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

Citing its declining cash flow profile and rising debt load as well as “uncertainty around future monetizations,” iA Capital Markets analyst Matthew Weekes downgraded his recommendation for Brookfield Business Partners L.P. (BBU.UN-T, BBU-N) after its fourth-quarter 2022 results fell short of expectations.

On Friday, it reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of US$659-million, up 20 per cent year-over-year and in line with Mr. Weekes’s US$659-million as a better-than-anticipated contribution from its Infrastructure Services segment offset weakness in its Business Services and Industrial businesses. However, adjusted earnings from operations fell 13 per cent to US$325-million, missing the analyst’s US$375-million projection due to the impact of higher interest rates on borrowings and preferred equity distributions.

“Proportionate borrowings net of cash increased by approximately $740-million quarter-over-quarter and BBU also issued another $725-million of preferred shares to Brookfield Asset Management (BAM-N/BAM.A-T, Not Rated),” said the analyst. “The closing of Westinghouse in H2/23 should provide some relief (proportionate and corporate borrowing reduction of $3.3-billion), but ultimately, we believe BBU’s proportionate leverage levels will be a headwind in the current macroenvironment, and project a declining cash flow profile going into 2023.

“We are slightly raising our Adj. EBITDA forecasts, as lower expectations for certain businesses are offset by higher proportionate EBITDA from Altera following the restructuring along with anticipated tailwinds in offshore oilfield services. However, higher Adj. EBITDA is offset by higher interest costs and preferred distributions, resulting in lower projected Adj. EFO. Lastly, we are incorporating higher proportionate and borrowings as well as the additional BAM pref, which lower our NAV [net asset value] to unitholders.”

Moving his rating for Brookfield Business shares to “hold” from “buy,” Mr. Weekes cut his target to US$27 from US$30. The average on the Street is currently US$30.33, according to Refinitiv data.

“We are electing to downgrade our rating ... as we consider (a) BBU’s declining cash flow and rising debt profile amidst higher interest rates, (b) uncertainty in future monetization activities amidst a challenging macroeconomic environment, and (c) the recent strong performance of the units,” he said. “We believe the underlying quality of BBU’s portfolio is solid, and while the Partnership considers the individual cash flow profile of each company in determining its debt structure, we believe the overall capital structure will be a headwind in the context of the current macroenvironment. Factors that could provide upside to our outlook include (a) further accretive monetization activity and debt reduction; and (b) potential outperformance from existing businesses such as Clarios, CDK, Scientific Games, and BRK as BBU executes internal growth and margin enhancement initiatives.”

Elsewhere, others making changes include:

* Desjardins Securities’ Gary Ho to US$32 from US$34 with a “buy” rating.

“BBU reported decent 4Q results, driven by resilient business performance,” Mr. Ho said. “We continue to favour BBU given its strong FCF generation, resilient profile and attractive valuation (trading at 8 times EBITDA vs 13 times for the S&P 500 and more than 15 times for peers with similar margin profiles). We believe as the company executes on its value creation playbook, interest rate hikes ease and some monetization materializes, its valuation gap should narrow.”

* National Bank’s Jaeme Gloyn to US$36 from US$38 with an “outperform” rating.

“We believe BBU’s diversified portfolio of companies across sectors/geographies continues to deliver solid results. In addition, we hold a favourable view of BBU’s recent flurry of acquisition activity (CDK, Neilsen, La Trobe, Scientific Games’ Lottery Business, Aldo, DexKo and Modulaire), and the ongoing build into the technology sector,” said Mr. Gloyn. “Moreover, the monetization of WH increases our confidence in management’s ability to monetize Clarios and BRK Ambiental next. Overall, we anticipate BBU’s successful execution/integration will drive the shares higher. BBU currently trades at an EV/EBITDA multiple of 8.0 times (or 7.6 times proforma WH sale), slightly above the 5-year average of 6.9 times but in line with the trading levels between 7.0 times and 8.0 times over the past two years. We also estimate the shares currently trade at a historically wide 43-per-cent discount to NAV (or 55 per cent pro-forma WH’s $8/unit of value).”


Separately, believing its near-term growth expectations “seem stretched,” iA Capital Markets’ Naji Baydoun lowered Brookfield Renewable Partners L.P. (BEP.UN-T, BEP-N) to “hold” from “buy” on Monday.

“In Q4/22, we became more bullish on BEP following the Westinghouse transaction announcement; this was due to the belief that the combination of accelerating growth and more modest valuation created a buying opportunity in the stock,” he said. “However, we now see near-term growth expectations as potentially being too high (almost 12 per cent per year FFO [funds from operations] per share growth expected through 2024). As such, there could be downward pressure on growth expectations, and if financial estimates moderate, valuation could become less compelling than previously expected. For these reasons, we are taking a more neutral stance on BEP, and revising our financial forecasts, price target, and recommendation.”

On Friday, Brookfield Renewable reported fourth-quarter 2022 adjusted EBITDA of $461-million, exceeding Mr. Baydoun’s US$459-million estimate but missing the Street’s forecast by US$4-million. FFO per unit of 35 US cents fell also the analyst’s projection by 3 US cents while lower than the consensus of 37 US cents.

“New asset additions and higher realized power prices contributed to year-over-year growth, partially offset by asset sales and weaker- than-expected generation; Q4/22 results also benefitted from lower corporate costs,” he said. “BEP also announced a 5.5-per-cent dividend increase (in line with expectations and the Company’s long-term 5-9 per cent per year dividend growth target.”

“In 2022, BEP deployed approximately 3.5GW of power capacity from its development activities, which should drive $45-million of annual run-rate FFO (below expectations for 4GW+ and $60-million per year of FFO going into the year). The Company’s (1) growing pipeline of prospective projects, and (2) increased emphasis on greenfield and brownfield development (1GW developed in 2021) are expected to underpin a long runway of healthy organic growth. BEP expects to deploy 5GW per year of new capacity in 2023-24, with a further 9GW of advanced-stage prospects that could generate $222-million per year of combined run-rate FFO once commissioned (plus $13-million per year of FFO from sustainable solutions projects). Overall, these investments should support BEP’s target of 3-5 per cent per year FFO/share growth target from development activities over time.”

Mr. Baydoun thinks Brookfield Renewable’s brisk acquisition activity, which came in at almost US$2.8-billion in 2022 and topping its target of US$1.2-$1.4-billion annually, should help “support the overall growth outlook.” He expects “success in securing permanent financing to fully fund its recent/ongoing M&A activity will be a key focus for 2023.”

However, he lowered his target for its U.S.-listed shares to US$34 from US$38. The average is currently US$35.74.


While he saw the growth outlook provided by Northland Power Inc.’s (NPI-T) at its Investor Day event on Friday as “positive” in both the short- and long-term, Desjardins Securities analyst Brent Stadler emphasized its near-term headwinds for the offshore wind projects were “larger than expected” and higher-than-anticipated capital expenditure guidance now weighs on his valuation.

Accordingly, he lowered his recommendation for the Toronto-based company to “buy” from “top pick” previously.

“The growth update was solid, as NPI’s total development pipeline increased to 20GW (from 14.5GW), with projects expected to COD starting in 2023 through to 2030+,” said Mr. Stadler. “This significant pipeline provides NPI with flexibility to build projects with the best risk-adjusted returns and provides selldown optionality to fund development (two selldown processes currently ongoing).

“Growth targets maintained for 2027 but increased for 2030 — 4 times growth by 2030. NPI expects to grow its installed capacity to 6.5GW by 2027 and more than 12GW (up from 9GW) by 2030, roughly doubling and quadrupling its installed capacity from 3GW today. NPI expects to increase its EBITDA by CAGRs of 7–10 per cent out to 2027 and more than 13 per cent by 2030 to $3-billion (from $1.2–1.3-billion in 2023).”

However, Mr. Stadler expressed concern over Northland’s cost inflation with it now guiding to $16–19-billion to complete its development pipeline, up from $12–15-billion.

“We estimate this includes $1.4-billion of new projects. We had expected some cost inflation but not to this extent,” he said. “This update reduced our valuations for the Hai Long and Nordsee Cluster of projects, while Baltic Power’s economics were roughly maintained (given inflation protection in the PPA). A higher-priced CPPA could drive upside on our Nordsee Cluster valuation.”

Reducing his earnings and cash flow expectations through 2024, Mr. Stadler cut his target for Northland shares to $43 from $49. The current average is $46.30.

“We expect significant growth in global offshore wind over the next decade (more than 20 per cent compound annual growth rate) and believe NPI is the best way for Canadian investors to play the space,” he concluded.

Elsewhere, while acknowledging “near-term challenges,” iA Capital Markets’ Naji Baydoun thinks patient investors “should be rewarded” by Northland Power, believing its growth profile “remains robust” following Friday’s Investor Day event.

Calling its valuation “compelling” and its current share price offering “an attractive entry point,” Mr. Baydoun trimmed his target by $1 to $46, maintaining a “buy” rating.

“Overall, we view NPI as the best investment vehicle for investors to gain exposure to the offshore wind investment theme,” he concluded. “NPI offers investors an attractive mix of (1) stable cash flows from contracted power assets (2.6GW net in operation, 10-year weighted average contract term), (2) strong potential long-term FCF/share growth (primarily driven by offshore wind projects), (3) longer-term potential upside from organic development activity and accretive M&A, and (4) an attractive dividend profile (3-per-cent yield, 50-70-per-cent long-term FCF payout). From a valuation perspective, NPI’s shares continue to trade at compelling relative valuation levels compared to both their own historical average trading multiples and relative to peers. As the Company (1) continues to successfully execute on its growth strategy, (2) increases the share of renewable assets within its portfolio, and (3) delivers above-peer average growth, we would expect the shares to at least close some of their relative valuation gap to potentially trade at a premium relative to peers.”

Others making changes include:

* Scotia Capital’s Justin Strong to $49 from $51 with a “sector outperform” rating.

“With over 3.5 GW of projects in construction and/or expected for financial close and beginning of construction within the next two years, Northland remains in a solid position to deliver substantial growth in Adjusted EBITDA by 2027,” said Mr. Strong. “Long term, the company continues to pursue a pipeline of up to 15 GW, which includes its internally identified projects and other prospects. We remain constructive on Northland and reiterate it as our top pick within the renewable coverage universe. We re-iterate our buy thesis on Northland’s largely funded growth plans and large opportunities set in its pipeline. At the same time we have moderated our target valuation to account for increased capex estimates, resulting in a $2 decrease in target price.”

* BMO’s Ben Pham to $46 from $46.50 with an “outperform” rating.

“NPI’s 2023 investor day highlighted a balanced view between the favorable industry tailwinds, but also the negative trends that have weighed on returns,” said Mr. Pham. “That said, at 10.3 times EV/EBITDA (a 30-per-cent discount to peers), we believe the market has been fixated solely on the negative trends. As the market gains confidence in NPI’s growth guidance (7-10-per-cent EBITDA CAGR), with the next most notable catalyst being financial close of Hai Long, we believe the valuation should expand.”

* Raymond James’ David Quezada to $49 from $52 with an “outperform” rating.

“As highlighted in the company’s investor day, we believe Northland sports the most attractive long-term growth among the renewable peers in our coverage universe supported by an upsized 20 GW portfolio of renewable power and storage projects,” said Mr. Quezada. “While NPI has faced challenges with project cost inflation, we believe the company has been able to substantially mitigate these issues thus far and is still earning solid returns on most projects. We have reduced our price target ... consistent with tweaks to our near-term estimates, however, with shares of NPI at close to cycle low valuations, we consider current levels an opportunity to add to positions.”

* ATB Capital Markets’ Nate Heywood to $50 from $52 with an “outperform” rating.

“Northland Power continues to actively pursue clean technology development opportunities that fit the strategic asset mix in attractive jurisdictions seeking energy security,” he said. “The Company is well positioned to be an early mover in new renewable markets through offshore wind, a generation technology that NPI has significant expertise. NPI has also developed a portfolio of highly contracted onshore assets, which should continue to add supplemental cash flow to fund its robust offshore wind development pipeline, and continues to actively pursue onshore developments in Europe, the U.S. and Latin America.”

* National Bank’s Rupert Mere to $44 from $46 with an “outperform” rating.

“NPI’s growth prospects give us confidence in its long-term potential, despite near-term cost headwinds,” he said.


While Methanex Corp. (MEOH-Q, MX-T) reported in-line fourth-quarter results and sees increased demand in 2023, RBC Dominion Securities analyst Nelson Ng said he’s remaining “on the sidelines due to the uncertainty of a potential global recession (negatively impacts global methanol prices) and the uncertain medium-term outlook for gas supply in Trinidad (supply contract expiration in H2/24).”

“Methanol demand could improve in 2023, but impacts of a recession are uncertain. Management indicated that global methanol demand increased slightly in 2022 to 88 million tonnes, but demand in Q4/22 was down 5 per cent compared to Q3/22, primarily driven by lower MTO operating rates (low olefins prices) and lower demand from traditional chemical applications (COVID-19 restrictions in China), while energy-related applications were relatively stable,” he said. “Looking into 2023, management sees demand upside from the reopening in China, and it also flagged interest from the marine industry for dual-fuel vessels.”

TSX-listed shares of the Vancouver-based company surged 7.3 per cent on Monday with the premarket release of its quarterly results, including adjusted EBITDA of US$160-million which was in line with Mr. Ng’s US$161-million and the consensus forecast of US$164-million. Adjusted earnings per share of 73 US cents was higher than anticipated (16 US cents) “due to lower-than-expected depreciation and tax expense, and higher-than-expected finance income.”

Despite production results narrowly missing his projections, Mr. Ng raised his 2023 and 2024 Adjusted EBITDA estimates to US$629-million and US$678-million, respectively, from US$621-million and US$675-million based on Methanex’s reference prices for February and the Chemical Market Analytics (CMA) updated methanol price forecast.

That led him to increase his target for the company’s shares to US$50 from US$45 with a “sector perform” rating. The average is US$46.82.

“Recession concerns could keep the shares range-bound,” he said. “We see rising recessionary uncertainties, which could negatively impact near-term and longer-term methanol prices. However, we believe the shares are suitable for investors that have a more constructive view on the economy (i.e., soft landing/minor recession) and expect natural gas prices to remain elevated, which should support methanol prices.

“Methanex is the industry leader. Methanex has facilities on four continents, which allows it to optimize production and sales to serve its global customers. The company’s facilities generally sit at the lower half of the cost curve, which also provides a competitive advantage. For 2023, 85 per cent of North American gas needs are hedged, and 100 per cent of the gas needs in the rest of the world are contracted.

Elsewhere, other analysts making target changes include:

* Scotia Capital’s Ben Isaacson to US$60 from US$50 with a “sector outperform” rating.

“Despite a strong start to ‘23, we see further upside for MEOH over the coming quarters, provided methanol remains near mid-cycle levels (it’s slightly above),” he said. “To achieve that upside, nothing special needs to happen – nothing whatsoever. All we need to see are: (1) the continuation of mid-cycle economics (~$350/mt realized), which has held up well through the downturn – just ask all the other commodity chems how far away from mid-cycle they are; and (2) the continuation of the on-time/budget ramp of G3, with first commercial production planned for Q4. Mid-cycle ‘24 EBITDA (ex Titan, ex Waitara) now moves to between $1.0-billion and $1.1-billion. Using a five-year average multiple of 7 times, we estimate fair value at $75 per share. When Titan returns to service (’24/25), and assuming a 90-per-cent op. rate, an extra $100-million of run-rate mid-cycle EBITDA will raise fair value to $85. A Waitara restart (don’t hold your breath), improved operating rates in Chile via an Argentina gas deal, as well as elevated cycle conditions could push fair value even higher. Achieving our revised $60 PT (up 20 per cent) should be easy, especially with ‘24+ FCF now moving to $8 per share.”

* Raymond James’ Steve Hansen to US$60 from US$50 with a “market perform” rating.

“While we continue to admire Methanex’s robust FCF profile, compelling growth outlook (G3), balance sheet discipline, and pledge to return excess cash to shareholders, we reiterate our MP3 rating based upon our lingering macroeconomic concerns and the associated implications on global methanol demand. Notwithstanding these concerns, we have increased our target,” said Mr. Hansen.

* BMO’s Joel Jackson to US$65 from US$60 with an “outperform” rating.

* CIBC’s Jacob Bout raised his target to US$49 from US$42 with a “neutral” rating.


Canaccord Genuity analyst Yuri Lynk says Bird Construction Inc. (BDT-T) is “increasingly looking like the stock with the best reward-to-risk proposition amongst the construction companies we have under coverage.”

Ahead of the the March 7 release of its fourth-quarter results, Mr. Lynk raised his forecast for the Mississauga-based company, citing “Bird’s record combined backlog of $5.1-billion, continued new awards momentum, and improving margin trends on strong execution and a greater proportion of collaborative contracts.” He’s now expecting earnings per share growth of 33 per cent in 2023 to $1.05 and 15 per cent in 2024 to $1.20.

“The stock is up 9 per cent year-to-date vs. Aecon and NACG at 15 per cent and 11 per cent, respectively, despite its very attractive top- and bottom-line growth outlook for 2023, near-record de-risked backlog, strong balance sheet, and 4.9-per-cent dividend yield,” he said. “We see risks skewed to the upside for Q4, for which we forecast EPS of 22 cents, 2 cents behind Q4/2021 and consensus of the same. We expect revenue to increase 6 per cent year-over-year, to $635 million, and EBITDA to remain roughly flat year-over-year at $28 million vs consensus of $29 million.”

Keeping a “buy” recommendation, Mr. Lynk raised his target by $2 to $11. The average on the Street is $10.33.

He maintained a “hold” recommendation and $10 target for shares of Aecon Group Ltd. (ARE-T) and “buy” rating and $22 target for North American Construction Group Ltd. (NOA-T). The averages are $12.42 and $23.60, respectively.

“North American Construction Group (NACG) is another stock we really like, although it has a more modest implied return to our target price than Bird. As for Aecon, we wish to stay on the sidelines as execution issues are likely to overshadow the company’s improved bidding process and diverse opportunity set,” the analyst said.


In a research report titled A Sandbox Full of Value, Acumen Capital analyst Nick Corcoran initiated coverage of Source Energy Services Ltd. (SHLE-T), which is currently the largest frac sand provider in the Western Canadian Sedimentary Basin, with a “buy” recommendation, pointing to market dominance and expecting “strong” growth moving forward.

“SHLE has an industry leading position with its terminal network throughout the WCSB connected to mines in Wisconsin through the CN Rail network,” he said. “Combined with a focus on logistics and efficiently delivering frac sand directly to the wellsite, the Company is a preferred vendor of large E&Ps with high frac intensity development programs.”

With activity in the WCSB increasing, Mr. Corcoran projects sales to increase 28.7 per cent year-over-year from $418.9-million in 2022 to $539.0-million in 2023. He estimates adjusted EBITDA will rise 57.7 per cent from $60.2-million in 2022 to $95.0-million “demonstrating pricing power and operating leverage in the business.”

“A number of large contracts are expected to roll off in early-2023 and be repriced at significantly higher Adj. Gross Profit/MT (the strongest measure of pricing as it removes location based pricing differences and cost passthroughs such as transportation costs),” he said.

Seeing its shares trading at an “attractive” valuation, the analyst set a $9 target, above the $3 average.

“SHLE currently trades at 2.1 times 2023 EV/EBITDA compared to the peer group average of 3.2 times,” said Mr. Corcoran. “We believe SHLE will trade in line with the peer group as the Company demonstrates pricing power and operating leverage. FCF is expected to be used to pay down higher interest senior notes reducing overall leverage.”


Citi analyst Jon Tower does not see any “red flags” in Restaurant Brands International Inc.’s (QSR-N, QSR-T) data ahead of the Feb. 14 release of its fourth-quarter results, believing Canadian limited-service restaurant sales are “staying strong” and predicting “sequential momentum” for Burger King.

“We expect the focus is more on the Q&A session of the call, pieces of the BK turnaround story and how franchisee profits/assets are addressed,” he said in a note released Monday. “We expect the new Chairman’s pitch will be compelling, but valuation (multiple vs S&P +1 stadev ahead of history) already expresses optimism and MCD’s intensifying competitive activity (e.g., upcoming celebrity meal in early Feb) could mean an imminent hiccup in high frequency data.

“What the data says — (1) BK US Footfall vs 2019 was relatively consistent quarter-over-quarter although market share versus the broader sector and of the big-three continues drifting to new lows. (2) Tims Canada app data showed an uncharacteristic sharp dip in users in 4Q, and it has been a longer period of time without a promo-driven jump in engagement, but the long-term trend continues to grind higher. BK app engagement has remained relatively rangebound for since md-2021. (3) Canada limited-service restaurant sales continue to show strong growth, with sales staying in the mid-teens vs 2019.”

Raising his 2022 and 2023 earnings per share estimates to US$3.18 and US$3.27, respectively, from US$3.13 and US$2.95, Mr. Tower increased his target for its shares to US$72 from US$60 with a “neutral” rating. The average is US$68.82.

“We don’t believe the market is fully capturing ramping international stories at Tims, Popeyes (and soon Firehouse) that can drive medium-term upside to net unit growth (NRG) and long-term upside to profits; however, limited visibility into the economics of these nascent businesses means limited ability to layer into valuation,” he said. " At the same time, we see above average room for near- to medium-term estimate volatility related to the Burger King US brand repositioning/reinvestment (including incremental closures) and potential pressure on supply chain profits.”


In other analyst actions:

* Credit Suisse’s Andrew Kuske cut Brookfield Corp. (BN-N, BN-T) to “neutral” from “outperform” with a US$41 target, down from US$42 and below the US$47.19 average.

“Part of the downgrade is based on a re-assessment of the underlying near-term value of BN’s Brookfield Property Group (BPG) portfolio given the combination of rising rates, cap rate changes, real estate performance and, among other factors, valuation,” he said.

* UBS analyst John Hodulik upgraded Rogers Communications Inc. (RCI.B-T) to “buy” from “neutral” with a $75 target, above the $72.73 average.

* DZ Bank AG’s Axel Herlinghaus lowered Shopify Inc. (SHOP-N, SHOP-T) to “sell” from “hold” with a US$45 target, up from US$34 and above the US$44.45 average.

* Paradigm Capital’s analyst Gordon Lawson downgraded Teck Resources Ltd. (TECK.B-T) to “hold” from “buy” with a $62 target, falling from $63. The average is $59.79.

* Calling its third-quarte results “disappointing,” Barclays’ Adrienne Yih bumped her Canada Goose Holdings Inc. (GOOS-T) target to $21 from $20 with an “overweight” rating. The average is $29.

* Scotia Capital’s Phil Hardie raised his target for Definity Financial Corp. (DFY-T) to $46 from $44 with a “sector outperform” rating. The average is $42.68.

“We view Definity as an evolutionary story, but what we believe truly sets it apart from its publicly traded peers are the themes related to excess capital and M&A and what they mean for the ROE outlook and the stock’s valuation,” he said. “We believe key reasons to like and own Definity: (1) defensively positioned with limited sensitivity to macroeconomic factors, interest rates, or financial markets; (2) solid growth prospects and a resilient model that is likely able to support double-digit earnings growth and compound BVPS by mid-single digits over the mid- to long-term; (3) a strong management team; and (4) M&A potential serves as an embedded catalyst, with mid-term takeout potential likely limiting downside risks. Definity has gone through a significant foundational transformation of its business over the last few years, culminating in the establishment of leading digital platforms and an overhaul of its commercial portfolio that should support competitive positioning and accelerated growth with sustained profitability. We believe that a high level of excess capital, an under-levered balance sheet, and M&A optionality can provide a path to mid-teens ROE, which could offer significant upside potential to the stock.”

* Mr. Hardie also increased his Intact Financial Corp. (IFC-T) target to $235 from $231 with a “sector outperform” rating. The average is $223.08.

“Intact is Canada’s largest P&C insurer, with a successful long-term track record of exceeding industry ROE by 500 basis points, that is also a resilient, defensive-oriented leading financial services company with a strong management team and mid- to long-term growth prospects,” he said. “The pillars of its strategic road map for growth include expanding leadership in Canada, building a specialty solutions leader, and strengthening leading positions in the United Kingdom and Ireland. We view Intact as our “Go-To” defensive quality name largely from its defensive characteristics, solid growth outlook, and sustainable mid-teen ROEs supported by a favourable pricing environment. M&A also likely provides an embedded catalyst and given its current levels of excess capital and progress with the RSA integration, we believe deal activity is imminent over the next 12 to 24 months. We see several catalysts on the horizons that include (1) stronger-than-expected underwriting and operational performance once conditions normalize, (2) demonstrated value creation and performance enhancement from the RSA UK&I platform over the mid- to longer-term, and (3) potential resumption of larger scale M&A activity.”

* CIBC’s John Zamparo hiked his MTY Food Group Inc. (MTY-T) target to $77 from $70, keeping an “outperformer” rating. The average is $68.29.

“We view MTY’s recent acquisitions favourably: BBQ Holdings adds more corporate ownership than we’d like, but the deal generates impressive returns and further diversification away from office towers. Furthermore, Wetzel’s Pretzels (which we have now included in our forecasts) adds an organic net unit growth engine. We increase our F2023 and F2024 EPS estimates by 3 per cent and 1 per cent, respectively, while raising our P/E multiple to 16 times (from 15 times), resulting in an increased price target,” he said.

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