We believe CN is well-positioned to benefit from above-average volume growth given its pipeline of opportunities across its book of business (coal, grain, intermodal) and its unmatched network reach,” he said.


Scotia’s Patricia Baker sees Aritzia Inc. (ATZ-T) as a 2020 winner and predicts “more to come.”

“It is somewhat (but not fully) surprising in the context of the global pandemic devastation in retail that the best-performing stock in our coverage universe year-to-date is ATZ, up 30 per cent,” she said. “ATZ began to see the impact of COVID on its business toward the end of February and pivoted quickly to permit sales to migrate smoothly to online. This resulted in solid e-commerce sales trends of more than 150 per cent in Q1/F21 and 82 per cent in Q2/F21. ATZ also re-orientated its merchandise to accommodate ‘work from home’ by reducing emphasis on event and professional apparel and shifted toward more casual and lifestyle apparel. ATZ also relaxed return policies and free shipping minimums. These actions, coupled with the support ATZ provided to its workforce and communities, we believe will engender enhanced loyalty to the brand. Likewise, the company’s intensified efforts around diversity and inclusion resonate well with its core consumer base.

“While F21 will be a challenging year, we remain convinced ATZ will emerge stronger than most apparel retailers, advantaged by its exceptional e-commerce platform, its small brick and mortar footprint (affording opportunities for growth), unique operating model, and brand positioning.”

Maintaining a “sector outperform” rating, Ms. Baker hiked her target to $29.50 from $23.50. The average is $24.94.


Seeing it as “a low-risk investment vehicle for exposure to an attractive dividend, with ample dry powder for continued growth, Desjardins Securities analyst Justin Bouchard initiated coverage of Topaz Energy Corp. (TPZ-T) with a “buy” recommendation.

“The investing public has no shortage of options both within and outside of the energy space,” he said. “When presented with this veritable smorgasbord of opportunities, the question is why invest in TPZ? The answer comes down to TPZ’s unique business model which, to the best of our knowledge, has no directly comparable analogue, at least not in North America.

“Whether by intent or happenstance, the TPZ business model appears to borrow a page from fields such as animal husbandry and horticulture where, through a process of selective breeding, the ideal is to create a hybrid that combines the desired characteristics of two different parents. Applying that analogy to TPZ, an argument can be made that its unique cash flow profile is a hybridization resulting from the pairing of an upstream E&P royalty business with an energy infrastructure model. Broadly speaking, E&P royalty cash flow is characterized by volume and commodity exposure but is unburdened by the underlying costs related to production and asset maintenance. Meanwhile, the typical energy infrastructure business follows a tolling model — a fixed fee is generally paid on volumes handled; the variability of throughput may vary depending on a host of factors (such as the existence of take-or-pay provisions), but the cash flow profile is, by and large, characterized by comparative stability.”

Mr. Bouchard set a $20 target for Topaz shares, which began trading on the TSX in late October. The average is $17.30.

“In practical terms, what TPZ offers prospective investors is the best of both worlds with respect to cash flow characteristics (and thereby implied market valuation). Indeed, the asset bases are complementary — the upstream royalties provide the opportunity for commodity price and volume upside with minimal cost exposure while simultaneously compensating for the inherently limited upside of the midstream business model. Meanwhile, the midstream business — comprised primarily of long-term take-or-pay cash flows backed by high-quality counterparties—provides a base of stable, ratable cash flow. The key point is that the hybrid TPZ model provides a floor for earnings — thereby protecting the dividend in a downside commodity price environment — and leverage to commodity prices (mostly natural gas pricing). To put it simply, each cash flow stream has its set of benefits and drawbacks. And, as we see it, there are two key, interrelated criteria that govern the extent to which these benefits and drawbacks manifest —namely, counterparty quality and commodity prices.”


Industrial Alliance Securities analyst Elias Foscolos thinks there’s “something for everyone” in the utilities sector, which has been “relatively insulated” from the impact of the COVID-19 pandemic.

“Some key reasons that regulated utilities have been so resilient to the pandemic overall are 1) utilities are essential service providers, 2) increased residential sales due to isolating and work-from-home/school-from-home measures have provided an offset to lower commercial and industrial sales, 3) residential sales are generally higher margin than commercial or industrial sales, and 4) the regulated return structure mitigates load reduction through decoupling, formulaic rates, and cost recovery,” he said.

“Despite these factors that mitigate direct negative impacts to financial performance, our analysis indicates that COVID-19 has affected our coverage universe in other ways. COVID-19 has damaged the Alberta economy, lowering CU’s near-term CAPEX profile. We could potentially see a regulatory offset whereby a weaker outlook for Alberta is compensated for by a more favourable regulatory compact when new rates are determined. In our view, FTS has also experienced a direct negative impact due to delayed rate case proceedings at TEP. We believe EMA has essentially been unaffected, while H has likely experienced a modest tailwind from changes in the load mix.”

Though he said those factors represent risks to the sector, Mr. Foscolos thinks policies that increase “rate-recoverable spending on resiliency and decarbonisation will likely strengthen the organic growth profile for utilities.”

After adjusting his valuation methodology include a dividend discount model (DDM), Mr. Foscolos raised his target for all four utilities in his coverage universe:

Calling it the “valuation play,” he increased his Canadian Utilities Ltd. (CU-T, “buy”) target to $37 from $36, which is the current average on the Street.

“CU’s strong balance sheet and discounted value relative to comparables are reflected in higher valuations through EV/EBITDA and P/E multiples,” he said. “This ultimately reflects our thesis on the stock, which we ee as an underleveraged but low-growth valuation play. We believe deployment capital into regulated investments outside of Alberta would likely be accretive and welcomed by investors. CU has lowered its ESG risk through the divesture of its Alberta- based fossil fuel generation assets in 2019, and maintains only a small amount of exposure to natural gas generation.”

Mr. Foscolos called Hydro One Ltd. (H-T, “hold”) “the safe play” and raised his target to $31 from $30. Average: $30.79.

“H maintains ultra-conservative leverage and payout ratios, as well as respectable secured rates through 2022,” he said. “The Company’s revenues are 99-per-cent regulated and are earned in one jurisdiction, Ontario, which we believe will experience stable, long-term economic growth. As such, we view the stock as the safest pick in the sector. We believe H’s quality, among other tailwinds including weather, has driven outperformance of the stock year-to-date amidst a flight to safety.”

Seeing them as “growth stories,” he also increased his targets for:

  • Emera Inc. (EMA-T, “buy”) to $63 from $60. Average: $61.33.
  • Fortis Inc. (FTS-T, “buy”) to $60 from $58. Average: $59.43.


Separately, in his weekly note reviewing the week for pipelines, utilities, midstream and fuel distribution companies, Mr. Foscolos lowered his rating for Gibson Energy Inc. (GEI-T) in reaction to “strong” price appreciation.

He moved the Calgary-based company’s stock to “hold” from “buy” with a $24 target (unchanged). The average on the Street is $24.79.

On the midstream segment, Mr. Foscolos said: “This sector performed very well relative to the TSX with GEI leading the pack. ALA was the outlier posting a negative return last week, but the stock remains the best performing Midstream stock year-to-date matching our Utilities segment’s returns.”


Crescent Point Energy Corp.’s (CPG-T) “disciplined” capital program should allow it to maintain relatively flat production while continuing to gradually trim its debt level, said Desjardins Securities analyst Chris MacCulloch in response to Friday’s release of its budget and guidance for 2021.

“We were most impressed by further progress in reducing operating costs, which resulted in relatively flat estimate revisions, despite lower volumes reflecting the more disciplined capex program,” he said.

“Stay lean and live to fight another day. We have been loudly advocating this mantra for the oil-weighted Canadian producers, particularly those carrying elevated debt levels. Unfortunately, that list includes CPG, by no fault of the current board and management team, which inherited a more aggressive business model built for another era. On that note, it is refreshing to see a company adopting our soapbox advice by living within its means, with a view to taking stronger oil prices as they come (and prudently applying any potential windfall to the balance sheet), rather than relying on sustained US$45–50 per barrel WTI next year. Even more encouragingly, management has adopted this austere tone despite the steady uptrend in oil prices (and equity valuations) since the first Pfizer and BioNTech COVID-19 vaccine announcement on November 9.”

Maintaining a “hold” rating for Crescent Point shares, Mr. MacCulloch raised his target to $3 from $2.50. The average is $2.85.

“By delivering more consistent operational performance and improved capital efficiencies, as once again evidenced by further cost reductions, CPG has better positioned itself to compete for investor mindshare when the eventual recovery in global oil prices occurs,” he said. “By our reckoning, that recovery will likely be more of a 2022 event following mass vaccinations, the correction of global inventories and the normalization of OPEC+ spare capacity. Meanwhile, CPG still has considerable work ahead of it in continuing to right-size the balance sheet, with 2021 strip D/CF tracking near 3.0 times. We expect CPG to remain active on the M&A front as the North American oil & gas industry consolidates, which could present opportunities to accelerate balance sheet deleveraging.”

Other analyst raising their targets included:

* BMO’s Ray Kwan to $2.75 from $2.25 with a “market perform” rating.

“We do see significant beta in the share price, if oil prices recover above US$50/bbl WTI,” he said.

* TD’s Juan Jarrah to $3.50 from $3.25 with a “buy” rating.

* Canaccord Genuity’s Anthony Petrucci to $2.75 from $2.25 with a “hold” rating.

* CIBC’s David Popowich to $2.75 from $2.50 with a “neutral” rating.

* National Bank’s Travis Wood to $3.75 from $2.50 with an “outperform” rating.


RBC Dominion Securities analyst Walter Spracklin expects the recent sector rotation for North American waste management companies to “persist” in 2021.

“The overall waste sector has modestly underperformed the S&P 500 thus far in Q4; while within the sector GFL has seen an out-sized quarter-to-date increase of 28 per cent vs peers that were largely flat,” he said. “We expect this relative momentum to continue in favor of GFL as a broader sector rotation away from more defensive names into companies that have greater leverage/upside to an early-cycle/recovery scenario plays out.”

Ahead of fourth-quarter earnings season, Mr. Spracklin said he’s looking continued improvement in volumes, while acknowledging reopening restrictions remain a headwind. He also expects pricing to “remain healthy.”

“While our current estimates reflect the volume recovery continuing in Q4, we do acknowledge that rising case rates and the re-imposition of restrictions in several major markets across NA pose a risk to our forecast,” he said. “That said, we see largely constructive commentary on recent trends from the majors during Q3 conference calls coupled with a generally stable macroeconomic backdrop as supporting the recovery in the near term.”

“We expect solid pricing trends observed during Q3 to persist into Q4 despite the potential for churn-related headwinds. Our pricing forecasts remain unchanged for the quarter and we are looking for yields across our coverage to average 2.9 per cent in Q4, up slightly from the 2.8 per cent reported during Q3.”

Mr. Spracklin raised his target price for shares GFL Environmental Inc. (GFL-N/GFL-T) to US$32 from US$30, keeping an “outperform” rating. The average is US$24.25.

“We are increasing our target multiple to 14.5 times (from 14 times) to better reflect a reduced risk profile attributable to greater tolerance for higher leverage in an early-cycle/recovery scenario,” he said. “Our price target increases ... and we highlight GFL as our preferred name representing the most attractive upside opportunity within our waste sector coverage. "

He lowered his targets for:

Waste Connections Inc. (WCN-N/WCN-T, “outperform”) to US$116 from US$124. Average: US$115.76.

Republic Services Inc. (RSG-N, “sector perform”) to US$100 from US$106. Average: US$105.54.

Waste Management Inc. (WM-N, “sector perform”) to US$123 from US$129. Average: US$127.84.


Analysts at Citi made “significant upgrades” to their metal price forecasts in their 2021 market outlook released Monday

“There is not significant upside in 2021 from current levels - $7500/t copper, $2000 ali/t, $115/t iron ore, $1900/oz gold – but these prices are the highest in years and generally imply strong earnings and FCF, especially in iron ore,” said Alexander Hacking.

“The macro backdrop for mining equities is supportive given a combination of low Fed rates, a weak dollar, momentum in China and equity rotation into value. That said, the recent market melt-up has left most of our coverage looking fully valued relative to long-term prices, and copper miners looking stretched. We continue to see FCF as the key valuation metric but investors will soon be looking for growth if history is any precedent. Our favorite stocks on a relative view heading into 2021 are Vale (iron ore), First Quantum (copper), Newmont (gold) and Steel Dynamics (steel). We upgrade Nexa to Buy (30-per-cent FCF yield post-Aripuana) and downgrade Warrior Met Coal to Neutral/High Risk (lower 2021 met coal price).”

With the changes, Mr. Hacking upgraded Nexa Resources SA (NEXA-N) to “buy” from “neutral” with a US$11 target, up from US$8. The average is US$8.02.

“The Aripuana project appears mostly de-risked and we calculate post-project FCF yield close to 30 per cent. The main challenge for the stock is liquidity and rebuilding investor confidence in execution,” he said.

He downgraded Warrior Met Coal Inc. (HCC-N) to “neutral” from “buy” with a US$20 target. The average is US$21.44.

“Citi has downgraded its 2021 met coal price forecast & the FCF yield is no longer compelling,” he said.

Mr. Hacking made the following target price changes:

* First Quantum Minerals Ltd. (FM-T, “buy”) to $27 from $17. The average on the Street is $19.43.

“FM valuation is stretched, but we see the most relative value in the group,” he said. “Potential positive catalysts in 2021 include resolving Zambia’s fiscal situation and asset sales to accelerate de-leveraging. We calculate 11-per-cent attributable FCF yield. We also note that debt-to-equity stories generally outperform in mining.”

* Freeport McMorRan Inc. (FCX-N, “neutral”) to US$26 from US$18. Average: US$22.36.

“FCX remains well positioned to benefit from strong copper and gold prices; yet we see the stock relatively fully valued and with more relatively value currently in FM,” he said.

* Teck Resources Ltd. (TECK.B-T, “neutral”) to $26 from $19. Average: $23.45.

“We remain Neutral on Teck seeing a strong FCF yield post-QB2 but no immediate catalyst to re-rate,” he said. “We are also speaking to a growing number of investors who express concerns about met coal given the potential de-carbonization of global steel making.”

* Vale SA (VALE-N, “buy”) to US$18 from US$14. Average: US$16.76.

* Alcoa Corp. (AA-N, “neutral”) to US$24 from US$14. Average: US$17.56.

* Southern Copper Co. (SCCO-N, “sell) to US$58 from US$42. Average: US$47.17.


In other analyst actions:

* Credit Suisse analyst Andrew Kuske downgraded Inter Pipeline Ltd. (IPL-T) to “underperform” from “neutral” with a $13.50 target, down from $14. The average on the Street is $14.56.

“With Inter Pipeline Ltd.’s (IPL) recent stock market performance of up 20 per cent since Pfizer’s vaccine announcement on Nov 9th, including nearly 4 per cent on Friday, Dec. 4th, we find better relative value exists in other energy infrastructure stocks,” he said. “As a result, downgrade the stock to Underperform from the prior’ Neutral rating. Given the recent stock market performance, we also revisited some dynamics affecting IPL’s core business. Specifically, Alberta’s energy market, as with some others, experienced rising natural gas prices without broadly rising NGL prices. In our view, these dynamics create some near-term headwinds at the same time of some fairly significant uncertainty surrounding the Heartland Petrochemical Complex (HPC), including: construction and partial monetization options. Upon revisiting our financial model, our target price moved to $13.50 from the prior $14. In introduce our Underperform rating – that is partly predicated on relative value in our coverage universe.”

“Inter Pipeline’s core Western Canadian energy infrastructure assets offer a substantial contractedness, but commodity-exposed businesses tend to have more volatility than others in our universe, along with HPC execution risks. We believe that the pace of dividend to prior levels is critical to future share performance.”

* Mr. Kuske lowered Capital Power Corp. (CPX-T) to “neutral” from “outperform” with a $38 target. The average is $36.27.

* National Bank Financial analyst Zachary Evershed upgraded Richelieu Hardware Ltd. (RCH-T) to “sector perform” from “underperform” with a $33.50 target, up from $33. The average is $36.75.

* National Bank’s Michael Parkin raised Kirkland Lake Gold Ltd. (KL-T) to “outperform” from “sector perform” with a $72 target, falling from $75. The average is $79.36.

* Cormark Securities analyst David Ocampo raised Exco Technologies Ltd. (XTC-T) to “buy” from “market perform” with a $12 target, up from $7.25 and exceeding the $10 average.

* Canaccord Genuity analyst Dalto Baretto initiated coverage of Marimaca Copper Corp. (MARI-T) with a “speculative buy” rating and $4 target. The average on the Street is $5.24.

“MARI is developing what we view as an attractive copper oxide project in northern Chile and has optioned a large and prospective land package surrounding the project,” he said.

“We view MARI as a compelling investment for investors looking for manageable and economically compelling copper projects, particularly those with significant exploration upside potential. The company appears to be in the early stages of unlocking the regional geological puzzle, which we believe could be a game-changer.”

* TD Securities analyst Daryl Young moved his target for Badger Daylighting Ltd. (BAD-T) to $39 from $36 with a “hold” rating. The current average is $40.38.

* National Bank Financial analyst Travis Wood for Whitecap Resources Inc. (WCP-T) to $4.75 from $3.50, keeping an “outperform” rating. The average is $3.59.

* Scotia Capital analyst Paul Steep increased his target for Dye & Durham Ltd. (DND-T) to $35 from $28 with a “sector outperform” recommendation. The average is $32.25.

“Our initial view of Dye & Durham’s planned acquisition of SAI Global’s Australian Property Division is that the purchase is aligned with the firm’s stated strategy of expanding its geographic presence in markets similar to Canada (e.g., U.K., Australia),” he said. “We believe the firm will remain an active acquirer, with an estimated $41-million in net cash (Q4/21) following the closing of the purchase of the SAI Australian assets.

“Our view is that the firm’s financial results will continue to be fueled by its organic growth and integration of acquisitions (e.g., Property Information Exchange [PIE], Stanley Davis Group, Atsource Solutions) that have been completed during the past year. We believe that DND’s existing mix of business and geographic markets offers the potential for ongoing acquisitions given that legal information and software markets remain fragmented.”

* Oppenheimer analyst Matthew Biegler cut its target for Aptose Biosciences Inc. (APTO-Q, APS-T) to US$8 from US$9 with an “outperform” rating. The average is US$10.56.

* Scotia Capital analyst Cameron Bean for Peyto Exploration & Development Corp. (PEY-T, “sector perform”) to $4.50 from $4. The average is currently $3.79.

“We continue to like the direction PEY is taking and believe that its 2021 plan could set it up to deliver a lot of free cash flow in 2022 – provided natural gas prices do not fall off a cliff,” said Mr. Bean. “It is likely too early (and too uncertain) for the market to look through to 2022, but we do see a much improved outlook for the equity provided we avoid prolonged natural gas price weakness. Prior to our update, we reviewed our revenue assumptions and updated our model for the company’s most recently disclosed hedges. As a result of the changes (and a couple points on diversification that we clarified with management) we have increased our cash flow forecasts.”

* Canaccord Genuity analyst Yuri Lynk resumed coverage of H2O Innovation Inc. (HEO-X) with a “buy” rating and $2.50 target. The average is $2.46.

“As a water pure-play, H2O boasts a favourable long-term macro backdrop as the world’s water purification and wastewater treatment needs continue to grow,” said Mr. Lynk. “Through self-help initiatives, robust demand for its products, and acquisitions, H2O is now much better positioned to play a larger role in the water value chain that at any time since going public in 2001. The company boasts strong underlying organic growth, improving FCF per share trends, and excellent financial flexibility. We view management as proven acquirers and believe any acquisition could represent upside potential to our published estimates.”

* Seeing an “attractive” valuation, Canaccord’s Scott Chan initiated coverage of Mount Logan Capital Inc. (MLC-NE) with a “buy” rating and $3.75 target.

“At current levels, we believe MLC shares offer strong risk-reward characteristics, trading at a 29-per-cent discount to Q3/20 NAV, while the company transitions its current business model toward an asset-light alternative credit asset manager,” Mr. Chan said.

* Canaccord Genuity’s Tania Gonsalves initiated coverage of Else Nutrition Holdings Inc. (BABY-X) with a “speculative buy” recommendation and $6.50 target.

“Today, the only two options for infant formula are cow’s milk-based or soy-based,” she said. “Else has developed the first 100-per-cent plant-based non-dairy and non-soy formula that is nutritionally equivalent to breast milk. It is made of a patented (until 2034) blend of 92-per-cent almonds, buckwheat and tapioca that is certified USDA organic, vegan, natural and free of hormones, antibiotics, gluten, hexanes, GMOs, palm oil and corn syrups. Else is building out a portfolio of products centred on this novel nutrition formula. Including sales of infant formula, toddler/children complete nutrition drinks, and complementary nutrition baby food, we forecast Else’s global sales to grow from $1.0-million today to almost $1.0-billion by 2026 (200-per-cent compound annual growth rate).”

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