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

While shares of Enbridge Inc. (ENB-T) have “performed well,” iA Capital Markets analyst Matthew Weekes expects slower growth and other headwinds to weigh on performance moving forward.

Accordingly, he’s “moving to the sidelines,” lowering his recommendation to “hold” from “buy.”

On Friday, shares of the Calgary-based company rose 1.9 per cent following the premarket release of its fourth-quarter 2021 results. Adjusted earnings before interest, taxes, depreciation and amortization of $3.69-billion missed both Mr. Weekes’s $3.75-billion estimate and the consensus forecast of $3.78, leaving its full-year EBITDA of $14-billion near the low end of its guidance.

“Distributable cash flow (DCF) per share of $1.23 was strong, resulting in annual DCF [discounted cash flow] per share of $4.96, near the top end of guidance,” the analyst said. “Positives in the quarter included record volumes on the Mainline and contribution from the Moda acquisition, while headwinds included warm weather leading to lower utility demand, the weaker US dollar partially offset by ENB’s hedging program, and a provision related to Mainline tolls under the interim International Joint Toll (IJT).”

After it reiterated its guidance, including adjusted EBITDA of $15.0-$15.6-billion, Mr. Weekes thinks 2022 “should be a strong year for growth,” however he warned it will be increasingly difficult for gains going forward.

“At the midpoint, this represents high single-digit growth, underpinned by a full year of the Line 3 Replacement and the Ingleside Energy Centre (IEC), higher average Mainline volumes, and additional organic growth in the business …but should temper in 2023 and beyond,” he said. “Following a tailwind-heavy year in2022, we expect growth to moderate based on ENB’s secured capital program and normalization of Mainline volumes, which will likely include some attrition to the Trans Mountain Expansion once that pipeline enters service (likely 2023).”

“Mainline tolling will likely re-enter the conversation as the timeline progresses. ENB has re-engaged shippers on tolling options for the Mainline, with the potential for a revised incentive tolling option to be implemented by mid-2023,or a cost of service (COS) framework to be implemented in late-2023. In our view, Mainline tolling represents an overhang of uncertainty that could cause some volatility in the share price as a potential resolution draws nearer.”

Enbridge to settle on new Mainline tolling plan by summer, CEO says

Mr. Weekes maintained a $56 target for Enbridge shares. The average target on the Street is $55.77, according to Refinitiv data.

“ENB’s Q4/21 results do not materially change our outlook,” said Mr. Weekes. “However, following the recent strong stock price performance, we are electing to move to a Hold rating as we consider a more moderate pace of projected organic growth, as well as potential headwinds, including volume competition from the Trans Mountain Expansion and uncertainties in Mainline tolling and various US pipelines. While ENB’s stock price has converged to our target price, the shares continue to offer an attractive dividend yield, largely underpinned by stable, contracted or regulated cash flow and earnings. ENB’s balance sheet is strong, and we look forward to potential catalysts that could provide upside to our outlook, being mainly new projects, which are increasingly weighted toward clean and low-carbon energy.”

Elsewhere, Scotia Capital analyst Robert Hope lowered Enbridge to “sector perform” from “sector outperform” with a $58 target, up from $56.

“Since its large Line 3 Replacement project entered service on October 1st, Enbridge’s shares have also outperformed its Canadian peer group. With the strong share price performance to start the year, we see limited room for further valuation expansion and upward estimate revisions relative to its peers. While we don’t believe the Mainline toll process or Line 5 dispute will result in negative outcomes, we continue to field questions on them and could hold back valuation expansion. The shares are currently trading at 9.7 per cent/9.8 per cent 2022/2023 estimated. FCF Yield and we assume some minor valuation expansion is possible,” said Mr. Hope.

Others making target changes include:

* National Bank Financial’s Patrick Kenny to $57 from $56 with an “outperform” rating.

“With the newly secured growth bumping our long-term estimates, our target taps up $1 to $57,” he said. “Despite a relatively skinny total return opportunity of approximately 9 per cent, we maintain our Outperform rating ahead of the Wabamun CCS hub potentially being sanctioned, representing 5-per-cent further valuation upside.”

* CIBC World Markets analyst Robert Catellier to $58 from $57 with an “outperformer” rating.

“The recent pace of project additions ($3B since the IR day in December), and solid system utilization keep us constructive on the company’s outlook despite mixed Q4/21 results. Stronger consideration of buybacks and continued progress on low-carbon ESG-friendly projects are positives,” said Mr. Catellier.

* TD Securities’ Linda Ezergailis to $59 from $57 with a “buy” rating.

* Raymond James’ Michael Shaw to $54.50 from $53 with a “market perform” rating.

* BMO’s Ben Pham to $59 from $57 with an “outperform” rating.


Believing 2022 is “full of possibilities” for Pembina Pipeline Corp. (PPL-T), Scotia Capital analyst Robert Hope raised his recommendation for its shares to “sector outperform” from “sector perform” on Monday, touting “many avenues to growth upside.”

“We see Pembina growing free cash flow at a 2022-2024 estimated CAGR [compound annual growth rate] of 5 per cent, which would be in-line with the median for the pipeline and midstream group (ex TWM and LCFS),” he said. “That said, we believe our estimates are conservative and see many paths to upward revisions. In fact, we see Pembina as among the best positioned in the midstream group to benefit from the very strong commodity price environment. We believe that the potential for positive catalysts far outweighs the potential for negative catalysts. On the positive side, in 2022 we could see some previously deferred projects restarted, which would add to our longer-term growth outlook. If commodity pricing remains robust, there is upside to our 2022 Marketing expectations – and potentially guidance. There is also upside to returns from existing assets if volume growth remains robust. Pembina is well positioned to fund any incremental growth, and in 2022 has excess cash flow, which we expect will be devoted to share buybacks. Absent new growth, we see further share buybacks in 2023 and 2024. That said, we do believe the company has a preference for growth capital over buybacks – and the backlog of potential projects is very large ($4-billion).”

Believing its “attractively valued,” he raised his target to $47 from $43. The average is $44.38.

“Since the announcement of the CEO transition, Pembina’s shares have underperformed its peer group,” said Mr. Hope. “While not a surprise, we believe the underperformance is overdone given our view the overall direction of Pembina will be the same regardless of who takes the CEO position. Absent the CEO change, we would have expected strong price performance from Pembina during this period of strong commodity prices.”

Mr. Hope’s rating change came alongside a research report titled To 2024 and Beyond: A Look at Pipeline and Midstream Growth and Valuations in which he made other target price adjustments. They are:

* TC Energy Corp. (TRP-T, “sector outperform”) to $72 from $69. Average: $67.71.

“In our view, TC Energy is well positioned to benefit from the continued build out of its natural gas pipeline systems (75 per cent of EBITDA) as well as growth in its power business (7 per cent of EBITDA),” he said. “The denial and cancellation of Keystone XL weighed on growth in 2020 and 2021, but we expect cash flow to step-up in 2022 as its Natural Gas Pipeline business continues to grow and its Liquids business stabilizes. We view TC Energy as a well run company with a good long-term growth outlook, though it would have less torque to the commodity price environment than the midstream companies.”

* Gibson Energy Inc. (GEI-T, “sector perform”) to $26 from $25. Average: $25.03.

“We view Gibson as having one of the better growth outlooks in our coverage universe, in part do to our expectation that it will sanction two tanks per year,” he said. “The balance sheet is in good shape, and if Marketing conditions improve, we could see share buybacks in 2022. Longer term, we view the company as a take out candidate if growth slows as we believe that its assets could handle more leverage than the public markets want to see. At recent levels, we view the shares as fairly valued.”

* Tidewater Renewables Ltd. (LCFS-T, “sector outperform”) to $21 from $20. Average: $21.69.

“Tidewater Renewables is positioned to benefit from its advantageous position as a BC LCFS credit generator. The company has made commendable progress in securing feedstock and credit sale agreements to date,” he said.


Seeing an “improving” outlook and an “attractive” valuation, National Bank Financial analyst Vishal Shreedhar raised his rating for Saputo Inc. (SAP-T) to “outperform” from “sector perform.”

“We are upgrading because: (a) SAP will implement significant price increases, covering inflationary pressures; (b) Q4/F22+ should see year-over-year EPS growth after consecutive quarters of material declines; (c) Valuation is attractive, with SAP trading at 16.7 times NTM EPS [next 12-month earnings per share] versus the five-year average of 20.6 times; and (d) Near-term estimates are achievable,” he said in a research note released late Friday. “Specifically, F2023 consensus EBITDA is $1.517-billion (NBF is $1.577-billion). If pressures related to market factors recover slightly, SAP generates moderate efficiency benefits, F/X pressures stabilize and heightened transportation costs get covered by higher prices (as management indicated), SAP should outperform. (2) The primary risk to our upgrade is execution against SAP’s various improvement initiatives given historical underperformance.”

On Feb. 8, the Montreal-based dairy company reported largely in-line results for the third quarter of its 2022 fiscal year. Revenue of $3.901-billion was higher than Mr. Shreedhar’s $3.675-billion estimate, while adjusted earnings before interest, taxes, depreciation and amortization of $322-million was narrowly below his expectation ($317-million).

Saputo closing three facilities, investing about $169-million on operations in U.S. and Australia

“SAP reiterated long-term targets contemplating EBITDA of $2.125-billion in F2025 (NBF is $1.987-billion),” he said. “Specifically, SAP noted that Canada performance is ahead of its plans, and expects it to deliver against plan objectives. UK performance has improved and SAP believes it will hit objectives in years 2-4. Argentina is similarly on track and expected to achieve plan objectives. Australia is expected to be close to plan objectives, despite milk declines. The biggest challenge is in the U.S., which will remain under pressure through year 2, although years 3-4 are expected to improve.”

Seeing its near-term estimates as “achievable,” Mr. Shreedhar trimmed his target to $33 from $35. The average is currently $41.

“The primary risk to our upgrade is execution,” he said. “We believe that Saputo’s execution has been lagging for some time, pressuring ROIC [return on invested capital] and earnings growth. We are encouraged by Saputo’s recent executive management change, and Saputo’s orientation to focus on growing the core business instead of capturing large acquisitions. We are also encouraged by management’s proactive pricing measures and ongoing facility improvement initiatives.”


Following a “solid” fourth quarter, “healthy” outlook and dividend outlook, National Bank Financial’s Tal Woolley expects RioCan Real Estate Investment Trust (REI.UN-T) to reveal “more good news” at its Feb. 23 Analyst Day event.

On Friday, the Toronto-based REIT reported funds from operations per unit of 46 cents, up 18 per cent year-over-year and exceeding both the analyst’s 38-cent estimate and the consensus forecast of 38 cents. It also announced a 6-per-cent increase in its distribution to $1.02 annually.

“SPNOI [same property new operating income] growth excluding provisions also turned positive in Q4, coming in at 1.0 per cent (4.9 per cent including them),” said Mr. Woolley. “SPNOI should go higher over the year, as occupancy rises. Q4 occupancy was 96.1 per cent (up 120 basis points year-over-year, 50 basis points quarter-over-quarter), with commitments for another 70 basis points ahead. Collections are approaching pre-pandemic levels at 99 per cent, meaning lower earnings provisions and greater earnings visibility. Blended leasing spreads were up 5 per cent. Leasing progress is solid at The Well with 90 per cent of the office component leased (first cash rents expected in H2/22). The retail is 50-per-cent leased (62 per cent including tenants in advanced discussions), with completion expected in H1/23.”

Seeing its unveiled financial targets giving unitholders “increased visibility” on returns and expected growth, he added: “From the call, we believe management expects 3-4-per-cent SPNOI growth, along with $1.2-billion in development completions over the next two years, could drive similar 5-7 per cent FFO per unit growth longer term (more details seem likely at the upcoming investor day), creating a likely upward revision bias on consensus estimates. With expected development completions to surpass development spending for the next couple of years, we anticipate that leverage ratios, which fell quarter-over-quarter, will continue to fall closer to pre-COVID levels in time. Introducing growth/payout guidance shows a willingness to be held financially accountable by REI’s relatively new c-suite: something that we believe should not be overlooked by investors.”

Maintaining an “outperform” recommendation, Mr. Woolley raised his target to $27 from $25. The average is currently $26.14.


RBC Dominion Securities analyst Mark Dwelle thinks Fairfax Financial Holdings Ltd. (FFH.U-T, FFH-T) is “making all the right moves,” raising his financial expectations after “probably the best underwriting result” he has seen in his 20 years following the company.

On Friday, Toronto-based Fairfax reported fourth-quarter 2021 net earnings per share of $33.64, exceeding $32.68 a year ago as well as Mr. Dwelle’s $14.15 estimate. The result included $938-million in net realized and unrealized gains on its investments.

“Results are positively impacted by a lower share count, a better combined ratio and rising premiums,” he said. “These positives are partly offset by higher assumed minority interest (Odyssey is a very profitable unit) and modest adjustments to reserving and cat assumptions. Our 2023 estimate rises to $73.75 from $64.50 mostly as a result of reduced share count. On an operating basis we are similarly raising our estimate to $55.78 from $52.21 for 2022 and to $62.05 from $53.72 for 2023. Our estimates do not include Go-Digit which would become consolidated once necessary approvals are achieved (a modest positive to ‘22 and beyond).”

Keeping an “outperform” rating, Mr. Dwelle hiked his target to US$675 from US$600 also factoring in a December move to spend US$1-billion on a share buyback. The average is $832.26 (Canadian).

“Strong growth in a hard market is true to its playbook and opportunistic,” he said. “Investment portfolio positioning could also be a ‘22 tailwind. Add all that to a $1 billion buyback in the quarter and we see a management that is making all the right moves yet a share multiple that still greatly lags peers. We think there is significant room for multiple expansion and continue to view FFH shares as a best-in-class value opportunity at about 0.75 times book value.”

Elsewhere, Scotia’s Phil Hardie moved his target to $810 from $780 with a “sector outperform” rating.

“Despite a strong run through 2021, we believe FFH’s valuation continues to look attractive and trades at a discount to book value and well below its intrinsic value,” said Mr. Hardie.


Touting its “unique ESG/energy transition model” and believing its valuation is inexpensive, BMO Nesbitt Burns analyst Ray Kwan initiated coverage of Kiwetinohk Energy Corp. (KEC-T) with an “outperform” rating.

“In our view, Kiwetinohk is a call on a new business model, where renewables, natural gas-fired generation, CCUS, natural gas, and hydrogen all play a role in the decarbonizing revolution,” he said. “Ultimately, we believe the success of the company will be contingent on execution, and we see CEO Pat Carlson as one of the few capable of handling such a task, given his successful track record.”

Mr. Kwan, currently the lone analyst covering the stock, set an $18 target for the Calgary-based company’s shares.

“At this juncture, we see the shares trading inexpensively vs. peers, while offering its green energy/power business as an option,” he added.


Barclays analyst John Aiken thinks capital market revenues and a sustained tailwind from credit performance are likely to drive the bottom line results for Canadian banks in the first quarter of 2022.

“Heading into Q1, the dual ‘X factors’ of credit and CMRev that played out for much of 2021, could emerge to kick off FY22,” he said in a research note released Monday. “The ongoing improvement of the macro outlook will likely continue to fuel a positive credit performance, while equity market highs and strengthening commodities could boost trading/market-related revenues, although industry league tables for investment banking are somewhat mixed. Prospective BoC rate hikes and a higher, albeit flattening yield curve will likely keep margins steady, while moderating but record 2021 home sales continue to be supportive for mortgage and asset growth. As such, we anticipate net interest income will trend higher, and following a ‘kitchen sink’ Q4, NIX will likely ease.

“And finally, on the capital front, after the cornucopia of dividend hikes and share repurchases announced in Q4, we anticipate no net new capital activity, while CET1 ratios continue to strengthen.” Mr. Aiken thinks credit results could again surprise to the upside, emphasizing the economy and employment landscape are “climbing back above pre-pandemic levels, and rate hikes coming as soon as March, it appears that the banks may have managed to side-step the potential delinquencies and credit losses than had previously been anticipated.”

He added: “With the ongoing improving macro outlook, we would not be entirely surprised if credit continues to surprise to the upside. CMRev could be an ‘X factor’, while NII will likely strengthen. Although Q1 is seasonally the strongest quarter for capital market revenues (CMRev), underscored by historically robust trading, industry league tables suggest somewhat mixed investment banking (-underwriting issues/+completed M&A deals). With record 2021 home sales spurring solid mortgage growth, and margins likely holding steady, we anticipate net interest income will continue to trend higher from Q4. Expect NIX to ease, while capital edges higher. Following a ‘kitchen sink Q4′, we anticipate NIX to moderate to

kick off FY22. And, after the plethora of dividend hikes and share buybacks announced in Q4, we anticipate no net new capital activity in the quarter, as CET1 ratios continue to strengthen from the end of 2021.” Mr. Aiken also emphasized rising rates which could further multiple expansion for bank stocks.

With that view, he make a series of target price changes. They are:

  • Bank of Montreal (BMO-T, “overweight”) to $167 from $165. Average: $158.94.
  • Bank of Nova Scotia (BNS-T, “equalweight”) to $97 from $96. Average: $94.66.
  • Canadian Imperial Bank of Commerce (CM-T, “equalweight”) to $170 from $169. Average: $166.73.
  • Canadian Western Bank (CWB-T, “overweight”) to $43 from 41. Average: $42.91.
  • Laurentian Bank of Canada (LB-T, “equalweight”) to $45 from $44. Average: $46.50.
  • Royal Bank of Canada (RY-T, “overweight”) to $158 from $157. Average: $145.31.
  • Toronto-Dominion Bank (TD-T, “overweight”) to $115 from $111. Average: $107.81.

“The relatively positive macro outlook will likely continue to spur better than expected credit, providing a valuable boost to the bottom line, and will likely bridge the gap to higher rates and stronger top line growth. While markets-related revenues could continue to provide a valuable offset to net interest income pressures, looming rate hikes should bode well for the banks, and potentially drive higher valuation multiples,” he said.


In other analyst actions:

* JP Morgan analyst Sebastiano Petti upgraded Telus Corp. (T-T) to “overweight” from “neutral” with a $36 target, rising from $30. The average on the Street is $33.60.

* National Bank Financial analyst Maxim Sytchev trimmed his target for ABC Technologies Holdings Inc. (ABCT-T) to $7 from $9 with a “sector perform” rating. The average is $8.21.

“Recent M&A was carried out at a time when company’s own balance sheet is under pressure but given significant private equity ownership structure, Board and the team have elected to push forward,” he said. “With material amount of dilution, math is not in the company’s favour (while the acquired assets are not exhibiting trough top lines – which on the one hand is great because it shows resilience, but on the other hand, makes the transactions much more expensive as there is no rebound effect). Having fully incorporated M&A into our forecasts (and the resulting equity dilution, share count is 2 times now vs. post-IPO), we compress our target price.”

* Canaccord Genuity analyst Matt Bottomley cut his Aurora Cannabis Inc. (ACB-T) target to $5 from $6, keeping a “sell” rating. The average is $5.99.

* Scotia Capital analyst Konark Gupta raised his Bombardier Inc. (BBD.B-T) to $2 from $1.75 with a “sector perform” rating. The average is $2.25.

“We remain impressed by management’s strong execution on margin and deleveraging throughout 2021 while last year’s robust order activity accelerated FCF turnaround and is driving production rate increases faster than we had anticipated,” he said. “Our target increases. ... on higher estimates through 2025. However, we maintain our Sector Perform rating for two main reasons. First, bizjet order activity faces deceleration risk this year as commercial airlines recover. Second, we remain skeptical about BBD’s 2025 guidance (particularly margins and FCF) due to rising competition from Gulfstream and Dassault (launching five new models during 2022-2025), besides industry cyclicality. That said, we like the near-term fundamental story and believe 2022 guidance is conservative. Further, BBD is hosting an investor day on February 24, which could serve as a potential catalyst if it raises or pulls forward key long-term targets.”

* National Bank’s Cameron Doerksen trimmed his CAE Inc. (CAE-T) target by $1 to $44, exceeding the $39.80 average, with an “outperform” rating, while Desjardins Securities’ Benoit Poirier cut his target to $37 from $38 with a “buy” rating.

“We maintain our Outperform rating on CAE shares following fiscal Q3 results,” said Mr. Doerksen. “Although near-term results will continue see the impacts from pandemic, we believe the Civil sector is firmly on the way to a full recovery. We also remain bullish on the long-term strategic impact on CAE’s Defence segment from the L3Harris acquisition. With acquisitions CAE has made over the past two years along with the restructuring that should also boost margins, we see CAE as a materially larger and more profitable business in the postpandemic world.”

* Cowen and Co. analyst Oliver Chen slashed his target for Canada Goose Holdings Inc. (GOOS-N, GOOS-T) to US$37, below the US$42.55 average, from US$56 with an “outperform” rating.

* Canaccord’s Aravinda Galappatthige lowered his target for Cineplex Inc. (CGX-T) to $17 from $19 with a “speculative buy” rating. The average is $17.79.

“We have adjusted our estimates for the impact of the most recent wave of COVID-19 and related restrictions. Our forecasts now assume a return to within 10 per cent of pre-pandemic levels by H2/22. We believe F2023 expectations now reflect a more reasonable post-pandemic financial picture and a more reliable basis for valuation,” he said.

* TD Securities analyst Daryl Young raised his Colliers International Group Inc. (CIGI-Q, CIGI-T) target to US$185 from US$180 with a “buy” rating. The average is US$184.08.

* National Bank’s Richard Tse raised his target for Constellation Software Inc. (CSU-T) to $2,350, below the $2,594.01 average, from $2,100 with a “sector perform” rating.

“All in, we believe Constellation continues to consistently execute on its acquisition growth strategy while offering investors defensive attributes from a largely recurring revenue (cash flow) base. While all positive, we continue to believe the risk-to-reward profile is balanced from a valuation standpoint,” he said.

* Desjardins Securities’ Doug Young bumped up his Definity Financial Corp. (DFY-T) target to $33 from $32 with a “buy” rating. Others making changes include: BMO’s Tom MacKinnon to $35 from $32 with an “outperform” rating, Barclays’ John Aiken to $34 from $32 with an “overweight” rating, Scotia’s Phil Hardie to $35 from $34 with a “sector outperform” recommendation and Raymond James’ Stephen Boland to $33.50 from $32 with an “outperform” rating. The average is $33.78.

“DFY offers investors a pure play into the Canadian P&C insurance sector. It has invested significantly into its digital platforms, derisked certain businesses and has considerable capital flexibility to grow organically and through acquisitions,” Mr. Young said.

* CIBC World Markets analyst Mark Jarvi trimmed his target for Fortis Inc. (FTS-T) to $60, above the $59.32 average, from $61, keeping a “neutral” rating, while Scotia’s Robert Hope also cut his target to $60 from $61 with a “sector perform” recommendation.

“Fortis’ Q4/21 results were below our expectations as its U.S. operations were weighed down by weather and some non-recurring costs. We move down our go forward EPS estimates by 1-2 per cent to reflect more tempered UNS expectations as well as a slower recovery of its Caribbean assets,” said Mr. Hope.

* BMO Nesbitt Burns analyst Tom MacKinnon raised his Great-West Lifeco Inc. (GWO-T) to $42, below the average by 67 cents, from $41 with a “market perform” rating.

“A generally in-line Q4/21 versus consensus, but a modest 2-per-cent miss versus our estimate. Results were noisy, as lower-than-expected earnings at Empower, Canada and Europe/ Capital & Risk Solutions were partially offset by lower overall taxes. Sales mixed, but integration of MassMutual tracking as expected and combination of investment/ policyholder experience gains were in line. No change in estimates,” he said.

* Canaccord’s Scott Chan increased his IGM Financial Inc. (IGM-T) target to $57 from $55 with “buy” rating, while Barclays’ John Aiken bumped his target to $43 from $41 with an “underweight” recommendation. The average is $56.

“The effort to contain expenses and improve efficiency has benefitted earnings in 2021. However, outside of capital deployment or significant market growth, moving forward we anticipate earnings growth will wane, particularly with the increased expense growth guidance for 2022. Additionally, with IGM trading at a premium to peers, we anticipate relative multiple expansion will be limited in the near term. Capital deployment continues to provide upside for investors and we note that our estimates do not reflect the impact of the China AMC transaction expected to close in the first half of this year.,” said Mr. Aiken.

* Wells Fargo analyst Colin Langan cut his Magna International Inc. (MGA-N, MG-T) target to US$85 from US$93 with an “overweight” rating. Others making changes include: Credit Suisse’s Dan Levy to US$100 from US$102 with an “outperform” rating, Scotia’s Mark Neville to US$110 from US$105 with a “sector outperform” rating and CIBC’s Krista Friesen to US$96 from US$104 with an “outperformer” rating. The average is US$97.94.

“MGA’s strong 4Q print and a relatively encouraging guide to 2022 (for which EBIT likely cleared the buyside bar) was overshadowed by what investors viewed as disappointing expectations for outgrowth and margin recovery,” said Mr. Levy. “In short, MGA is well-positioned to benefit from the expected recovery in auto production, but the question now is in what way it can outperform the broader industry. Investment in megatrend/Auto 2.0 narrative opportunities is ongoing, but the MGA guides to ‘22 and ‘24 are more indicative of the costs than the benefits, as MGA guided to modest growth over market. Indeed, MGA previously guided for its megatrend exposure to increase to 25-30 per cent of its revenue over time, up from 15-20 per cent currently … MGA will now need to communicate how/when increased megatrend exposure shows up in outgrowth. Nevertheless, we remain positive on MGA and reaffirm our Outperform rating, as the stock trades at a meager 5.2 times 2023 EBITDA, and the favorable cycle ahead (particularly in North America, where MGA is overweight) represents a strong opportunity for the stock, making outgrowth and megatrend benefits optionality to the upside.”

* BMO’s Jonathan Lamers cut his NFI Group Inc. (NFI-T) target to $27 from $30 with an “outperform” rating. The average is $27.75.

“NFI’s transit customers continue to experience ridership that is recovering very gradually, weighing on budgets, and manufacturing sector supply challenges are ongoing,” said Mr. Lamers. “We reduced our 2022 estimates. We believe the stock offers value for investors able to be patient to the eventual earnings recovery. There is some visibility with New Flyer’s customers set to benefit from significantly increased U.S. Transit Funding effective April, which should support stronger orders.”

* BMO’s Devin Dodge raised his target for Russel Metals Inc. (RUS-T) to $36 from $34, keeping a “market perform” rating. The average is $39.

“As we transition away from an extremely strong 2021 for RUS, we believe the company is performing well, demand should be on an improving trend and the balance sheet is in great shape. We believe there is increased optimism around M&A and RUS has dry powder available to self-fund deals. While we are more optimistic about RUS’ near-term prospects, the outlook for moderating steel prices has historically been a challenging backdrop for the stock and prevents us from taking a more constructive view on the shares,” said Mr. Dodge.

* Canaccord’s Robert Young raised his Sangoma Technologies Corp. (SANG-Q, STC-T) target to $24 from $22 with a “buy” rating, while TD Securities’ David Kwan lowered his target to $27 from $31 with a “buy” recommendation. The average is $31.50.

* Ahead of the Feb. 16 release of its fourth-quarter results, CIBC’s Todd Coupland cut his Shopify Inc. (SHOP-N, SHOP-T) target to US$950 from US$1,750 with a “neutral” rating. The average is US$1,467.66.

“Achieving Q4 revenue growth expectations of 34.5 per cent (FactSet 37 per cent) could be challenging given the slowdown in e-commerce web traffic,” he said. “Year-over-year web traffic to Shopify’s website declined to 2 per cent in Q4 vs. 8 per cent in Q3 and 19 per cent in Q2 (SimilarWeb). We recommend investors wait for a more attractive entry point.”

* RBC’s Sabahat Khan trimmed his target for SNC-Lavalin Group Inc. (SNC-T) to $39 from $42 with an “outperform” rating, while Canaccord’s Yuri Lynk cut his target to $45 from $47 with a “buy” rating. The average is $41.77.

“We are reiterating our BUY rating and lowering our target price ... ahead of Q4/2021 results.” said Mr. Lynk. “We continue to see earnings power of $1.90 in 2024, which we feel is conservative. At this point, SNC should have completed its loss making lump-sum turnkey (LSTK) contracts. Professional services comparables trade at 25 times 2022 estimated EPS, which implies a $58 stock price after discounting our 2024 EPS estimate back a year at 10 per cent and adding $15.00 per share for Capital. However, between now and then we expect uneven financial performance as LSTK contracts require negative cost reforecasts.”

* Raymond James’ Stephen Boland raised his Trisura Group Ltd. (TSU-T) target to $55, below the $59.21 average, from $51 with an “outperform” rating.

* Peel Hunt analyst Tim Huff lowered his target for Wheaton Precious Metals Corp. (WPM-T) to $70 from $77 with an “overweight” rating. The average is US$57.54.

* RBC’s Drew McReynolds raised his Yellow Pages Ltd. (Y-T) target by $1 to $14 with a “sector perform” rating. The average is $14.33.

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