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

Despite reporting “solid” third-quarter results and reiterating its full-year guidance, National Bank Financial analyst Patrick Kenny downgraded Enbridge Inc. (ENB-T) on Monday, citing “a total return opportunity of only 6.0 per cent, and the stock trading at a current dividend yield spread of 2.9 per cent above the GCAN 10-year rate (in line with ENB’s five-year average spread: 2.9 per cent).”

On Friday, shares of the Calgary-based company rose 1 per cent after it reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $3.76-billion, exceeding both Mr. Kenny’s $3.69-billion estimate as well as the consensus forecast of $3.62-billion. He said the beat reflected “incremental contributions from assets placed into service this year as well as updated rates on Texas Eastern resulting from its recent rate case.”

After Enbridge reiterated its 2022 guidance, including adjusted EBITDA guidance of $15.0-$15.6-billion and adjusted funds from operations per share of $5.20-$5.50, the analyst emphasized it B.C. pipeline is backfilling its conventional backlog.

“ENB has added $4-billion to its secured growth backlog (now approximately $17-billion), largely reflecting the $3.6-billiob 300 mmcf/d T-South expansion, while launching another open season for a further 500 mmcf/d T-North expansion for $1.9-billion,” he said. “ENB also advanced its USGC crude export strategy, including bumping up its interest in the Gray Oak pipeline, while acquiring an additional 10 per cent interest in the Cactus II Pipeline, both of which feed Gulf Coast export terminals including EIEC, where ENB sanctioned four additional storage tanks. Meanwhile, ENB continues its mainline recontracting negotiations with discussions expected to continue through the end of the year (recall, we estimate 5-per-cent downside to our estimates assuming a return to cost-of-service tolls).”

Ahead of the Nov. 30 release of its 2023, Mr. Kenny largely left his forecast for Enbridge unchanged, raising his target for its shares by $1 to $54 while moving it to “sector perform” from “outperform.” The average target on the Street is $58.55, according to Refinitiv data.

Other analysts making target adjustments include:

* CIBC’s Robert Catellier to $58 from $57 with an “outperformer” rating.

“The pickup in growth projects ($3.8B added to the project backlog), the strong performance of core infrastructure, and the increasing demand for energy all support our positive thesis for Enbridge,” said Mr. Catellier.


While Desjardins Securities analyst Doug Young expressed enthusiasm about the coming fourth-quarter earnings season for Canadian banks, he warned investors the market isn’t likely to “reward” stocks in the sector “due to the lingering economic uncertainties and concerns as we peer out over the next year.”

In a research note released Monday titled Third verse same as the first..., he added: “We’ll be playing the same old song this quarter. The Canadian banks’ 4Q FY22 earnings season kicks off with BNS on November 29. We think it could actually be a decent quarter for the group, with strong P&C banking results offsetting weakness in capital markets. Not dissimilar to what we saw in U.S. banks’ 3Q22 results.”

While Mr. Young thinks macroeconomic concerns are already priced into bank stocks, he expects near-term valuation multiple expansion to be unlikely.

“The Big 6 Canadian banks are all trading below their 20-year historical average P/BVPS multiples,” he said. “If the Canadian economy remains resilient and recession concern eases, we could see valuation multiples improve; however, it is too early to make that call in our opinion.”

For the quarter, Mr. Young is forecasting a 3-per-cent year-over-year decline in cash earnings per share for the Big 6 on average “with the decline mostly attributable to lapping a quarter with larger releases in performing loan ACLs, but also reflects a normalization in capital markets results.”

After tweaking his estimates for the sector, Mr. Young made these target adjustments in order of stock preference:

  1. Toronto-Dominion Bank (TD-T, “buy”) to $103 from $104. The average on the Street is $99.21.
  2. Bank of Montreal (BMO-T, “buy”) to $148 from $150. Average: $148.14.
  3. Royal Bank of Canada (RY-T, “buy”) to $140 from $141. Average: $137.08.
  4. Canadian Western Bank (CWB-T, “buy”) remains $33. Average: $33.29.
  5. National Bank of Canada (NA-T, “hold”) to $99 from $100. Average: $102.08.
  6. Bank of Nova Scotia (BNS-T, “hold”) to $76 from $83. Average: $82.96.
  7. Canadian Imperial Bank of Commerce (CM-T, “hold”) to $70 from $73. Average: $74.84.
  8. Laurentian Bank of Canada (LB-T, “hold”) to $35 from $41. Average: $42.38.


While macroeconomic headwinds led to weaker-than-anticipated third-quarter results and a reduction to its full-year outlook, Citi analyst Ryan Potter thinks Telus International Inc. (TIXT-N, TIXT-T) continues to exhibit margin execution and a “solid” pipeline while making a favourable shift in its business mix.

“TELUS International missed top-line expectations and lowered its growth outlook due to macro-related headwinds (elongated sales cycles and some softness in tech & games and ecomm & fintech verticals as well as Europe),” he said. “It mitigated the bottom-line impact by demonstrating solid operational rigor in managing costs, leading to strong margin performance. The sales pipeline remains healthy and, over time, we believe the company stands to benefit from clients’ increased cost focus as well as vendor consolidation exercises.”

TSX-listed shares of the company dropped 7.2 per cent on Friday after it reported revenue of US$615-million, up 10.6 per cent year-over-year but below both Mr. Tower’s US$653-million forecast and the consensus estimate of US$647-million. Adjusted earnings per share of 32 US cents met his expectation and beat the Street by a penny.

Citing macro-related headwinds, Mr. Tower lowered his financial estimates for Telus International after it reduced its 2022 revenue outlook to of US$2.45-$2.49 billion from US$2.55-$2.60 billion. Its adjusted EPS projection remains US$1.18-$1.23.

However, he raised his forecast for 2023 and 2024 after incorporating revenue gains from its US$1.2-billion acquisition of WillowTree, a U.S.-based mobile application and technology company.

“We now include the recently announced WillowTree acquisition in our estimates (expected to close Jan 2023) which more than offsets the lowered organic assumptions on revenue but we believe this is also dilutive to earnings in the low-to-mid single digits range, which leads to lowered bottom-line estimates,” said Mr. Tower. “We like this acquisition though as it accelerates TELUS International’s continued business mix pivot into faster-growing offerings with attractive end markets.”

Maintaining a “buy” rating for Telus International shares, he lowered his target to US$26 from US$34 due to his near-term reductions. The average is US$29.59.

“TELUS International has done a good job pivoting its business mix toward faster growth opportunities through its focus on high-growth clients in its traditional digital customer experience business and leveraging M&A to expand into fast-growing adjacencies such as content moderation and AI data solutions,” said Mr. Tower. “We believe the company now has a strong client list that helps drive headline financial metrics toward industry-leading levels. Given its success with both large and tuck-in acquisitions, we expect the company to also leverage M&A to continue this accelerated growth pivot. Risks to consider include potential volume volatility tied to economic cycles, relatively high top client concentration, geopolitical risks, and status as a controlled company. We believe the current valuation more than takes into account these risks and view the risk/reward as attractive.”

Elsewhere, Scotia Capital’s Divya Goyal downgraded the stock to “sector perform” from “sector outperform” and lowered her target to US$26 from US$30.

“Given the quarterly performance of the company and macro trends, we have revised our estimates for TI over the next few quarters to reflect the expected revenue growth across TI’s client base,” she said. “Based on our analysis, we expect a notable slowdown in revenue growth from the company’s largest social media client (assumed Meta (not covered)), given its widely announced cost-cutting measures. Additionally, we anticipate a slowdown in growth across the company’s ‘Other Clients’ revenues (55 per cent of total TI revenues) given the macro headwinds which have already started impacting this revenue stream, as evident from negative 4-per-cent year-over-year revenue impact across TI’s eCommerce & Fintech segment and negative 17-per-cent year-over-year revenue impact across ‘Other segment’ which comprises Retail and Healthcare customers.”

Others making changes include:

* BMO’s Keith Bachman to US$27 from US$35 with an “outperform” rating.

“Like many services companies, Telus is facing macro headwinds which has and will negatively impact growth over the next several quarters. We previously forecasted about 16.0-per-cent year-over-year CC growth for FY23, and we now forecast about 10.5-per-cent year-over-year CC growth, which is similar to 4Q22 growth. With that said, TIXT was able to raise its margin guide for the year with a focus on profitability, and we think standalone margins can improve even through negative revenue variance,” he said.

* CIBC’s Stephanie Price to US$36.50 from US$39 with an “outperformer” rating.

“Amid a difficult macro environment, TI is seeing localized slowdowns in some verticals, including certain customers in its core tech and games and e-commerce segments. TI is responding by slowing hiring (flat Q/Q) and focusing on profitability. The company reduced its 2022 revenue guidance by 4 per cent at the mid-point, while increasing its 2022 margin guidance by 50 basis points. We continue to regard TI as well managed, with upside from WillowTree synergies,” said Ms. Price.

* Credit Suisse’s Kevin McVeigh to $36.50 (Canadian) from $40 with a “neutral” rating.

* JP Morgan’s Tien-tsin Huang to US$30 from US$32 with an “overweight” rating.

Concurrently, several analysts adjusted their targets for parent company Telus Corp. (T-T), which gained 2.4 per cent on Friday following its earnings release and dividend raise.

They include:

* RBC’s Drew McReynolds to $34 from $33 with an “outperform” rating. The average is $32.33.

“TELUS remains our best idea in Canadian telecom,” said Mr. McReynolds. “We view 2022 as a pivotal turning point for TELUS as the company transitions into a new post-FTTH build / 5G phase. We expect the company to emerge in 2023 with a distinctively different financial and operational profile relative to most global telecom peers. As FTTH coverage reaches 85-90 per cent of the targeted broadband footprint by the end of 2022, enhanced capex flexibility should enable TELUS to capitalize on 5G without meaningful capital constraints, opportunity costs or FCF impairment. Longer term, under certain operational and regulatory conditions, we see strong strategic and financial rationale for TELUS to explore a transformational re-organization that can fully unlock the value of core infrastructure assets and core technology assets.”

* CIBC’s Stephanie Price to $31 from $30 with a “neutral” rating.

* National Bank’s Adam Shine to $35 from $34 with an “outperform” rating.

* Barclays’ David Joyce to US$24 from US$23 with an “equal-weight” rating.


Following a “sound” third quarter from Baytex Energy Corp. (BTE-T), National Bank Financial analyst Dan Payne thinks “the diversity of its assets (Clearwater & Duvernay) continue to complement and extend the duration of its portfolio in support of its long-term value proposition.”

However, pointing a recent jump in share price of 32 per cent month-over-month as well its current valuation, he lowered his rating to “sector perform” from “outperform” previously.

“While its next inflection point to value through free cash & return of capital is not set until mid-2023; that said, ALL of that could be positively changed by way of outperformance in the Clearwater, which we will continue to monitor for acceleration of its value profile,” he said.

“BTE is poised for a 26-per-cent return profile (vs. peers 35 per cent) on 2023 leverage of 0.2 times (vs. peers 0.1 times), while trading at a 2023 estimated EV/DACF [enterprise value to debt-adjusted cash flow] of 3.4 times (vs. peers 2.8 times).”

After the bell on Thursday, the Calgary-based company reported quarterly results that largely fell in line with expectations, including average production of 83,194 barrels of oil equivalent per day and cash flow per share of 51 cents.

“During the quarter, the company continued to reflect the refinement of its business, maintaining production under a 60-per-cent payout ratio to imply a 13-per-cent free cash yield, as underpinned by a $37/boe cash netback (down 19 per cent quarter-over-quarter), and with which it continues to manage down debt & leverage (relatively flat sequentially given currency impact of its notes) while executing its phased approach to return of capital,” said Mr. Payne.

“Operations continue to evolve positively, with the Clearwater & Duvernay plays comprising the growth engine against steady-state & free cash oriented assets elsewhere. Notably, its Clearwater assets continue to be a rocket ship, producing at 10 mboe/d from 24 wells, and recent downspaced wells proving extreme results at 1,100 boe/d IP30 to suggest the continued expansion of high-return inventory and a view towards critical mass at 15 mboe/d across its 80 section land position. Complementing that, are its Duvernay assets delivering very solid results, with four wells producing at rates of 700 boe/d each.”

He maintained a target of $9 per share, which is 5 cents lower than the current average.

Others making target changes include:

* RBC’s Greg Pardy to $9 from $8.50 with a “sector perform” rating.

“Baytex delivered solid operating and financial results in the third-quarter with its emerging Clearwater play supporting about 8,200 bbl/d of high margin oil production,” he said.


A pair of equity analysts on the Street made rating changes for Ensign Energy Services Inc. (ESI-T) on Monday following the release of its quarterly result last week.

Stifel’s Cole Pereira downgraded the stock to “hold” from “buy” with a $4.50 target, up from $4.25 but below the $5.58 average on the Street.

“Ensign reported 3Q22 results that beat Stifel and consensus estimates on EBITDAS ($105-million), but lagged our forecasts on a FCF basis (by $21-million),” Mr. Pereira said. “ESI’s business continues to perform very well but in our view there is near-term uncertainty around a refinancing of its April 2024 unsecured senior notes. A refinancing would need to occur in the next five months to avoid the bond going current, and the new issue bond market remains extremely challenging. While we expect a resolution will occur, we believe there is uncertainty around how punitive the coupon will be, whether there will be any changes in security of the bond, and if there would also be some sort of dilutive event alongside it. We have increased our target price ... but are downgrading our rating to Hold from Buy as we move to the sidelines for now.”

TD Securities’ Aaron MacNeil upgraded to “buy” from “speculative buy” and increased his target to $6.50 from $6.

Meanwhile, those making target changes include:

* BMO’s John Gibson to $7 from $6.50 with an “outperform” rating.

“We believe the drillers are about to embark on a significant journey of growth over the next few years given high utilization across most rig classes, coupled with modest rises in activity levels,” he said.

* CIBC’s Jamie Kubik to $4.75 from $4.50 with a “neutral” rating.


While calling its third-quarter operating performance “soft,” Canaccord Genuity analyst Mark Rothschild raised his recommendation for Dream Office REIT (D.UN-T) to “buy” from “hold” with an $18 target, down from $19 and below the $20.59 average.

“Continued soft operating performance is putting pressure on Dream Office REIT’s (Dream Office) cash flow, and it could take some time for fundamentals to improve,” he said. “Clearly, property-level fundamentals are recovering at a much slower rate than we had anticipated, and it is likely that an economic slowdown over the next year will lead to greater vacancy. Therefore, management is taking a patient and long-term approach to managing through this period, with a focus on investing capital in the assets to improve occupancy.

“Over the long term, the portfolio is, in our view, significantly more valuable than the current unit price. Many of the REIT’s assets are located near hospitals, providing a built-in source of potential tenants, whereas others are valuable development or redevelopment sites. Further, the REIT’s ownership stake in Dream Industrial (27 per cent of NAV) should produce stable and growing cash flow.”

Elsewhere, CIBC World Markets’ Dean Wilkinson cut his target to $20 from $24 with an “outperformer” rating.


Pointing to a large vacancy in France, Canaccord Genuity analyst Christopher Koutsikaloudis downgraded Inovalis Real Estate Investment Trust (INO.UN-T) to “hold” from “buy” with a $4.25 target, down from $4.75 and below the $5.38 average.

On Friday, Inovalis announced the sole tenant at its Arcueil property in Paris, which represents 36 per cent of its total revenue, has not renewed its lease and will vacate in the middle of next year.

“We are not overly surprised by the announcement as we believed there was a high risk the lease would not be renewed,” he said.

“However, with the property representing more than a third of the REIT’s revenue, the announcement has a material impact on cash flow. Management indicated that it intends to redevelop the property in a partnership with its asset manager Inovalis SA and potentially other investors.”

Elsewhere, dropping her net asset value estimate “materially,” BMO’s Jenny Ma downgraded Inovalis to “underperform” from “market perform” with a $3.50 target, down from $5.25.

“We had identified Inovalis’ high weighting to Orange as a notable risk factor for a long time. As at Q2/22, Orange comprised 28 per cent of Inovalis’ total revenue. The Canadian REIT sector has not seen a departure of this proportional magnitude in recent memory. Taking into account Orange’s vacancy, all else equal, we estimate Inovalis’ occupancy rate drops dramatically to 62 per cent from 82.6 per cent at quarter-end Q2/22,” she said.


Touting its “outstanding” third-quarter performance, RBC Dominion Securities analyst Greg Pardy reaffirmed Enerplus Corp. (ERF-N, ERF-T) as his “favorite intermediate producer given its capable leadership team, solid execution, strong balance sheet and rising shareholder returns.”

The Calgary-based company remains on the firm’s “Global Energy Best Ideas” list.

“Enerplus Corporation delivered impressive third-quarter results amid 20-per-cent sequential oil & liquids production growth and free cash flow generation of $241 million,” said Mr. Pardy. “This performance reflects better than expected well productivity in North Dakota and comes despite non-core asset sales in Canada. The company repurchased $112 million (7.9 million) of its common shares in the third quarter and announced a 10-per-cent increase in its common share dividend to an annualized rate of 22 cents per share (1.2-per-cent current yield).”

“Enerplus reaffirmed its commitment to distribute a minimum of $425 million of shareholder returns this year and at least 60 per cent of free cash flow into 2023 with an accent on share buybacks. Execution of a substantial issuer bid (SIB) also remains an option for Enerplus should market conditions dictate, but the company appears comfortable with the flexibility afforded by an NCIB. Our outlook for Enerplus factors in share repurchases of $384 million in 2022 and $395 million in 2023.”

After the company increased the midpoint of its 2022 production guidance by 1 per cent and “refined” its capital program to $430-million (from a $400-$440 million range previously), Mr. Pardy increased his earnings expectations for 2022 and 2023, boosting his target for its shares by $1 to $20. The average is $21.

“Enerplus is trading at a debt-adjusted cash flow multiple of 3.5 times in 2022 (vs. our Canadian intermediate peer group avg. of 3.8 times) and 2.8 times in 2023 (vs. peers at 2.4 times) and a free cash flow yield of 20 per cent in 2022 (vs. peers at 20 per cent) and 21 per cent in 2023 (vs. peers at 31 per cent),” he said. “We believe the company should trade at an above average multiple given its consistent operating performance, capable leadership team and strong balance sheet, partly off-set by portfolio concentration.”

Elsewhere, others making target changes include:

*Desjardins Securities’ Chris MacCulloch to US$22 from US$20.50 with a “buy” rating.

“The stock has been the best-performing oil-weighted producer in the Canadian mid-cap space to date this year, reflecting the company’s strong operational results, streamlined portfolio and aggressive buyback program. In other words, ERF has executed beyond expectations and been appropriately rewarded by the market,” said Mr. MacCulloch.

* Stifel’s Cody Kwong to $33 (Canadian) from $32 with a “buy” rating.

“This earnings update epitomizes what we see in having Enerplus as our Top Idea. Strong and predictable operational and financial results. An undeterred commitment to shareholder returns as its net debt balance falls. Continuous high grading of its assets which is even more effective when selling at commodity prices highs and buying at the lows. Our forecast includes meaningful share buyback activity through the end of 2023, which we believe creates a positive feedback loop for shareholder value in the short, medium and long term,” said Mr. Kwong.


In other analyst actions:

* TD Securities’ Graham Ryding lowered IGM Financial Inc. (IGM-T) to “hold” from “buy” with a $40 target, while Canaccord’s Scott Chan moved his raised his target to $40 from $38, below the $41.57 average, with a “buy” rating.

* TD Securities’ Sean Steuart downgraded Western Forest Products Inc. (WEF-T) to “hold” from “buy” with a $1.40 target, while CIBC’s Hamir Patel cut his target to $1.50 from $1.75, below the $1.78 average, with a “neutral” rating.

* Accountability Research’s Harshit Gupta cut Imperial Oil Ltd. (IMO-T) to “hold” from “buy” with an $80 target. The average is $76.

* Desjardins Securities’ Chris MacCulloch raised his ARC Resources Ltd. (ARX-T) target to $26 from $25 with a “buy” rating. The average is $24.47.

“Casting aside B.C. regulatory uncertainty for a brief moment, it is tough to find a better bargain in the Canadian energy sector than ARC these days,” he said. “The company has executed on operational targets after shifting capital into Alberta, where it has taken advantage of underutilized infrastructure capacity at Kakwa while trimming debt levels, both of which stem from last year’s transformative acquisition of Seven Generations Energy.

“More importantly, ARC has significantly accelerated capital returns, which accounted for a whopping 94 per cent of FCF generated in 3Q22, primarily through share buybacks. Following this performance, we have increased our buyback assumption to 75 per cent of discretionary FCF (from 50 per cent), all while continuing to conservatively assume our target price as the cost basis for share repurchases. As we have frequently noted, there are multiple ways to grow per-share metrics and it is tough to argue with the merits of a buyback-centric strategy for ARC, which we consider a top-tier producer trading at a middle-of-the pack multiple at 3.6 times 2023 DACF based on the current strip.”

* Mr. Chris MacCulloch also raised his Tourmaline Oil Corp. (TOU-T) target to $97 from $92 with a “buy” rating. The average is $98.50.

“While acknowledging that valuation is beginning to stretch, we continue highlighting the stock as a unique way to gain exposure to JKM LNG prices from the best-run natural gas producer in North America, in our view,” he said.

* Canaccord Genuity’s Yuri Lynk raised his Badger Infrastructure Solutions Ltd. (BDGI-T) target to $40 from $37 with a “buy” rating, while Scotia’s Michael Doumet cut his target to $35 from $38.50 with a “sector perform” rating. The average is $34.75.

“While Badger has undoubtedly shown progression in the profit ramp (higher sales, offset by lower margins), the macro has become more uncertain (we lowered our multiple). That being said, the backdrop in non-residential construction remains relatively favourable, and we expect profit growth to enable the company to cash fund the expansion of its fleet,” said Mr. Doumet.

* Canaccord’s Matthew Lee raised his Black Diamond Group Ltd. (BDI-T) target by $1 to $8, exceeding the $7.50 average, with a “buy” rating.

“We continue to believe that BDI offers investors an attractive combination of top-line growth, improving margins, and robust cash flow, which should continue despite economic headwinds. Furthermore, BDI trades at a healthy discount to both WFS and MSS peers, which we opine presents an attractive buying opportunity,” said Mr. Lee.

* CIBC World Markets’ Kevin Chiang hiked his Bombardier Inc. (BBD.B-T) target to $47 from $37 with a “neutral” rating. The average is $54.03.

“With three consecutive quarters of positive FCF generation on the back of healthy business jet demand and the expansion of its aftermarket segment, BBD is progressing ahead of its schedule to achieve its 2025 targets,” he said.

* JP Morgan’s Phil Gresh raised his Canadian Natural Resources Ltd. (CNQ-T) target to $96 from $93, above the $95.10 average, with a “neutral” rating.

* CIBC’s Stephanie Price cut her target for Constellation Software Inc. (CSU-T) to $2,300 from $2,450 with an “outperformer” rating. Others making changes include: BMO’s Thanos Moschopoulos to $2,250 from $2,450 with an “outperform” rating and Raymond James’ Steven Li to $2,250 from $2,400 with a “market perform” rating. The current average is $2,483.01.

“We remain Outperform on CSU following Q3/22 results, which were in-line. CSU is our top large-cap pick given the extensive diversification in its business, high recurring revenue mix, strong balance sheet, and cash generation (which would allow it to ramp up M&A, should a recession provide more attractive opportunities). We view valuation as attractive relative to its historical average and our forecasts for EBITDA/cash flow growth. We’ve modestly trimmed our EBITDA estimates, principally due to FX and more conservative assumptions for TO,” said Mr. Moschopoulos.

* Canaccord’s Yuri Lynk cut his Doman Building Materials Group Ltd. (DBM-T) target to $5 from $5.50, below the $6.29 average, with a “hold” rating.

“We like the company’s positioning in the North American building products distribution space give the secular demand drivers we see in the long-term. However, we believe earnings reached a cyclical peak in 2021, and are likely to contract through 2024, which makes it difficult to recommend the stock here,” said Mr. Lynk.

* BMO’s Stephen MacLeod trimmed his Dorel Industries Inc. (DII.B-T) target to $7 from $9, below the $9.25 average, with a “market perform” rating.

* CIBC’s Nik Priebe raised his Fairfax Financial Holdings Ltd. (FFH-T) target to $950 from $900 with an “outperformer” rating, while Scotia’s Phil Hardie bumped his target to $995 from $910 with a “sector outperform” rating. The average is $930.95.

“Fairfax’s third-quarter results demonstrated 1) better-than-expected resilience given a number of headwinds, and 2) that it is well positioned for a rising interest rate environment,” said Mr. Hardie. “Fairfax faced a challenging environment that included elevated catastrophe losses from Hurricane Ian and a sell-off in fixed income and equity markets. The impact, however, was not as bad as feared, with the company reporting only a modest loss. The short duration of Fairfax’s fixed income portfolio helped mitigate the impact of rising yields on the value of its bond holdings, and more importantly, enabled it to take advantage of the higher interest rates to boost its recurring interest & dividend investment income.

“We see attractive opportunities for investors to buy Fairfax shares given its discounted valuation does not likely reflect the company’s underlying earnings power. We believe FFH is generally overlooked or unloved by investors, and trades well below its intrinsic value.”

* ATB Capital Markets’ Martin Toner increased his Kinaxis Inc. (KXS-T) target to $200 from $190, below the $213.00 average, with an “outperform” rating, while BMO’s Thanos Moschopoulos cut his target to $185 from $200 with an “outperform” rating.

“We remain Outperform on KXS and have made minor changes to our FY2023 estimates following Q3/22 results—which were a hair below consensus on revenue and a beat on adj. EBITDA, while KXS raised FY2022 guidance. KXS continues to experience accelerating demand in its business (as evidenced by 28 per cent year-over-year c/c organic ARR growth for the quarter), helped by the competitive strength of its solution and the topical nature of supply chain. Given its relative growth and macro resilience, we continue to see some room for multiple expansion,” said Mr. Moschopoulos.”

* RBC’s Irene Nattel raised her Loblaw Companies Ltd. (L-T) target to $160 from $154, exceeding the $131.20 average, with an “outperform” rating.

“Forecasting EPS $1.97 (up 24 per cent year-over-year), slightly above consensus $1.92 (range: $1.82-$2.01) when L reports Q3 on Nov 16. Results should once again underscore Loblaw’s favourable momentum and strong positioning against the backdrop of accelerating inflation. Target +$6 to $160 on roll forward of valuation basis; Multiples consistent with improving valuation drivers, notably return metrics, underpinned by the Company’s unique collection of inter-related assets. Reiterate L as a top pick in the sector,” said Ms. Nattel.

* Canaccord’s Tania Armstrong-Whitworth cut her Jamieson Wellness Inc. (JWEL-T) target to $45 from $46 with a “buy” rating, while CIBC’s John Zamparo lowered his target to $41 from $46 with an “outperformer” rating. The average is $44.53.

* RBC’s Joseph Spak reduced his Magna International Inc. (MGA-N, MG-T) target to US$65 from US$69 with an “outperform” rating, while CIBC’s Krista Friesen raised her target to US$65 from US$63 with an “outperformer” rating. The average is $72.06.

“MGA facing some new challenges that are impacting margins. MGA is a beneficiary from a cyclical recovery, but FX and some ‘stickier’ costs weigh on existing mid-term targets,” said Mr. Spak.

* RBC’s Joel Jackson cut his target for Nutrien Ltd. (NTR-N, NTR-T) to US$120 from US$135 with an “outperform” rating. The average is US$106.21.

* CIBC’s Cosmos Chiu reduced his Pan American Silver Corp. (PAAS-Q, PAAS-T) target to US$25 from US$31, remaining above the US$22.50 average, with an “outperformer” rating.

* National Bank’s Patrick Kenny raised his Pembina Pipeline Corp. (PPL-T) target by $1 to $46, below the $50.63 average, with a “sector perform” rating.

* CIBC’s Stephanie Price lowered her Q4 Inc. (QFOR-T) target to $4.50 from $5, keeping a “neutral” rating. Other changes include: Raymond James’ Stephen Boland to $6.50 from $7.50 with an “outperform” rating and Canaccord’s Doug Taylor to $3.25 from $4.50 with a “hold” recommendation. The average is $5.05.

“While we continue to like Q4′s competitive positioning as it modernizes the investor relations functions for capital markets participants, its growth profile continues to be challenged by a tough macroeconomic and market backdrop,” said Mr. Taylor. “The slower growth profile puts more focus on profitability metrics and Q4 still has a steep climb to achieve breakeven with balance sheet flexibility declining. As such, we continue to advise caution for investors and maintain a HOLD rating as we believe a depressed EV/sales multiple is likely to persist until visibility of both growth reacceleration and breakeven results improves.”

* BMO’s Jenny Ma cut her RioCan REIT (REI.UN-T) target to $22.75 from $24.75 with an “outperform” rating. The average is $24.

* ATB Capital Markets’ Chris Murray cut his SNC-Lavalin Group Inc. (SNC-T) target to $36 from $37 with an “outperform” rating. Others making changes include: Raymond James’ Frederic Bastien to $33 from $35 with an “outperform” rating, Desjardins Securities’ Benoit Poirier to $37 from $40 with a “buy” rating and National Bank’s Maxim Sytchev to $36 from $39 with an “outperform” rating. The average is $35.83.

“[Friday’s] 3Q22 print was further evidence that SNC-Lavalin’s services business remains on a steady upward trajectory,” said Mr. Bastien. “As encouraging as this may be, it is hard to look past the three light rail transit (LRT) jobs that have doubled as a boat anchor for such an extended period of time. We have been conditioned to expect losses from LSTK Projects, but the segment is now in need of more cash to see these trains past the finish line. As a result, net debt-to-EBITDA now stands at 3.3 times, limiting capital deployment options for management in the short-term. We are still of the view SNC’s journey to simplify and de-risk the business will pay off for patient investors, but recognize there are many alternatives currently offering similar upside potential with a fraction of the risk.”

* JP Morgan’s John Royall raised his Suncor Energy Inc. (SU-T) target by $1 to $50 with a “neutral” rating. The average is $54.79.

* RBC’s Nelson Ng trimmed his TranAlta Renewables Inc. (RNW-T) target to $17 from $20 with a “sector perform” rating, while Raymond James’ David Quezada cut his target to $18 from $19 with a “market perform” rating. The average is $16.77.

“RNW posted weak Q3/22 results and guided toward the lower end of management’s 2022 financial guidance. While we believe that RNW shares are appropriate for income oriented investors, we look for more clarity on the company’s medium-term growth prospects before getting more positive on the shares. We have reduced our price target ... to reflect the higher interest rate environment,” said Mr. Ng.

* After “another big beat,” National Bank’s Jaeme Gloyn reaffirmed Trisura Group Ltd. (TSU-T) as his “top P&C pick,” raising his target to $68 from $65 with an “outperform” rating. The average is $57.29.

“From our perspective, TSU currently trades at a cheap 19 times consensus 2023 EPS. This represents a significant discount to U.S. specialty insurance peers trading at an average P/E of 28 times on 2023 EPS, and only a slight premium to DFY trading at 18 times on 2023 and IFC trading at 16 times on 2023, even though consensus forecasts TSU will deliver more rapid earnings growth and stronger profitability. Our target valuation premium reflects i) our view TSU will execute on our robust revenue/earnings growth forecasts, ii) premium valuations in the insurance peer group, and iii) premium valuations ascribed to specialty lines-focused companies delivering consistent double-digit ROE/EPS growth,” said Mr. Gloyn.

* National Bank’s Zachary Evershed bumped his Uni-Select Inc. (UNS-T) target to $50.50 from $49 with an “outperform” rating, while Desjardins Securities’ Benoit Poirier moved his target to $50 from $47 with a “buy” rating. The average is $46.25.

“We were impressed once again with UNS’s results, which confirmed the potential for value creation under the new management team. We are encouraged by management’s operational excellence and the company’s improved leverage ratio, which opens the door for strategic acquisitions. We believe the best is yet to come as we see many opportunities to grow revenue and improve margins,” said Mr. Poirier.

* RBC’s Walter Spracklin lowered his Westshore Terminals Investment Corp. (WTE-T) target to $33 from $35 with an “outperform” rating. The average is $28.60.

“WTE’s Q3 results were in line and 2022 guidance was reiterated. We took lower however our 2023 throughput estimate to reflect rail service issues at BNSF that we expect to negatively affect volumes early next year; offset by strong pricing expected to drive solid rate increases long-term. Overall, our positive long-term view is intact ahead of WTE’s transition to potash; and with the stock down 37 per cent off May highs we are increasingly positive on the shares at today’s levels,” said Mr. Spracklin.

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