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

Analysts at RBC Dominion Securities reduced their commodity price projections on Monday to reflect the outlook stemming from the fallout from the OPEC+ dispute and the spread of COVID-19.

The firm dropped its 2020 and 2021 estimates for Brent by 34 per cent and 28 per cent, respectively, to US$42 and US$46 per barrel (from US$64 per year). Its WTI estimates fell 37 per cent and 29 per cent, respectively, to US$37.61 and US$42 (from US$59.32 and US$59.32).

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“Just when you thought it couldn’t get any worse, the perfect storm for energy companies has arrived. Weaker economic activity and oil demand due to the coronavirus, alongside political warfare between OPEC & Russia leave public companies facing a scenario that combines ’08-09 and ’14-16,” said analysts Biraj Borkhataria, Erwan Kerouredan and Al Stanton. “This comes on top of a synchronized downturn across other divisions, including stubbornly oversupplied gas and chemicals markets. That said, there are some aspects which are different today, including more limited access to capital for U.S. E&Ps, which has already led a number of companies to cut activity in 2020. For the majors, the prospect of $30/bbl oil or below for a period of time is an extreme challenge. We think a six-month downturn could be managed, while a prolonged one would likely lead to dividend cuts across the board –which are already partly reflected in current pricing.”

With those changes, analysts at the firm made several rating changes to North American large-cap energy stocks.

Believing it provides “more resiliency to sustained weaker oil price,” Scott Hanold raised ConocoPhillips (COP-N) to “outperform” from “sector perform.”

“ConocoPhillips (COP) is more advantageously positioned to weather the current commodity price environment with a large cash position, low leverage, and a low production decline rate,” he said. “We think lower oil price environment will persist well into 2021 and COP attributes provide a more sustainable model.”

"Based on our conversations, COP is evaluating reduced activity given prevailing commodity prices but plans to proceed in a measured approach. At its 2019 investor day, COP provided a stress test of its 10- year outlook using price decks at $40/bbl-WTI. We think COP proceeds toward a maintenance production plan during 2020/2021 with quicker North America onshore reduction, which tends to be shorter cycle."

Based on the firm's lower commodity price and production outlooks, Mr. Hanold reduced his target for ConocoPhillips shares to US$50 from $73. The average is US$67.40.

His colleague Biraj Borkhataria lowered Exxon Mobil Corp. (XOM-N) to “underperform” from “sector perform,” expecting “all levers of the business to be challenged in 2020” and seeing it possess the highest dividend breakeven across his coverage universe.

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"ExxonMobil has historically been one of the most successful super-majors at investing through the business cycle and taking advantage of downturns by lowering its cost structure and high-grading its asset base. Unfortunately, its current efforts have been overrun by weaker macro, leaving it in a challenging position," said Mr. Borkhataria.

His target slid to US$40 from US$55. The average is US$57.10.

Other changes included:

* Ovinitiv Inc. (OVV-N, OVV-T), formerly Encana Inc., to “sector perform” from “outperform” with a US$5.50 target, dropping from US$32 and well below the US$24.15.

Analyst Greg Pardy said: “Our 2020-21 CFPS estimates fall 35 per cent and 53 per cent, respectively, for the company. Notably, included within our 2020 estimates for Ovintiv are substantial hedging gains of $1.0 billion ($3.96 per share). We peg the company’s average net debt to trailing cash flow ratio at 3.5x in 2020 ($38 WTI), and 5.2x in 2021 ($42 WTI).”

* BP PLC (BP-N) to “underperform” from “outperform.”

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Mr. Borkhataria said: "Following a material change in our oil price deck and material earnings downgrades, we double downgrade to Underperform. BP's dividend breakeven is higher than peers, while we think the balance sheet also looks stretched, putting the dividend at risk."

* Marathon Oil Corp. (MRO-N) to “sector perform” from “outperform” with a US$9 target, down from $12. Average: US$13.86.

Mr. Hanold said: “MRO’s strategy to not outspend cash flow likely remains its plan. However, due to the unforeseen drop in oil prices, in order to manage leverage ratios and spend within cash flow, oil production likely declines into mid-2021. Balance sheet leverage increases to 2.5 times, above the peer group, as hedges protection stops at $48/bbl.”

* Royal Dutch Shell PLC (RDS.B-N) to “outperform” from “sector perform.”

Mr. Borkhataria said: “We think Shell has the ability to cut spending in 2020, and we see the financial framework, while still challenged, slightly better than most peers.”

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Equity analysts at RBC Dominion Securities also lowered their ratings for a series of TSX-listed energy companies on Monday in response to the firm’s commodity deck changes.

Their changes included:

  • Calfrac Well Services Ltd. (CFW-T) to “underperform” from “sector perform” with a 40-cent target, down from $1. The average is $1.04.
  • Birchliff Energy Ltd. (BIR-T) to “sector perform” from “outperform” with a target of $1.50, down from $4. The average is $3.40.
  • Baytex Energy Corp. (BTE-T) to “sector perform” from “outperform” with an 80-cent target, sliding from $2.50. The average is $2.47.
  • Pipestone Energy Corp. (PIPE-X) to “sector perform” from “outperform” with a target price of 80 cents, down from $2.25. The average is $2.04.
  • Delphi Energy Corp. (DEE-T) to “underperform” from “sector perform” with a 25-cent target, down from 90 cents. The average is 87 cents.
  • NuVista Energy Ltd. (NVA-T) to “sector perform” from “outperform” with a target of $1 from $4 previously. The average is $3.82.

Conversely, the firm upgraded Parex Resources Inc. (PXT-T) to “top pick” from “outperform” with a $21 target, down from $25. The average is $28.42.

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BMO Nesbitt Burns analyst mades a series of ratings changes for TSX-listed energy stocks.

The firm raised:

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  • CES Energy Solutions Corp. (CEU-T) to “outperform” from “market perform” with a $1.75 target, down from $2. The average target is $2.95. Analyst John Gibson said: "With roughly half of its revenue tied to production-oriented businesses, CES should be able to weather the upcoming decline in activity levels better than most, although we do expect to see pressure, particularly in its drilling fluids businesses.

It cut:

  • Seven Generations Energy Ltd. (VII-T) to “market perform” from “outperform” with a $3 target, down from $11. The average is $10.72. Ray Kwan said: “Although the company remains well hedged for 2020 (50 per cent of liquids production), we believe the company’s high decline production, combined with its continued transportation/processing commitments, will leave little free cash flow until the outer years, whenever a recovery appears. ... At this juncture, we think the opportunities are more abundant in the larger, better-capitalized producers.”
  • Crescent Point Energy Corp. (CPG-T) to “market perform” from “outperform” with a target of $2.50, sliding from $8. Average: $7.34. Mr. Kwan said: “Crescent Point has done an admirable job of reducing leverage over the past year, largely through selective asset sales and free cash flow generation. ... However, with limited hedges in 2021 and likely declining production in 2020, we think the opportunities are more abundant in the larger, better-capitalized producers.”
  • Crew Energy Inc. (CR-T) to) to “market perform” from “outperform” with a $1.25 target, down from $4.25. Average: $3.82. nts. Mike Murphy said: “We continue to view the company as holding a high quality undeveloped Montney asset base, but believe it will be challenging to transact in the near term given the current state of the market ... Leverage remains elevated; however, the company has time to wait out a recovery, with its covenant-free term debt not maturing until 2024.”
  • NuVista Energy Ltd. (NVA-T) to “market perform” from “outperform” with a $1.25 target, down from $4.25. Average: $3.82. Mr. Kwan said: “We believe Nuvista is better positioned this year relative to its peers due to its advantageous oil hedges. However, beyond 2020, the outlook remains murky and will likely require NuVista to outspend cash flow to reach its previous production targets, barring a significant boost in commodity prices, in our view.”
  • Shawcor Ltd. (SCL-T) to “market perform” from “outperform” with a $3 target, falling from $12. Average: $12.91. Mr. Gibson said: “SCL still holds plenty of torque to a pipe coating recovery; however, the recent drop in oil prices has created a lot of uncertainty around timing ... Further, we expect the company’s composites business, which is driven in part by completions-related activity in North America, will be affected as activity levels fall.”
  • Surge Energy Inc. (SGY-T) to “market perform” from “outperform” with a 50-cent target, down from $1.50. Average: $1.20. Mr. Kwan said: “While the company remains partially hedged for 2020, we estimate Surge’s D/CF [debt-to-cash flow] at 3.8 times under our new price deck, compared to 2.1 times previously.”
  • Pipestone Energy Corp. (PIPE-X) to “market perform” from “outperform” with a $1 target, down from $2.50. Average: $2.04. Mr. Murphy said: “Pipestone has done an admirable job of improving capital efficiencies over the past year, and we view the company as well positioned to resume its growth trajectory once commodity prices recover. ... However, given the current market, we think opportunities are more abundant among the larger, better-capitalized producers.”
  • Tamarack Valley Energy Ltd. (TVE-T) to “market perform” from “outperform” with a $1.50 target, down from $3. Average: $3. Mr. Kwan said: “On our estimates, Tamarack continues to have a strong balance sheet, with leverage still below 2 times D/CF for 2020 ... However, with declines in the mid-30% range, we believe production will fall by 6 per cent year-over-year for both 2020 and 2021, assuming a cash flow budget over the next two years.”

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Pointing to escalating uncertainty for Canadian railroad companies, Raymond James analyst Steve Hansen lowered both Canadian Pacific Railway Ltd. (CP-T) and Canadian National Railway Co. (CNR-T) to “market perform” from “outperform” ratings.

“After a solid recovery in Canadian rail traffic through 1Q20, the macro outlook has abruptly shifted, in our view, jolted by the combined impact of crude oil’s recent plunge (i.e. OPEC-led price war) and the broader (still evolving) COVID-19 pandemic," he said. "While we have admittedly seen little-to-no impact in the traffic data thus far, and we struggle to narrowly define what these impacts might be (COVID in particular), we do believe there are negative headwinds forthcoming.”

“Canadian rail traffic has proven pleasantly healthy through the first 10 weeks of 1Q20. While admittedly blurred by the rail blockades that crippled CN’s network through February, we highlight CP’s broadbased traffic gains and 9.9-per-cent increase in quarter-to-date revenue ton miles (RTMs). While CN’s RTMs remain comparatively lackluster (down 1.7 per cent QTD), we attribute the bulk of this weight to the aforementioned blockades, with traffic leading into the disruptions (and more recently) showing solid strength. Unfortunately, much of this strength is rear-view looking.”

Mr. Hansen expects the recent drop in oil prices to "meaningfully dent" crude-by-rail volumes in the second half of 2020, projecting a drop of 40-50 per cent from recent levels before a "modest" 2020 recovery. He also anticipated consumer-sensitive categories to take a hit from the fallout from COVID-19.

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“To be clear, we regard both CN and CP as well-equipped to manage any short-term drawdown in traffic, a point underscored by their adept management teams, nimble op. models and solid balance sheets,” the analyst said. “That said, with Street estimates likely to migrate lower in the coming weeks/months, and both stocks faring relatively well despite this new bout of unprecedented uncertainty (CN: down 10.3 per cent year-to-date, CP: down 9.8 per cent YTD), we feel it prudent to take pause until greater visibility emerges.”

His target for CP shares fell to $340 from $375. The average is currently $361.94.

Mr. Hansen’s CN target dropped to $118 from $138, versus the $125.65 average.

Elsewhere, Scotiabank Capital analyst Konark Gupta raised both CN and CP to “sector outperform” from “sector perform” ratings. His target for CP fell to $322 from $345, while his CN target slid to $110 from $126.

“We are making significant initial cuts to our estimates for CNR and CP to reflect the potential impact of COVID-19 and oil price weakness on the global economy and ultimately on the railroad industry,” said Mr. Gupta. “Although our revised estimates are materially below current consensus and the stocks could be facing more downside risk in the short term on an absolute basis, we are upgrading CNR and CP to SO from SP taking a relative view. We see Canadian rails as top-quality industrials in Canada with highly defensive attributes, including well-diversified end-market exposures, significant margins, strong balance sheets, solid track records, high FCF conversions, and consistent shareholder returns. In addition, Canadian rails have proven to be nimble in right-sizing operations during the prior downturns. We believe these characteristics have led CNR and CP to relatively outperform the market and their U.S. peers YTD. While we have a positive long-term outlook for both rails, we think CP’s outsized Q1/20 EPS growth on easier cost comps and solid traffic trends YTD provides a nice offset to potential downturn this year.”

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With “macro uncertainty growing,” Raymond James analyst Steve Hansen lowered his rating for Bombardier Inc. (BBD.B-T) to “market perform” from “outperform” on Monday.

“Much has changed over the past 3 weeks with respect to global macro outlook,” he said. “While the full impact of these events (i.e. OPEC-led price war, covid-19 virus pandemic, equity market plunge) still remains unknown, we see the collective impact weighing on the near-to-medium term business jet outlook."

He lowered his target for Bombardier shares to $1.50 from $2.75. The average on the Street is currently $1.99.

“While we continue to admire the transformative BT sales transaction announced last month, the rapid (unprecedented) deterioration in the global macro outlook over the past month gives us material pause over the prospects for a pure-play business jet company,” he said.

“We will continue to monitor accordingly.”

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Industrial Alliance Securities analyst Elias Foscolos said he remains concerned about the impact of pricing concessions on STEP Energy Services Ltd. (STEP-T) stemming from attempts to secure work programs.

In the wake of the release of fourth-quarter financial results last week, which feature in-line EBITDA but weaker-than-anticipated revenue, Mr. Foscolos lowered his financial projections for the Calgary-based oilfield service company on Monday.

"Moving forward, we will be maintaining focus on the company’s compliance with its rolling covenant funded debt/EBITDA ratio, and we remain very cautious," he said. "Unless there is a quick turnaround, it is clear to us that an equity cure will be required. An equity cure introduces another level of uncertainty including the timing, pricing, and likelihood of enactment."

“Currently, we calculate STEP’s funded debt including lease liabilities and net of cash & equivalents at $249-million. Under the Company’s revised covenants as of January 2020, STEP is required to maintain a funded debt/EBITDA ratio below a rolling ratio based on the previous four fiscal quarters. Based on current funded debt, which we forecast will remain at roughly the same level throughout the year, and our projected EBITDA estimates, we anticipate a breach of covenants commencing in H2/20. However, an ‘equity cure,’ which would inject $25-million of equity into the Company, will keep it from breaching its covenants given our bearish projections.”

However, despite those worries, Mr. Foscolos raised his rating for STEP on Monday to "hold" from "sell" based on its "weak" share price, maintaining a 50-cent target price. The average on the Street is $1.53.

Meanwhile, RBC Dominion Securities lowered its rating to “underperform” from “sector perform” with a 60-cent target, down from $1.75.

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In a separate note, Mr. Foscolos said High Arctic Energy Services Inc. (HWO-T) has the balance sheet “to survive,” despite uncertainty surrounding drilling activity in Papua New Guinea and a drop in Western Canadian activity.

“HWO’s Q4/19 results were below our expectations mostly on margin,” the analyst said. “The work program on the one remaining drilling location in PNG is set to expire after Q2/20, with limited visibility for renewal as activity in the region continues to be suppressed amidst geopolitical issues. Recent macro developments in oil & gas markets are most likely to weigh on the Company’s North American operations. HWO will be maintaining a laser focus on expenses and cash flow in order to stay cash flow neutral, but in our view, the current dividend appears aggressive.”

Maintaining a “hold” rating for its stock, he lowered his target to $1 from $1.50 alongside a drop in his financial projections for both 2020 and 2021. The average on the Street is $2.22.

Mr. Foscolos maintained a “speculative buy” rating and $1.75 target for CES Energy Solutions Corp. (CEU-T). The average is $3.04.

“CEU’s Q4/19 results beat estimates, which we primarily attribute to relative strength in its U.S. businesses,” he said. “Based on the financial results and conference call we have made minor adjustments to our previous model leaving EBITDA for 2020 essentially unchanged. We believe the dividend reduction, projected working capital unwind, and extended debt maturity add further layers of cushion for investors. Finally, based on Friday’s closing price CEU is trading below tangible book value. Despite all the macro uncertainty and Friday’s negative market reaction we conclude that CEU will survive this downturn.”

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Seeing it making “prudent” decisions to protect its balance sheet, Raymond James analyst Jeremy McCrea raised his rating for Arc Resources Ltd. (ARX-T) to “outperform” from “market perform” in response to a 60-per-cent cut to its monthly dividend and 45-per-cent drop in its capital expenditure budget.

"Although amusement parks around the world are closing, investors can still experience the rollercoaster rides in Canadian Energy," he said. "With one of the most volatile weeks we've ever seen, high quality names have been sold off with ARX being no exception. As we've mentioned in our latest commodity update, the concerns investors have today is staying power and balance sheet safety and what management teams will act prudently and quickly. With ARX cutting its dividend by 60 per cent and capex by 45 per cent, we believe these were the prudent moves investors were likely waiting to see.

"More importantly, one of the reasons we've liked ARX in the past was its 'optionality' on gas. Well, this week, this option is in the money and after adjusting our commodity assumptions to strip, ARX's funds flow doesn't fall nearly as much as other operators (even excluding its hedging gains). With the company 76 per cent weighted to gas, 1.6 times D/EBITDA [debt to earnings before interest, taxes, depreciation and amortization] balance sheet for 2021, total payout at 76 per cent, ARX is quickly showing relative strength. Lastly, we'll remind investors of ARX's 'get out of jail free card' and its Attachie block. With 300 net sections, in what appears could be some of the strongest Montney geology in the basin (next to TOU's Gundy and ConocoPhilips' Blueberry asset), it's an undrilled asset that we think could still likely fetch a competitive bid to eliminate much of ARX's debt if commodity prices were to collapse further.

Mr. McCrea increased his target for ARC shares to $7 from $6.50. The average on the Street is $8.54.

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In a research report released Monday assessing the impact of the coronavirus-related slowdown on the Industrial Products sector, National Bank Financial analyst Maxim Sytchev raised his rating for Ritchie Bros Auctioneers Inc. (RBA-N, RBA-T), seeing its downside “largely realized” after a share price drop of almost 20 per cent since November 2019 and pointing out 80 per cent of its sales take place online.

Moving its stock to “sector perform” from “underperform,” he lowered his target to US$35 from US$37. The average is US$40.21.

On the sector as a whole, Mr. Sytchev said: “Recent volatility is opening up some opportunities when one could be buying a good business at a good price. The big question also pertains to what could be a catalyst to finding a floor; monetary intervention, drop in registered virus cases, incremental fiscal spending announcements? We also do not think that this is a 2008 situation where hell freezes over (one can, of course, disagree with that assessment). Why? China’s industrial activity levels are already back to 90 per cent-plus run rate (supported by multiple announcements and conversations with management teams that have Chinese suppliers), providing a blueprint on how the crisis might be unfolding in other parts of the world. There is also another big difference vs. 2008; back then we had lots of long-term uncertainty (hence significant multiple contraction made sense); now, there is a lot of short-term uncertainty, but assuming governments behave like adults (similar to what we have seen in China), we should be over the demand hump in three to five months.”

However, Mr. Sytchev did lower his financial expectations for companies in his coverage universe, leading to several target price changes. They were:

  • North American Construction Group Ltd. (NOA-T, “outperform”) to $20.50 from $24.50. Average:$23.58.
  • Stuart Olson Inc. (SOX-T, “underperform”) to 60 cents from $1.20. Average: $1.78.
  • Finning International Inc. (FTT-T, “outperform”) to $24 from $28. Average: $24.50.
  • Stelco Inc. (STLC-T, “sector perform”) to $8 from $10. Average: $11.45.

He maintained an “outperform” rating and $46 target (versus $46.80 consensus) for Stantec Inc. (STN-T) and an “outperform” rating and $22.50 target (versus $24.25) for ATS Automation Tooling Systems Inc. (ATA-T).

“Investors are still paying up for quality such as WSP / STN as both companies are still 36 per cent and 30 per cent above the recession NAVs (SNC/IBG, on the other hand, impute a recession scenario),” he said. “Toromont (another Tier 1 asset) also still sports a 29 per cent premium vs. an outright slowdown (caveat being strong FCF pickup during a downturn). RBA is almost on the cusp of a hypothetical recession scenario while FTT is already below a worst-case outcome (unless Chilean unrests explode again). ARE /BDT/NOA are already discounting a recession. ATA is 23 per cent above, which makes sense given the company’s Healthcare skew (55 per cent of topline). SJ is viewed defensively (hence why the premium still sustains). SOX/STLC /ACQ are likely to succumb to additional pressure in case of a material macro slowdown.”

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With its e-commerce growth remaining “strong” and expecting a “material” increase in air cargo demand once the Chinese market stabilizes, AltaCorp Capital Chris Murray raised his rating for Cargojet Inc. (CJT-T) on Monday, seeing its recent share price decline as an “opportune” point to acquire a “quality” growth at a reasonable price (GARP) name.

"With shares of Cargojet coming under pressure alongside broader market selloffs, we are revaluating on stance based on current fundamentals and with a return to target widening to 26.4 per cent, we are moving to an Outperform rating," the analyst said. "We had downgraded shares post Q4/19 earnings as we felt valuations were stretched at our $120.00 price target implying limited returns. However, we believe the recent sell-off does not reflect underlying fundamentals including the Company’s unique positioning in the Canadian market and its ties to several e-commerce linked customers. While there remains significant uncertainty and volatility, we believe this also creates an opportunity to acquire shares of a high-quality Company at a discount to recent trading multiples."

In justifying his move, Mr. Murray pointed to a series of recent studies that suggested " increases in e-commerce activity are likely as consumers look to alternate channels as work from home and social distancing measures have been put in place with the experience potentially altering buyer behaviour longer-term driving further adoption."

He added: "As we noted with our Q4/19 report, the Company purchased an additional 767-300 from Air Canada at what it believes to be an attractive price, which management initially expected to use for parts but ultimately decided to convert to a spare freighter aircraft that the Company can use for additional charter opportunities and the expansion of new routes given that all of its current aircraft are being deployed. Management had indicated it expects a material increase in demand once the Chinese market normalizes."

Moving the Mississauga-based company to “outperform” from “sector perform,” Mr. Murray maintained a $120 target, which falls 50 cents below the current consensus.

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Seeing increased stability setting up a “promising” 2020, Canaccord Genuity analyst Luke Hannan raised Auto Canada Inc. (ACQ-T) to “buy” from “hold.”

"We are encouraged by AutoCanada’s commitment to the Go Forward Plan, which involves investing resources into the higher-margin, more resilient areas of the business relative to the Canadian new car market," he said. "Furthermore, the company has generated significant cash flow and sold unproductive real estate over the course of 2019, reducing net leverage from 6.0 times TTM [trailing 12-month] EBITDA as of Q4/18 to 2.6 times at the end of Q4/19, reinforcing our view that the company will become the leading consolidator of the Canadian market in 2020."

Mr. Hannan maintained a $12 target. The average is $13.30.

“We believe current levels represent an attractive longterm entry point following the market-wide sell-off over the past week, with the stock trading at 5.5 times NTM [next 12-month] EPS, below peers at 6.0 times and well below its historical average of 10.5 times.”

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Though he sees a seasonally soft first-quarter on the horizon, Echelon Wealth Partners analyst Doug Loe raised Medical Facilities Corp. (DR-T) to “buy” from “hold” following a “strong” fourth-quarter that stabilized its new dividend policy.

"We were quite pleased with revenue/EBITDA performance in a quarter for which we conventionally have high expectations anyway, based on procedure volumes and case mix/payer mix that invariably is favorable in the period," he said. "And though we are mindful that once FQ4 concludes, Medical Facilities is proceeding into a FH1 financial period tends to be soft for all the reasons (except in the other direction) that FQ4 is strong, we believe that core operations are well-positioned to fund current dividend policy, now with quarterly distributable cash required to exceed payout of 7 cents per share and not 28 cents per share as before."

His target for Medical Facilities shares slid by a loonie to $4.50. The average is now $4.94.

"We are mindful that pending FQ120 financial data is likely to be soft and that could impede DR share price momentum until we advance into FH220, but we still believe that our revised price target, by corresponding to a 67.9-per-cent one-year return on share price appreciation alone, and a 6.2-per-cent yield driven separately by our expectations that pay-out ratio should on a T12M basis be sustainably low, at or below 34 per cent in most periods," said Mr. Loe.

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In other analyst actions:

* Canaccord Genuity analyst Kevin MacKenzie upgraded Pretium Resources Inc. (PVG-T) to “speculative buy” from “hold” with an $11 target, falling from $12.50. The current average on the Street is $10.80.

“While the 2020 updated reserves [for its Brucejack deposit] introduced another level of complexity into what we already view to be a black box, we feel that the conservatism gained by the applied adjustments should provide a much stronger basis from which to advance the project,” he said. “That said, we look to the results of subsequent quarters to build initial confidence in the 2020 updated LOM [life-of-mine] plan, and as such, we rate Pretium a SPECULATIVE BUY.”

* Echelon Wealth Partners analyst Frederic Blondeau upgraded BTB Real Estate Investment Trust (BTB.UN-T) to “buy” from “hold” after stronger-than-anticipated fourth-quarter results. Mr. Blondeau maintained a $4.50 target, which falls below the $4.83 consensus.

* “Waiting for growth,” CIBC World Markets analyst Chris Couprie lowered Invesque Inc. (IVQ-U-T) to “neutral” from “outperformer.”

“Invesque’s model has transitioned from primarily being focused on triple-net lease healthcare real estate, to one that incorporates a degree of operating exposure with the recent Commonwealth acquisition,” he said. "And while we are cognizant that the transition from Greenfield to Commonwealth accounted for 2 cents of the miss, operating results were short beyond that. Visibility is limited and while COVID-19 has not yet had an impact on any of IVQ’s operators (or Commonwealth), the lack of a reimbursement mechanism for properties which experience vacancy (e.g. from an outbreak or reduced demand) could pressure margins for operators where coverage ratios are tight, and could delay the anticipated occupancy recovery at the Commonwealth platform. The payout ratio was high in 2019, coming in at over 120 per cent of IVQ’s reported AFFO and on our current forecasts, the payout looks to remain elevated, which leads to sustainability questions.

Mr. Couprie lowered his target to $5.50 from $7.50. The average is currently $6.85.

“We acknowledge that the stock is cheap, that an oversold bounce is possible, and strategic initiatives could unlock value. In the context of other seniors housing names which are now similarly cheap, as of March 15, we find on a risk-adjusted basis a move to a Neutral rating is warranted," he said.

* Morgan Stanley cut Canadian Natural Resources Ltd. (CNQ-T) to “equal-weight” from “overweight” with a $24 target, down from $52. The average on the Street is $43.30.

* Morgan Stanley raised TC Energy Corp. (TRP-T) to “equal-weight” from “underweight” but cut its target to $55 from $63. The average is $74.15.

* The firm also upgraded Imperial Oil Ltd. (IMO-T) to “overweight” from “equal-weight” with a $24 target, dropping from $52. The average is $33.05.

* National Bank Financial analyst Michael Parkin raised Kirkland Lake Gold Ltd. (KL-T) to “outperform” from “sector perform” with a target of $54, rising from $53 but below the $58.50 average.

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