Skip to main content

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

Scotiabank analyst Jason Bouvier upgraded Cenovus Energy Inc. (CVE-T) to “sector outperform,” citing improving fundamentals, potential future positive catalysts for the stock, and attractive valuation.

Mr. Bouvier, who previously rated the stock “sector perform,” also raised his price target to $12 (Canadian) from $9.25.

He applauded the company’s continued commitment to improve its balance sheet and the planned $1.2-billion in synergies that will result from its merger with Husky Energy. The company also has leverage to higher oil prices and refinery crack spreads, and there are potential catalysts ahead with possible asset sales, including at Asia Pacific operations and at Husky retail locations in Canada, he said.

Citigroup Thursday also raised its price target to C$13 from C$11.

“Rising oil price, solid operations, and a relatively more insulated Downstream versus global peers all likely were tailwinds for the Canadian Oils in 1Q21,” Citibank said, noting that Cenovus was its favourite of the group.

The average target is $11.68, according to Refinitiv Eikon data.

***

CIBC analyst Kevin Chiang downgraded Transat AT Inc (TRZ-T) to “underperformer” from “neutral”, seeing little further near-term upside for the stock following Air Canada’s decision to drop its bid for the leisure travel company. But he maintained a $4 price target.

“While its stock price has re-set after the end of its arrangement agreement with Air Canada, it has held in better than we would have anticipated,” commented Mr. Chiang. “While media reports point to a $5/share bid from [Canadian media executive] Pierre Karl Péladeau, we do not view this as sufficient upside given that the stock is trading 10 per cent from this level. We also view this potential bid as the glass ceiling for the stock since other potential bidders have stated they are no longer looking at TRZ.”

“As more time passes without an official bid, there is a greater risk that one is not coming. We use a 5.5x EV/EBITDA multiple on our F2025E, reflecting optionality of a takeout. Moving this down just 1 point infers an equity value per share in the low single digits,” he added.

The average target among analysts is $4.36.

***

Several analysts raised their price targets on Cogeco Communications Inc (CCA-T) following better-than-expected earnings Wednesday evening. BMO raised its price target to C$125 from C$120; Canaccord Genuity’s target went to C$126 from C$119; CIBC raised its target price to C$131 from C$121; RBC raised its target price to C$125 from C$121; and Scotiabank’s target went to C$138 from C$132.

“Results for Q2 were encouraging as Cogeco’s broadband-focused strategy continues to propel margin expansion, but H2 will see the return of deferred costs that will modestly compress them,” said BMO analyst Tim Casey. “The company continues to seek U.S. cable assets; however, current market conditions have made this challenging.”

The average price target is now $129.20.

***

Citi is seeing an opportunity for investors to make strong gains over the next few months in shares of United Parcel Service Inc. (UPS-N). It bumped up its price target by $10 to US$200.

“We are opening a new 90-day positive catalyst watch on UPS shares ahead of 1Q results later this month and its investor day in June,” said analyst Christian Wetherbee. “After largely range bound trading over the last 6+ months we believe shares can rally near-term as investors digest what should be better than expected 1Q results driven by strong volume and pricing, and look ahead to a potentially catalyst rich and bullish investor meeting later this quarter.”

He added: “We have grown more positive on the prospects for parcel stocks this year as volume looks stronger than expected, providing durability to growth even against difficult comps, and this volume growth should sustain strong pricing power gained in the pandemic. With very rational competitive behavior in the industry, we think we could be at the early end of a multi-year upcycle for Domestic margins propelling earnings above current expectations.”

The average Street target is $177.29.

***

A number of price targets went up for Autocanada Inc. (ACQ-T) after the company announced positive news Wednesday on its capital structure, M&A pipeline, and sales for the first quarter.

Acumen Capital raised its target price to C$45 from C$37.50; CIBC hiked its target price to C$41 from C$37; and Scotiabank raised its target price to C$46 from C$40.

AutoCanada said it intends to offer an additional $100 million of senior unsecured debt. In terms of M&A, the company highlighted that it was in discussions with multiple targets, including potential targets in excess of $100 million in transaction value, with some expected to close in 2Q21. The company also announced first quarter preliminary sales of $960 million to $980 million, which was 20 per cent ahead of consensus.

“AutoCanada is making a clear pivot from a turnaround story to a growth story,” commented Scotiabank Michael Doumet.

While CIBC analyst Krista Friesen raised her price target, she maintained a “neutral” rating given recent share price appreciation.

“We take the strong Q1 results as evidence of execution on its Go Forward initiatives and pent-up demand in the quarter. Additionally, with the company preparing its balance sheet for M&A and the comment that it is in advanced discussions with multiple targets, we expect M&A to become an increasingly important part of ACQ’s growth story. With shares up ~25% [Wednesday], we view ACQ as fairly valued,” Ms. Friesen said.

The average price target on the Street is now $41.03.

***

In other analyst actions:

Rupert Resources Ltd (RUP-X): BMO starts with outperform rating; price target C$6.50

Corvus Gold Inc (KOR-T): BMO starts with outperform rating; price target C$3.50

Nuvista Energy Ltd (NVA-T): National Bank of Canada cuts to sector perform from outperform

Surge Energy Inc (SGY-T): National Bank of Canada cuts to sector perform from outperform

Precision Drilling Corp (PD-T): National Bank of Canada raises price target to C$40 from C$32.50 and upgrades rating to outperform from sector perform

Air Canada (AC-T): CIBC cuts target price to C$33 from C$34 and Raymond James raises target price to C$35 from C$30

Ascot Resources Ltd (AOT-T): BMO starts with outperform rating; price target C$1.50

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Report an error

Editorial code of conduct

Tickers mentioned in this story