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

RBC Dominion Securities analyst Drew McReynolds continues to see “few places to hide” for Canadian media stocks heading into earnings season, expecting most of the sector to “remain under pressure pending greater macro visibility.”

However, he does think current valuations and share price levels “represent attractive accumulation points should a prolonged hard landing scenario be avoided.”

“Year-to-date, three stocks in our media coverage are outperforming the 8-per-cent total return for the S&P/TSX Composite – Stingray (up 22 per cent), Thomson Reuters (up 15 per cent) and Cineplex (up 10 per cent),” the analyst said. “On a trailing twelve-month basis (TTM), Thomson Reuters is the only company in our media coverage with a positive total return (up 24 per cent) with all other companies in our coverage underperforming the negative 3-per-cent total return for the S&P/TSX Composite. We attribute the widespread pullback mainly to the emergence of an advertising recession in Canada beginning in H2/22 driven by supply chain disruption and inflation, lingering recession concerns and the impact of higher interest rates on valuations. The stocks in our media coverage most negatively impacted in this environment are media technology stocks VerticalScope (down 76 per cent on a TTM basis) and Enthusiast Gaming (down 75 per cent) on the back of meaningful exposure to digital advertising and e-commerce.”

With RBC’s economics team forecasting a mild recession through the middle of the 2023, Mr. McReynolds thinks the market’s risk-off sentiment and declining global liquidity has “taken its toll, particularly on the small cap names within our media coverage with cyclical exposure and/or low trading liquidity.”

“Until greater visibility emerges as to whether a soft or hard landing scenario unfolds in 2023, we expect the group to remain under pressure,” he said.

Looking for “signs of a trough” in management commentary, he added: “Through Q4/22, the companies in our media coverage confirmed that the Canadian advertising market had entered a recession driven mainly by the impacts of supply chain disruption and inflation with Q4/22 results for most companies in our coverage showing notable sequential deterioration in year-over-year revenue growth. Most companies in our coverage through March and April were cautiously optimistic that Q1/23 could prove to be the trough for advertising spend this cycle with ad bookings stabilizing, if not firming up, heading into Q2/23. While the extent of the ongoing economic slowdown will ultimately determine whether Q1/23 proves to be the trough or whether that cautious optimism is premature, updated management commentary on how advertising in Q2/23 is pacing will be the primary focus this quarter.”

Given his view that there are “few places to hide in an economic slowdown or outright recession” given cyclical revenue exposure, Mr. McReynolds thinks Thomson Reuters Corp. (TRI-N, TRI-T) is the “notable exception,” touting “a set-up that justifies paying up.”

“At a FTM [forward 12-month] EV/EBITDA multiple of 21.8 times versus a recent historical range of 14-23, we acknowledge the stock is far from cheap with little room for error given rising growth expectations against the backdrop of a slowing economic environment.” he said. “Despite the higher degree of valuation risk, we are maintaining our Outperform ranking on the stock reflecting what we believe continues to be a very attractive fundamental set-up, including: (i) the potential for another uptick in organic revenue growth for the Big 3 segments through 2025 given post-change program and post-COVID-19 structural tailwinds complemented by growthaccretive tuck-in M&A and non-core divestitures; (ii) the likelihood of continued (albeit more modest) margin expansion with operating leverage absorbing incremental reinvestments; (iii) what we believe is a highly attractive and balanced capital return program comprising 8- 12-per-cent annual dividend growth, active share repurchases and potential periodic returns of capital; (iv) low-risk, low-double digit underlying annual NAV growth with both growth and defensive attributes that underpin the ability to deliver average annual total returns of 10- 15 per cent over the longer-term; and (v) the absence of any identifiable negative re-rating catalysts.”

With his “outperform” recommendations, he raised his target for Thomson Reuters shares to US$135 from US$125 due, in part, to higher organic revenue growth for its Big 3 segments. The average target on the Street is US$125.43, according to Refinitiv data.

Otherwise, Mr. McReynolds see “some interesting opportunities at current levels where we either expect earnings to prove more resilient versus what is currently being priced into the stock, or where we believe the stock has over-shot to the downside under most economic scenarios and therefore looks mispriced.”

He pointed to three stocks:

* Boat Rocker Media Inc. (BRMI-T) with a $5 target, down from $5.50, and an “outperform” recommendation. The average is $4.90.

Analyst: “Within our traditional media coverage (broadcasting, publishing, advertising, printing and content production), we believe the earnings of content production and distribution companies should prove the most resilient in an economic slowdown reflecting what continues to be a robust streaming-driven content cycle. Against this backdrop, we believe Boat Rocker shares at 3.8 times FTM EV/EBITDA are too cheap to ignore, particularly given: (i) independent content company peers that trade at an average of 9.5 times; (ii) what we believe now is run-rate adjusted EBITDA of $40-million (with positive FCF generation) underpinned by a strong premium TV pipeline, high-margin assets (Kids and Family, Representation) and net debt-free balance sheet; (iii) a diversified revenue mix by genre, channel and geography enabling the company to navigate a more volatile operating environment; and (iv) a strong management team that is commercially and FCF focused.”

* Cineplex Inc. (CGX-T) with a $12 target (unchanged) and “outperform” rating. The average is $12.08.

Analyst: “We believe earnings visibility for Cineplex is steadily improving following a 2-3 year period of major industry disruption. Specifically, we are encouraged by: (i) the prospect of a full year of normal operations in 2023; (ii) early indications that consumer demand and the effectiveness of an evolving theatrical release window remain largely intact relative to pre-COVID-19 trajectories; (iii) management’s expectation of returning to pre-COVID-19 consolidated EBITDA margin levels; and (iv) a balance sheet that should strengthen given adjusted EBITDA growth and outright debt repayment alongside the continued support of lenders. We believe the pullback provides a more attractive and timely entry point”

* Verticalscope Holdings Inc. (FORA-T) with a $15 target, falling from $17 and an “outperform” rating. The average is $12.07.

Analyst: “With almost 70 per cent of revenues driven by digital advertising and 30-per-cent e-commerce, VerticalScope earnings will not be immune to macro headwinds. While we see the potential for downward estimate revisions over the next 2-3 quarters as macro impacts become clearer, we continue to view current levels as largely “trough on trough” with the stock trading at an EV/EBITDA multiple of 4.2 times on FTM EBITDA of $29-million versus what we believe on a normalized basis (i.e., in the absence of cyclical headwinds) would be a 12.0-15.0 times multiple and FTM EBITDA of $40-$50-million. Although some patience is required pending improved macro visibility and investor sentiment, such a ‘trough on trough’ set-up has historically been an attractive accumulation opportunity for longer-term-oriented investors looking for high-quality names within the media sector.”


Touting “an improved risk and payoff bet (despite remaining uncertainties),” iA Capital Markets analyst Naji Baydoun upgraded Algonquin Power & Utilities Corp. (AQN-T, AQN-N) to “speculative buy” from “hold” previously.

He said the change came after an analysis of the potential value of company’s portfolio and assets amid media reports of increased activist shareholder interest, particularly Starboard Value LP, and following its decision to abandon its acquisition of Kentucky Power.

David Berman: Algonquin walks away from Kentucky Power deal. What’s next for the stock?

“Based on various valuation methodologies applied to AQN’s businesses, we note that the Company’s current portfolio holds potential value above where the stock is,” said Mr. Baydoun. “We peg the value of AQN’s Power portfolio at approximately $9-10/share (including the Atlantica Sustainable Infrastructure stake [AY-Q, Not Rated]) and its Utility platform at $18-20/share, plus a further $5/share from organic growth. When eliminating corporate costs and net debt ($19-20/share), the remaining $13-15/share points to 15-30-per-cent upside for shareholders compared to the current share price.

“We believe that the potential value of AQN’s portfolio could be unlocked in different ways. So far this year, the Company has taken steps in the right direction to refocus its priorities on organic growth and strengthening the balance sheet (see here). With the Kentucky acquisitions now behind it, we see several potential paths forward for the Company: (1) a low but sustainable organic growth-focused capex plan, more manageable return to shareholders, and executing on asset sales to reduce leverage (i.e., a slow turnaround); or (2) more aggressive asset monetizations to provide financial flexibility (e.g., accelerate deleveraging and/or finance growth); or (3) strategic entities get involved (activists/strategic investors) that could lead to additional strategic developments. Overall, we see a sharpened focus on stabilizing the portfolio, materially reducing leverage, and prioritizing organic growth as key near-term objectives. The potential involvement of a strategic investor could help unlock further shareholder value via improved execution and focus; although a capital injection (e.g., TA & BEP in 2019) would help reduce debt and/or fund growth, we believe that it could potentially be a net negative from a dilution standpoint (e.g., selling equity at depressed levels, or securing non-dilutive but high-cost hybrid capital – particularly as AQN has stated it does not need new equity financings through 2024) and governance perspective.”

He raised his target for Algonquin shares by $1 to $13. The average is currently $12.15.

“AQN offers investors a mix of growth and income with (1) a diversified business model (regulated utilities & non-regulated power), (2) healthy medium-term growth (5-8 per cent per year Adj. EPS and FCF/share growth potential), (3) an attractive dividend profile (5-per-cent yield, 80-90-per-cent long-term Adj. EPS payout target), and (4) upside from new growth initiatives (including M&A; excluded from estimates/valuation),” he said. ”With the Kentucky transaction out of the picture and the potential for additional strategic developments to emerge as new players get involved with the AQN story (activist shareholders or strategic investors), we have (1) updated our SOTP valuation on AQN and are increasing our price target ... We also see the potential for incremental strategic initiatives to unlock value at AQN; the remaining uncertainties related to its overall financial performance, portfolio leverage, and long-term earnings picture warrant a Speculative qualifier for now, in our view.”


National Bank Financial analyst Rupert Merer sees GFL Environmental Inc. (GFL-T, GFL-N) as a “recession-resistant business” with tailwinds from organic growth and debt repayment.

However, ahead of the release of its first-quarter earnings after the bell on Thursday, he thinks the Vaughan, Ont.-based company will likely be “catching a break” for the remainder of the fiscal year, seeing organic growth and deleveraging as the focus moving forward.

“GFL should take a more subdued approach in 2023, with $300-500-million earmarked for tuck-in acquisitions, compared to the $1.003-billion it closed in 2022,” said Mr. Merer. “GFL also intends to sell three non-core U.S. solid waste regions this year, which should raise $1.5-billion. This slowdown in acquisitions and $66-million and FCF expected in 2023 should help GFL reduce leverage which currently sits at 4.8 times net debt/adj. EBITDA (we forecast 4.4 times for fiscal 2023 without asset sales). For 2023, GFL’s guidance (excludes M&A contributions) points toward 12-13-per-cent growth in revenue, of which 6.4-7.3 per cent is organic, 0.5 per cent is from FX and 3.5-4 per cent is from net M&A rollover. This year, GFL plans to digest past acquisitions and focus on operational efficiencies.”

He adjusted his first-quarter forecast for the Vaughan, Ont.-based company based on the impact of a weaker U.S. dollar, given more than 50 per cent of its revenue comes south of the border, as well as rising interest rates and management comments on working capital and PP&E expectations.

His revenue projection rose 0.6 per cent to $1.675-billion, falling in line with the consensus expectation of $1.674-billion, based on a “slight” increase to his Environmental Services forecast after a “strong” fourth quarter. His adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) estimate dipped by 4 per cent to $407-million, matching the Street, due to changes his Corporate cost forecast.

“Typically, FCF can be lumpy through the year with changes in non-cash working capital,” he added. “With interest rates pressure this year and free cash flow headwinds, we are now looking for $661-million for the full year, down year-over-year from $691-million in 2022. For Q1E, we are now looking for free cash flow of $(81)-million, down from $43-million previously.”

“Lower diesel prices and high growth in the Canadian population (2.7 per cent in 2022) could be tailwinds.”

Mr. Merer expects GFL to provide an update on its renewable natural gas (RNG) projects with the earnings release, believing it could see initial production from the three sites that are currently in active development by the second half of the year.

“The sites are expected to generate $45-million of run-rate EBITDA and upside to estimates could come from 21 more projects that are in the planning stage,” he said.

Maintaining an “outperform” recommendation for GFL shares, Mr. Merer raised his target to $52 from $50 after increasing his target multiple with the view GFL should close the gap with peers as it realizes cash flow growth and deleverages.” The average target is currently $45.41.

“Our target is based on a DCF with a cost of equity of 7.25 per cent and on a 14.5 times EV/EBITDA multiple (was 14 times) on 2023 estimates, which still would represent a discount to peers,” he said. “With declining interest rate risk and the risk for a recession, we also lower our beta assumption to 0.85 (was 0.90). The Waste industry is recession resilient, and we would expect it to outperform the broad market in an economic downturn. With a lower beta, our cost of equity is now 7.25 per cent (was 7.50 per cent).”

Elsewhere, others making target changes include:

* ATB Capital Markets’ Chris Murray to $53 from $50 and also reaffirmed an “outperform” recommendation.

“We expect GFL to report strong Q1/23 results on April 27, with robust pricing conditions in solid waste expected to offset the impact of weak recycled commodity pricing,” said Mr. Murray. “We expect management to provide updates on price/volume trends heading into H2/23 and on the M&A environment, including the timing of planned divestitures disclosed with Q4/22 reporting, which has been an important driver of recent outperformance, in our view. We are updating our estimates, particularly for free cash flow, to better reflect the timing of capex and interest costs in 2023. While shares have outperformed recently, we remain constructive on GFL given its defensive FCF profile, with planned divestitures expected to accelerate deleveraging efforts.”

* BMO’s Devin Dodge to US$38 from US$35 with an “outperform” rating.


RBC Dominion Securities analyst Paul Quinn predicts the “weak earnings trend” for North American paper and forest products companies will likely continue in the near term

“We expect Q123 results to continue to the weak earnings trend established in Q422,” he said in a report released Monday. “Building material prices remain very low. Pulp prices have materially weakened over the last month, led by lower consumption in China and capacity adds. Paper prices appear to be holding, but operating rates are weak. Containerboard markets are sloppy with market-related downtime attempting to offset the new mill start-ups. Timber prices remain weak across North America due to weak lumber and other end use consumption. During the Q1 earnings season, we suspect investors will again focus on the macro, with the effects of a potential recession looming large across most commodities. While we wait for an inflection point in the economy, interest rates and overall confidence, we note that valuations remain near historic lows.”

In a research note released Monday, Mr. Quinn upgraded Clearwater Paper Corp. (CLW-N) to “outperform” from “sector perform,” expecting declining pulp prices will be “a tailwind” to its results and sentiment for its stock. His target for its shares rose to US$42, matching the average on the Street, from $38.

Given that view, he also increased his target for Kingsey Falls, Que.-based Cascades Inc. (CAS-T) by $1 to $13, above the $11.33 average, with an “outperform” rating.

Conversely, Mr. Quinn made a series of target reductions “primarily reflecting challenging wood products markets and falling pulp price.”

“Unfortunately, we haven’t experienced a material pick-up in commodity prices quarter-over-quarter, but we do expect cost reductions in logs, stumpage, pulp and energy, which could be a positive in the quarter,” he said. “For the balance of the year, we favour lumber, tissue and timber companies. On the lumber side, we continue to anticipate further capacity closures in BC as producers are experiencing negative margins at present. The reduced sawmill capacity, together with a pick-up in home building activity, is setting up for a much improved pricing environment in 2024. Lower pulp costs will benefit tissue producers in 2023.”

“Lower pulp and containerboard pricing is expected to weigh on companies leveraged to these commodities in Q1. Given the level of economic uncertainty, it isn’t clear when pulp and containerboard prices will reach their bottom at this point.”

They include:

  • Greenfirst Forest Products Inc. (GFP-T, “sector perform”) to $1.50 from $1.75. Average: $1.50.
  • Mercer Inrernational Inc. (MERC-Q, “sector perform”) to US$8 from US$12. Average: US$11.70.
  • Western Forest Products Inc. (WEF-T, “sector perform”) to $1.25 from $1.50. Average: $1.46.
  • West Fraser Timber Co. (WFG-N/WFG-T, “outperform”) to US$105 from US$110. Average: US$102.50.

Mr. Quinn added: “Favourite names: In Canada, we like IFP, CFP, CAS & DBM. In the US, we like LPX, CLW, SLVM, PCH & WY.”

Elsewhere, Raymond James’ Daryl Swetlishoff cut his targets for Acadian Timber Corp. (ADN-T, “outperform”) to $17 from $19, Canfor Pulp Products Inc. (CFX-T, “outperform”) to $3.75 from $4.75 and Mercer International Inc. (MERC-Q, “outperform”) to US$13.50 from US$18. The averages are $17, $4.50 and US$11.70, respectively.

“West Fraser kicks off what we expect to be a messy 1Q23 Trees Earnings Season [Tuesday] after market,” said Mr. Swetlishoff. “We expect inventory write-downs and difficult SPF lumber and pulp earnings to weigh on earnings with large misses a distinct possibility. In particular, with prices remaining (stubbornly) well below BC cash costs, assets in this region will be a boat anchor on overall results. However, we identify catalysts for improved wood products pricing, which when coupled with attractive current valuations, could provide for an interesting 2H23 setup. Lumber end use demand remains solid. Home building activity, especially for wood intensive single family continues to surprise to the upside and Repair & Reno markets uses are also showing y/y improvements. This has buoyed U.S. SYP lumber markets with price premiums over Canadian SPF lumber over double historic norms. However, an unwillingness for the supply chain to hold inventory, enabled with quick railcar shipments from Canada and a glut of European wood has weighed on SPF lumber pricing. We expect lumber supply to contract during 3Q23 as uneconomic Euro shipments abate and Canadian log inventories deplete leading to tighter wood product markets. With wood products stocks trading well below tangible book value we see an interesting set up developing and advocate investors add to positions on potential earnings weakness. While all stocks in our universe would benefit from higher commodity pricing we highlight Strong Buy rated Interfor has recently been added to our Analyst Current Favorites List. While undeniably relatively cheap, forecast earnings misses and deteriorating pulp markets have prompted us to reduce our targets for Canfor Pulp and Mercer by 20-25 per cent.”


Calling it “a dark horse stock checking all the right boxes,” Canaccord Genuity analyst Aravinda Galappatthige initiated coverage of Telus International Inc. (TIXT-N, TIXT-T) with a “buy” recommendation on Monday, seeing it “well positioned within growth sectors.”

“TELUS International (TI) is a digital IT service provider with deep expertise in customer experience (CX) and an extensive roster of blue chip clientele,” he said. “Much of TI’s CX work involves the digital transformation of enterprise customer care operations including the introduction of self-serve functionalities, agent assist bots, streamlined resources for agents, etc. TI’s recent acquisitions have substantially expanded its capabilities into high-growth areas like AI (data annotation), content moderation, digital product development, and consulting. Thus, TI now boasts end-to-end digital capabilities, notably expanding its TAM [total addressable market] and longer-term growth potential, in our view.”

“In addition to a sizable TAM of approximately $750-billion, we believe TI’s longer-term prospects are supported by many of its product categories residing in high-growth subsectors, be it digital transformation (26.7-per-cent CAGR [compound annual growth rate] 2023-2030, Grand View Research), data annotation for AI (26.6-per-cent CAGR 2022-2030, Grand View Research), content moderation 12.6-per-cent CAGR (2022-2026, Research and Markets), and digital customer experience management (15.4-per-cent CAGR 2023-2030, Grand View Research). In addition, we see TI’s profile and reputation with enterprise customers developing quickly. In fact, approximately 90 per cent of growth is now sources from existing customers.”

Mr. Galappatthige called Vancouver-based Telus International, which made its market debut following an initial public offering in February of 2021, a “rare amalgam of high growth, FCF yield, and margins.”

“We believe TI’s investment thesis stands out as a rare combination of attractive FCF-led valuations and high top-line organic growth,” he said. “Even against the presently challenged backdrop, organic growth xpectations are in the double digits, alongside a high single-digit FCF yield. Moreover, TI’s margins are at the upper end of its comp group, reflecting solid execution and management, in our view.”

“TI’s 2023 guidance stands out to us as notably robust given the macro conditions and, in our view, asserts its placement at the higher-growth end of the broader IT services comp group. Our forecasts of 20.6-per-cent revenue growth and 17-per-cent EBITDA growth in 2023 translate to 10.1-per-cent and 8.5-per-cent organic growth for revenue and EBITDA, respectively. Management has indicated its expectation of mid- to high-teens organic growth beyond F2023. While we have somewhat more conservative estimates for F2024 recognizing the possibility of an economic slowdown spilling over into 2024, we consider the 15-18-per-cent range fully achievable in normalized conditions.”

The analyst set a target of US$28.50 per share, exceeding the current average on the Street of US$27.17.

“Against the current backdrop, sustainability of earnings expectations is potentially more important than even valuation multiples,” said Mr. Galappatthige. “We believe TI’s more resilient positioning going into a potential economic slowdown, and evidently more robust estimate revision trends, sets it apart from many of its comps.”


National Bank Financial analyst Matt Kornack sees H&R Real Estate Investment Trust’s (HR.UN-T) $277-million sale of its only office property in Ottawa is “a positive in light of market concerns over office real estate generally but also given the progress it represents in moving towards the REIT’s strategic goal of owning a portfolio of primarily residential and industrial properties.”

Mr. Kornack thinks the sale of 160 Elgin Street to Groupe Mach, a private Montreal-based real estate firm, helps H&R with its tranformation. He noted the property represented 19 per cent of its Canadian office portfolio’s gross leasable area (GLA) and reduces the total office exposure on a fair value (FV) basis to 28 per cent (was 30 per cent) with “roughly a third of this is downtown Toronto properties with redevelopment upside potential.”

“While the purchaser still needs to finance a portion of the deal, they will be highly motivated by the $67-million first tranche paid on close,” he said.

“Management noted that sale proceeds ($67-million) would be used to repay debt and buy back units. Given added clarity from the completion of the sale, we are now modelling unit repurchases and anticipate the REIT further utilize its NCIB as a mechanism for earnings growth as cash comes in from asset sales.”

Reiterating an “outperform” recommendation for H&R units, Mr. Kornack increased his target to $15.75 from $15.25 to “reflect the positive earnings implications as the transaction outcome has been de-risked.” The average on the Street is $15.83.


Calling it his “top contrarian pick” Scotia Capital analyst Konark Gupta raised his financial expectations for Air Canada (AC-T), pointing to better-than-expected Canadian air travel demand thus far in 2023 and a “significant” pullback in jet fuel prices.

His first-quarter EBITDA estimate rose to $257-million from $201-million and above the consensus on the Street of $243-million. Hi full-year 2023 and 2024 projections increased to $2.9-billion and $3.9-billion, respectively, from $2.7-billion and $3.8-billion.

“Although our revised EBITDA estimates are still below the top-end of the guidance ranges, we now think guidance could prove conservative, especially as AC’s fuel price assumption is looking quite high,” said Mr. Gupta. “Our improved fundamental outlook makes AC’s 2024 valuation even more attractive at 3.1 times EV/EBITDAR , which is at a wider-than-historical discount to U.S. comps (trading at 4.2 times), also reflecting the stock’s year-to-date underperformance. In our blue-sky scenarios, we see potential upside to $33 if AC achieves the top-end of its 2024 targets ($4-billion EBITDA and 1.5 times leverage ratio), assuming a pre-pandemic multiple of 4.5 times, and to $45 if FCF accelerates to push the leverage ratio further down to 1.0 times.”

The analyst’s target for Air Canada shares rose to $29, above the $26.06 average on the Street, from $27 with a “sector outperform” rating.

“AC remains our top pick as we believe air travel demand will sustain for longer relative to other areas, competition is stable or lessening rather than increasing, and margins should expand in the near term given the lag effect and stickiness in yields vs. falling fuel prices,” Mr. Gupta said.


In other analyst actions:

* Scotia Capital’s Ovais Habib resumed coverage of Alamos Gold Inc. (AGI-N, AGI-T) with a “sector outperform” rating and US$14.50 target. The average is US$11.87.

“Our Sector Outperform rating for AGI shares is based on our view that AGI should trade at a premium as it offers better risk–reward proposition given its demonstrated operation track record, steady production (average 16-year mine life), high quality assets with 83-per-cent NAV exposure in a tier 1 jurisdiction – Canada, declining cost profile, growing FCF profile and its fully-funded as well as higher-margin production growth,” he said.

* BMO’s Thanos Moschopoulos increased his CGI Inc. (GIB.A-T) target to $150, exceeding the average on the Street of $139.31, from $133 with an “outperform” rating.

“We remain Outperform on CGI and have modestly raised our estimates ahead of Q2/23 results,” he said. “While the stock’s multiple has recently expanded despite an apparent deceleration in overall IT services spending, we believe Street estimates are currently too pessimistic on organic growth for both Q2/23 and FY2023 (perhaps because the Street isn’t adequately baking in a significant y/y FX tailwind). We’ve raised our target price to $150 given this dynamic, and based on our view that CGI can sustain 10-per-cent-plus EPS growth, even in a potentially slower spending environment.”

* Following a meeting with incoming CEO Mark Becker, ATB Capital Markets’ Chris Murray lowered his Dexterra Group Inc. (DXT-T) target to $8.15 from $8.40, keeping an “outperform” rating. The average is $7.59.

“We see the Company positioned to make progress in 2023, but it will need to demonstrate improved performance,” Mr. Murray said.

* Credit Suisse’s Andrew Kuske lowered his Innergex Renewable Energy Inc. (INE-T) target to $19.50 from $20 with an “outperform” rating. The current average is $19.04.

* Seeing it “well positioned to execute in a challenging environment,” Scotia Capital’s George Doumet increased his Street-low target for Loblaw Companies Ltd. (L-T) to $128.50 from $126.50 with a “sector perform” rating. The average is $140.72.

“Similar to L’s last few quarters (and MRU’s recent quarter), we expect: (i) strong top-line momentum at pharmacy (especially at front), (ii) robust top line at food (albeit somewhat held back by the cycle of last year’s COVID lockdown) and (iii) continued pressure on food gross margin,” said Mr. Doumet. “Beyond the quarter, our expectation is for a normalization in pharmacy front sales, for food inflation to decline in the 2H (likely into the low single digits to mid single digitis), and for promotional intensity to rise.

“In the LTM [last 12 months], food at home inflation surged (close to 10 per cent today). Helped by its largest discount exposure among grocers, top-line and margin tailwind from strong demand at Shoppers Drug Mart, and improved merchandising execution, Loblaw’s shares have generated the highest return among the grocers over the LTM (and year-to-date). That said, we believe Loblaw’s growth momentum and favourable position in the industry are reflected in its valuation- with shares trading at 15.9 times NTM [next 12-month] P/E, at a discount of only 1.2 times to MRU versus 2.2 times historically, and at 1 times standard deviation from its historical average. Furthermore, we continue to believe we’re at the late stages of grocer outperformance.”

* BMO’s Peter Sklar raised his target for Maple Leaf Foods Inc. (MFI-T) to $27 from $26, maintaining a “market perform” rating. The average is $31.83.

“We have revisited our Q1/23 estimates for MFI in the context of weakening pork market conditions,” he said. “While the cybersecurity incident, labour shortage, and Japan market improvement are tailwinds relative to Q4/22, the producer margin (hog price - cost of raising hogs) is at a multi-year low in Q1/23, resulting in our expectation for a more modest EBITDA margin improvement versus Q4/22. We have lowered our Q1/23 EPS estimate to a loss of 4 cents (Mean a loss of 12 cents) from our previous EPS estimate of 11 cents.”

* Ahead of its May 9 earnings release, Desjardins Securities’ Gary Ho raised his target for Superior Plus Corp. (SPB-T) to $13 from $12.50 with a “buy” recommendation. The average is $12.95.

“We expect EBITDA of $278-million (consensus $271-million), factoring in warmer weather in Canada and the U.S., offset by robust margins,” said Mr. Ho. “Our 2023 EBITDA of $572-million assumes Certarus will close by the end of May; management remains confident in its pro forma guidance of $585–635-million. Certarus is performing ahead of expectations. New CEO Allan MacDonald started in early April and we await an update.”

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