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

While he says Loblaw Companies Ltd.’s (L-T) “solid” first-quarter results reaffirm his view that grocery fundamentals “remain positive near-term,” Desjardins Securities analyst Chris Li thinks “uncertainties linger” for the second half of 2022.

On Wednesday before the bell, Loblaw reported adjusted earnings per share of $1.36, exceeding both Mr. Li’s $1.34 estimate and the $1.36 consensus forecast.

“The outperformance came mainly from slightly better-than-expected Retail gross margin and lower-than-expected expenses,” he said. Consistent with what we saw from MRU’s results a couple of weeks ago, L benefited from high food inflation (it was more than 7.5 per cent during the quarter); this drove more people to shop at discount (L derives 60 per cent of its revenue from discount). It appears that cost pass-through was well-managed, supported by a healthy consumer (strong employment) and continuing elevated food-at-home demand.”

“High food inflation is manageable thus far as consumers adjust by shifting more to value (ie discount and private label). Work-from-home, a healthy consumer (strong employment and high savings) and rational competition are facilitating cost pass-through.”

Mr. Li thinks management’s 2022 target of low-double-digit organic EPS growth target “looks highly achievable, with some upside.” Excluding its $845-million acquisition of Lifemark Health Group, he’s projecting growth of 13 per cent.

“Consistent with management’s expectations, we expect growth to be higher in 1H (20 per cent) and moderate in 2H (high-single-digit percentage) as L laps elevated food inflation and food-at-home demand,” he said. " Key drivers include: (1) elevated food inflation and food-at-home demand; (2) sales recovery of higher-margin products (cosmetics, OTC, Rx, etc); and (3) Retail Excellence initiatives (centralized procurement, promo optimization using data analytics, and loyalty and retail network optimization). We increased our 2022 and 2023 EPS to $6.41 and $7.05, respectively, mainly due to the Lifemark acquisition.”

Maintaining a “hold” rating for Loblaw shares with the belief “meaningful upside is likely limited unless it can sustain EPS growth over and above 8–10 per cent longer-term,” Mr. Li raised his target for Loblaw shares to $116 from $110. The average is $121.10.

“The strong results clearly show that L has been rejuvenated by a renewed focus on execution under the new management team. We believe this is largely reflected in the valuation,” he said. “With some uncertainties in 2H, we await a more attractive entry point. We continue to have a slight preference for WN over L (WN trades at a 16-per-cent holdco discount).”

Elsewhere, National Bank’s Vishal Shreedhar raised his target to $122 from $120 with an “outperform” rating.

“We continue to maintain a favourable view of Loblaw and recommend it as a top pick in our staples coverage, supported by several key themes: (1) Benefits from management’s improvement initiatives; (2) EPS growth (low double-digit y/y in 2022 as guided by management); (3) A return to more favourable trends in discount and drug store (where L over-indexes); and (4) Potential structural benefits (longer-term elevated grocery demand). L is well-positioned to navigate this turbulent environment, in our view,” he said.

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Pointing to “record inflationary challenges,” BMO Nesbitt Burns analyst Jonathan Lamers lowered High Liner Foods Inc. (HLF-T) to “market perform” from “outperform.”

“Since we upgraded High Liner in November, commodity cost inflation has continued at record levels,” he said “We are concerned this creates downside to margins over 2022. Global shipping challenges and lockdowns affecting seafood processors in China are also risks. We are concerned these issues could affect results for an extended period and limit valuation expansion while these persist.”

After reducing his sales volume and gross margin assumptions, Mr. Lamers cut his adjusted EBITDA estimates for 2022 and 2023 to $89-million and $96-million, respectively, from $95-million and $103-million.

His target for High Liner shares slid to $13 from $16, below the $16.75 average.

“The stock trades at a discounted multiple relative to its sector. Improving organic sales volume growth could be a catalyst to narrow the valuation gap,” he said.

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Following a “soft start” to 2022, National Bank Financial analyst Rupert Merer downgraded 5N Plus Inc. (VNP-T) to “sector perform” from an “outperform” recommendation, emphasizing the presence of headwinds from the war in Ukraine and supply chain disruptions.

The Montreal-based producer of specialty semiconductors and performance materials reported revenue of $64-million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $5.6-million. Both fell short of Mr. Merer’s “ambitious” projections ($69-million and $10.6-million).

“VNP reported good year-over-year performance with its Renewable Energy, Space, Imaging markets and Pharma markets, but weakness in its Industrial, Extractive and Catalytic materials businesses,” he said. “Sales to a client with operations in Russia did not materialize and the outlook is bleak for this market. VNP also saw an impact from inflation and supply chain challenges.”

“VNP is now forecasting adjusted EBITDA for 2022 between $25-million and $30-million. Our previous forecast was $44-million, up from $28-million in 2021 and assuming a benefit from the acquisition of AZUR and recovery from the COVID-19 pandemic. The AZUR acquisition was forecasted to deliver up to €7-million per year in EBITDA, highlighting the scale of the headwinds to VNP in 2022E. VNP has re-launched a strategic review on some of its legacy materials businesses.”

Noting “some parts of the business may be worth more (like its medical imaging business), but the market is unlikely to pay for it until it has improved visibility on growth,” Mr. Merer cut his target to $2.50 from $4.25. The average is $3.80.

“Over time, VNP should have an opportunity with a number of interesting semiconductor technologies that could see growth in renewable energy, high power electronics and medical imaging.” he said. “It will prioritize investments into R&D for Wide Band Gap materials, like Gallium Nitride (GaN), that are used in these markets. However, it could take a few years for these markets to materialize and until then, performance could be lumpy. With that, we are moving to Sector Perform.”

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Given many of it operations experienced production setbacks, Scotia Capital analyst Ovais Habib expects to view the first-quarter results from Equinox Gold Corp. (EQX-T) “unfavourably,” leading him to lowered his recommendation to “sector perform” from “sector outperform.”

“While EQX retains strong liquidity ($465-million in cash and undrawn debt) to fund development at Greenstone, investors may prefer to wait for sustained production growth at other operations,” he said.

Late Tuesday, the Vancouver-based miner reporting an earnings per share loss of 8 cents, missing the Street’s forecast of a 2-cent profit. Production and cost results also fell short of expectations.

“With the Q1 results, EQX noted that permitting of the next tailings raise at RDM has been delayed pending ongoing discussions with regulatory authorities; in the event that permitting is not resolved in time to start the next raise in Q2/22, operations at the mine may be temporarily suspended starting in Q2 or Q3/22,” said Mr. Habib.

He cut his target to $11.75 from $12.25. The average is $13.67

Others making changes include:

* Canaccord’s Dalton Baretto to $14 from $15 with a “buy” rating.

“EQX no doubt had a difficult Q1, but we view these challenges as a temporary overhang,” said Mr. Baretto. “Our longer-term thesis remains intact: we view EQX as an appropriate option for those investors who are bullish on gold, given the company’s strong leverage to the metal price and unparalleled growth profile. We believe [Wednesday’s] 15-per-cent decline in the share price is overdone, and likely a market reaction to peer IMG’s capex increase at the Cote project.”

* BMO’s Ryan Thompson to $14.50 from $13.50 with an “outperform” rating.

“With the acquisitions of Leagold and Premier, EQX offers investors a diversified asset portfolio spread across four different countries. In our view, the company is well capitalized to execute on its robust growth pipeline (Los Filos expansion, Castle Mountain Phase I & II, Santa Luz restart, and the development of Greenstone),” he said.

* TD Securities’ Arun Lamba to $12.50 from $15.50 with a “buy” rating.

* Desjardins Securities’ John Sclodnick to $11.25 from $12 with a “hold” rating.

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After Wednesday’s post-market release of “very strong” first-quarter results, Desjardins Securities’ Chris Li now sees a “moderate slowdown scenario” for Gildan Activewear Inc. (GIL-N, GIL-T) given the presence of extensive macro pressures.

The Montreal-based clothing manufacturer reported adjusted earnings per share of 76 US cents, exceeding the the Street’s 61-US-cents forecast, driven by “exceptionally strong” activewear sales growth of 37.7 per cent year-over-year (versus Mr. Li’s 14-pe-cent estimate).

“[Point-of-sales] is decelerating for GIL’s activewear products in North America from exceptionally strong double-digit growth in 1Q to a more normal but still healthy mid-single digits in 2Q to date,” the analyst said. “GIL attributes the slowdown to economic uncertainty especially impacting corporate promotions, as well as rising COVID-19 cases in the U.S. and unfavourable weather (transitory). Hosiery and underwear sales (accounting for more than 20 per cent of sales) are slowing as they lap non-recurring consumer stimulus.”

Mr. Li expects the Street to focus on that slowly POS growth in activewear. It also led him to trim his EPS projections for the third and fourth quarters of this year as well as his full-year 2023 expectation.

“We expect 2Q activewear sales to remain strong (at least mid-teens growth), driven by pricing and mid-single-digit volume growth,” he said. “In 2H, we expect sales to slow to the low single digits as GIL starts to cycle through price increases with limited volume growth. For 2023, we expect sales growth to remain in the low single digits before rebounding in 2024. While some of GIL’s end-user segments are economically sensitive, we expect pent-up demand from travel, large events, sports, collegiate etc, distributor restocking (inventory still well below pre-pandemic levels) and structural growth drivers to offset the impact.”

Maintaining a “positive long-term view” and “buy” recommendation for its shares, Mr. Li cut his target to $55 from $63. The average on the Street is $55.

Elsewhere, RBC’s Sabahat Khan raised his target to US$52 from US$51, reaffirming an “outperform” recommendation.

“We reiterate our positive view on Gildan Activewear Inc. following better-than-expected Q1/22 results,” said Mr. Khan. “Looking ahead, we believe the company is well positioned to deliver on its 2024 sales and Adjusted EPS targets, and we revise our forecasts higher following the strong Q1 print.”

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Following weaker-than-anticipated first-quarter results, a group of equity analysts lowered their target prices for units of Minto Apartment Real Estate Investment Trust (MI.UN-T) .

After the bell on Tuesday, the Ottawa-based REIT reported funds from operations per unit of 19 cents, up 3 per cent year-over-year but below the Street’s forecast by 2 cents. Same property net operating income rose 2.6 per cent.

“Occupancy and leasing spreads are trending in the right direction; however, cost inflation expectations (opex and interest expense) have increased since our last update,” said Desjardins Securities’ Michael Markidis. “These factors are being felt across the Canadian REIT space.”

Though he expressed increased confidence in his revenue outlook, Mr. Markidis cut his target to $26.50 from $28 with a “buy” recommendation. The average is $26.09.

Others making target changes include:

* BMO’s Jenny Ma to $26 from $29 with an “outperform” rating.

“While Q1/22 results were a bit light due to lower-than-expected NOI, we remain encouraged by the ongoing positive leasing momentum and expect it to drive further occupancy gains and rental rate growth,” she said. “As the upcoming Ontario provincial election continues to weigh on regulatory concerns, we expect a re-election of the PC Party would be most favourable to MI.UN as its housing plan is more focused on increasing supply rather than further regulating the already-highly regulated rental market.”

* Canaccord Genuity’s Christopher Koutsikaloudis to $26 from $28.50 with a “buy” rating.

“In our view, the recent decline in Minto’s unit price, and the REIT sector broadly, reflects an increased risk that rising long-term interest rates will place upward pressure on cap rates,” he said.

* Raymond James’ Brad Sturges to $26 from $28 with a “strong buy” rating.

* TD Securities’ Jonathan Kelcher to $27 from $28 with a “buy” rating.

* RBC’s Jimmy Shan to $25.50 from $29 with an “outperform” rating.

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Citing a “discounted” valuation, Raymond James analyst Stephen Boland upgraded Home Capital Group Inc. (HCG-T) to “outperform” from “market perform” despite releasing weaker-than-anticipated first-quarter results.

On Wednesday, the Toronto-based company reported diluted earnings per share of $1.02, below Mr. Boland’s $1.23 estimate due largely to net interest margin compression.

“Home Capital reported origination growth of 73.0 per cent compared to last year driven by single-family originations,” he said. “Net interest income was below our estimate as deposit costs rose in the quarter quicker than Home Capital could raise mortgage rates. There was NIM compression which resulted in lower than expected EPS. This was partially offset by lower than expected provisions. The impact on NIM is expected to continue in 2022. Loan growth was 5.0 per cent in the quarter which is on target for management’s guidance of 20% loan growth for the year. The offset is we are lowering our net interest income assumptions. Management was active with the NCIB in the quarter so this should provide a floor for the stock.

“We believe concerns regarding rising interest rates are overdone. Home Capital are solid underwriters and have had little credit issues over the last 20 years even through the credit and liquidity crisis. The recent decline in housing prices is actually a positive for lenders as it offsets the rapid rise of housing over the past two years and makes adjudication and appraisals more reasonable. The stock is trading well below our 2023 BV and reflects distressed levels, not a bank with an expected double-digit ROE.”

Mr. Boland trimmed his target to $48 from $52. The average is $46.14.

Others making changes include:

* RBC’s Geoffrey Kwan to $46 from $50 with an “outperform” rating.

“While better-than-forecast originations and loan growth were a positive surprise, the significant decline in the share price likely reflected the greater-than-expected decline in NIM yield, which we don’t forecast to stabilize until Q4/22,” said Mr. Kwan. “That said, HCG’s shares are down 24 per cent so far this year and now trade at 0.78 times P/BV, despite our ROE forecasts of 12 per cent in 2022 and 15 per cent in 2023. We believe it’s possible in the short-term that HCG’s valuation is constrained by macro and housing market uncertainty (higher rates, lower home sales and likely lower prices), but we think we are likely to get more clarity in H2/22 regarding the housing/mortgage market, NIM yields, potential loan losses and return of capital. Given we think a housing downturn with severe mortgage losses is the less likely scenario, we think the shares could generate substantial upside when visibility improves and patient investors may find the current share price attractive.”

* BMO’s Étienne Ricard to $44 from $51 with an “outperform” rating.

* National Bank’s Jaeme Gloyn to $38 from $45 with an “outperform” rating.

* Scotia’s Phil Hardie to $43 from $47 with a “sector perform” rating.

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Brookfield Infrastructure Partners LP (BIP-N, BIP.UN-T) should be viewed as “a core holding for investors seeking yield plus above average growth with exposure to global infrastructure investments,” according to RBC Dominion Securities analyst Robert Kwan.

In a research report released Thursday, he said a quarterly release reinforced a strong growth outlook.

“With inflation being a key concern for many investors, BIP’s Q1/22 results demonstrated how BIP’s cash flow benefits from inflation,” said Mr. Kwan. “With the market’s concerns about the geopolitical environment and the economy in general (i.e., recession fears), we believe investors may gravitate to BIP’s units given the partnership’s long-established track record of successfully acquiring businesses for value during periods of market uncertainty.”

“BIP articulated multiple avenues to deliver growth in FFO/unit that include: (1) an attractive organic growth outlook that is trending to the high end of its 6-9-per-cent annual range delivered by a combination of benefiting from high inflation (via inflation indexation), project-related growth across its numerous operating “platforms” and GDP-related (i.e., volumetric) upside; (2) an acquisition outlook that management noted is as strong as it has ever been; and (3) the

capital recycling program, which provides an attractive funding option given the ability to rotate capital away from mature assets at high valuations into faster growing businesses with higher expected IRRs. Last, the company highlighted the potential to benefit from a new trend – ‘deglobalization.’”

Maintaining an “outperform” rating, Mr. Kwan raised his target to US$70 from US$65. The average is US$69.83.

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DA Davidson analyst Brandon Rolle views BRP Inc. (DOO-T) as the original equipment manufacturer (OEM) to own with the North American off-road vehicle industry, pointing to its “strong management team, superior product innovation and ability to drive market share gains without significant promotional activity.”

In a research report released Thursday, he initiated coverage of the Valcourt, Que.-based company with a “buy” recommendation, expecting it to outperform investor expectations on earnings, margins and retail sales through fiscal 2023 with “a healthy balance sheet supporting strong cash flow generation and shareholder return.”

“The company is a brand of choice for true powersports and boating enthusiasts,” said Mr. Rolle. “BRP’s products are recognized by stunning designs, powerful and efficient engines, and the incorporation of advanced technologies that drive industry-leading performance. BRP aims to continuously enhance the consumer experience through new features and models in a variety of ways, including enhancing rider ergonomics, adding safety features, enhancing engine performance and reducing environmental impact. The company’s diversified portfolio of brands and products includes, under the Powersports segment, Year-Round Products such as Can-Am ATVs, SSVs and 3WVs, Seasonal Products such as Ski-Doo and Lynx snowmobiles, Sea-Doo PWCs and pontoons, and Rotax engines for karts, motorcycles and recreational aircraft, and under the Marine segment, Alumacraft, Manitou, Quintrex, Stacer and Savage boats, and Rotax engines for jet boats. Additionally, the company supports its line of products with a dedicated PA&A business.”

Mr. Rolle said his latest checks of North American off-road vehicle dealers show BRP’s CanAm ORV line has gained significant market share in April with its retail sales outpacing industry declines.

“Contacts indicated CanAm’s product availability has improved slightly, but its ability to keep prices reasonable while providing superior innovation has aided the company in maintaining an elevated level pre-sale demand compared to the rest of industry,” he said. “For the upcoming new model year shift July1st, BRP is only planning to increase prices 1-2 per cent (compared to PII’s mid-single-digit-percentage price increase July 1st). Minimal price increases issued the last 3-6 months compared to competitors has helped the affordability of BRP’s ORV units, while also maintaining dealer margins that are well above industry average.”

Also seeing opportunities to increase its market share in the Sea-Doo market given competitors’ supply chain issues, Mr. Rolle’s earnings estimates now sit at the high-end of the company’s 2023 guidance.

“Supply chain issues are likely to impact 2Q22earnings, but the company expects relief in 2H23 along with pricing to match inflation,” he said. “While FY23 earnings are 2H23-weighted, BRP has a strong track record of meeting and exceeding its initial guidance range.”

Mr. Rolle set a target of $134 per share. The average is $136.75.

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Two more analysts on the Street downgraded Iamgold Corp. (IMG-T, IAG-N) over concerns about soaring capital costs at its Côté Gold Project.

Though he called its first-quarter results “very strong,” National Bank Financial analyst Mike Parkin lowered Iamgold Corp. (IMG-T, IAG-N) to “sector perform” from “outperform.” His target slid to $3.25 from $5.50. The average is $3.43.

“We believe that the Cote project, along with the Gosselin Zone, still has the potential to surface tremendous value for shareholders, but we believe the company has to demonstrate the ability to achieve this latest plan to avoid this potential future value from being heavily discounted in the share price,” said Mr. Parkin.

Stifel’s Ingrid Rico lowered the Toronto-based miner to “sell” from “hold” with a $2.50 target, down from $3.25.

“A disappointing update continues to underscore poor execution on the construction of the Côté Gold project,” she said. “Costs have been eroding the project’s NAV. Additionally, the magnitude of the new capex estimate now adds funding risk, after the company went ahead with this project initially having a strong balance sheet. Based on our current operational forecasts, it is clear that projected operating cash flows and current financial liquidity (assuming the $500-million credit facility is fully drawn over the course of this year) may not be sufficient to fill the funding gap to complete Côté. Furthermore, operating cash flow forecast for this year could be challenged not only by inflation cost pressures but also potential risks to achieve operational targets at Rosebel and Westwood.”

Their rating changes came a day after three other analysts downgraded the Toronto-based miner.

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In other analyst actions:

* RBC’s Paul Treiber lowered his Altus Group Ltd. (AIF-T) target to $61 from $72, keeping an “outperform” rating, while BMO’s Stephen MacLeod cut his target to $67 from $73 also with an “outperform” rating. The average is $64.75.

“Q1 revenue was in line with RBC/consensus, the second consecutive quarter following Altus’ CEO transition. While organic AA bookings growth slowed, it reflects tough comps and seasonality. The absolute dollars of bookings and quality of bookings are solid. If bookings growth remains in the double-digits, AA’s long-term growth is also likely similar,” Mr. Treiber said.

* Mr. Treiber also reduced his Constellation Software Inc. (CSU-T) target to $2,700 from $2,800, remaining above the $2,618.73 average, with an “outperform” rating, while BMO’s Thanos Moschopoulos cut his target to $2,400 from $2,500 with an “outperform” recommendation.

“We’ve raised our estimates, despite the EBITDA miss and FX headwinds, as our model now includes the Allscripts deal,” said Mr. Moschopoulos. “We’ve trimmed our target price, reflecting the recent multiple compression across the sector, but continue to view the stock’s valuation as attractive—given CSU’s continued success in deploying capital, which we expect will continue to drive strong EBITDA/cash flow growth in FY2022/ FY2023.”

* Canaccord Genuity’s Dalton Baretto lowered his Centerra Gold Inc. (CG-T) target to $13.50, below the $13.65 average, from $15 with a “buy” rating.

“A generally solid quarter overshadowed by the mercury issues at the Oksut ADR plant,” he said. “CG’s financial results were generally better than our forecasts due to higher copper production from Mt. Milligan than we had expected. Guidance for Milligan has been maintained, but Oksut (and consolidated guidance) remains suspended.”

* Canaccord’s Yuri Lynk lowered his Doman Building Materials Group Ltd. (DBM-T) target to $7.50 from $8 with a “hold” rating, while Raymond James’ Steve Hansen cut his target to $9.50 from $10.50 with an “outperform” rating. The average is $9.71.

“We are trimming our target price ... to account for emerging macro headwinds that, while still nascent, could present incremental risk to the outlook,” said Mr. Hansen. “That said, with demand still robust across most key end-markets and LBM prices expected to remain at elevated levels, we continue to foresee exceptional results throughout our forecast horizon.”

* Desjardins Securities’ Michael Markidis cut his Dream Industrial Real Estate Investment Trust (DIR.UN-T) target to $18 from $18.50 with a “buy” rating, while Canaccord Genuity’s Mark Rothschild reduced his target to $16.50 from $19 with a “buy” rating. The average is $18.93.

“DIR reported solid 1Q22 results,” Mr. Markidis said. “Revisions to our FFOPU [funds from operations per unit] outlook and NAV are not material; however, we have trimmed our target to reflect heightened yield curve volatility and the potential impact on property values. Conservative leverage and an above-average earnings growth outlook (two-year FFOPU CAGR of 7–8 per cent) are favourable attributes in an inflationary environment, in our view.”

* RBC’s Pammi Bir cut his First Capital Real Estate Investment Trust (FCR.UN-T) target by $1 to $21, above the $20.82 average, with an “outperform” rating. Others making changes include: BMO’s Jenny Ma to $21 from $21.50 with an “outperform” rating; Canaccord Genuity’s Mark Rothschild to $20.75 from $22 with a “buy” rating and Scotia’s Mario Saric to $19.50 from $20 with a “sector perform” rating.

We remain bullish on the prospects for FCR’s portfolio and believe that the REIT is well positioned to grow NAV over time,” said Mr. Rothschild. “In the near term, however, leverage is relatively high, long-term interest rates are rising, and the unit price has been particularly weak. On the conference call, management indicated that the weak unit price is a concern, and we believe they are likely to undertake some action to improve the unit price. In our view, aggressively buying back units with proceeds from asset sales with no increase in leverage would allow for management to grow NAV and drive the unit price higher at the same time. While it is possible that cap rates will rise along with the move in long-term interest rates, FCR owns a unique and high-quality portfolio, and there should remain strong interest in acquiring the type of properties that FCR owns. While many of these assets are irreplaceable and difficult to assemble, considering the REIT’s current valuation, it is, in our view, the best decision.”

* RBC’s Maurice Choy raised his target for Fortis Inc. (FTS-T) to $65 from $60 with a “sector perform” rating. The average is $61.39.

“With in-line Q1/22 results, we believe investor focus is on Fortis’ ability to grow beyond its base capex plan (e.g., the MISO LRTP and Lake Erie Connector projects) and its exposure to (and the regulatory protection against) inflation and supply chain issues,” said Mr. Choy. “Big picture, ‘boring’ quarterly results, execution of the base plan, and progress on energy transition-driven opportunities – plus the delivery of growing dividends – are what investors look for. To these ends, Fortis has lived up to these expectations in Q1/22, reinforcing the defensiveness of its pure-play regulated utility stock amidst the ongoing recession rhetoric.”

* Canaccord’s Matthew Lee raised his Hammond Power Solutions Inc. (HPS.A-T) target to $17.50 from $15.50, below the $19.25 average, with a “buy” rating.

* National Bank’s Travis Wood raised his Imperial Oil Ltd. (IMO-T) target to $80 from $78, above the $66 average, with a “sector perform” rating.

* Desjardins Securities’ Benoit Poirier cut his target for shares of The Lion Electric Co. (LEV-N, LEV-T) to US$14 from US$18 with a “buy” rating. Other changes include: Scotia’s Mark Neville to US$9 from US$11 with a “sector perform” rating, Raymond James’ Michael Glen to US$7.50 from US$11 with a “market perform” rating and BMO’s Jonathan Lamers reduced his target to US$7.50 from US$8 with a “market perform” rating. The average is US$10.84.

“We were pleased with the sequential improvement in vehicle deliveries reported in 1Q despite ongoing supply chain disruptions,” Mr. Poirier said. “We continue to believe significant capacity expansion will benefit the company in the long run, but the recent softening in truck booking activity and lower adjusted EBITDA resulting from an increase in SG&A expenses has caused us to revise our estimates lower.”

* Barclays’ Raimo Lenschow reduced his Open Text Corp. (OTEX-Q, OTEX-T) target to US$47 from US$51 with an “overweight” rating, while RBC’s Paul Treiber cut his target to US$52 from US$62 with an “outperform” rating and BMO’s Thanos Moschopoulos trimmed his target to US$47 from US$53 with an “outperform” rating. The average is US$55.75.

“Q3 revenue was in line, while adj. EBITDA/EPS were slightly ahead. Accretion on the Zix acquisition appears to be tracking in line. Our estimates decline slightly on FX and lower license revenue. With solid FCF and reduced software valuations, the probability of OpenText deploying capital on acquisitions is increasing,” said Mr. Treiber.

* ATB Capital Markets’ Patrick O’Rourke raised his Paramount Resources Ltd. (POU-T) target to $42 from $39, exceeding the $40.85 average, with an “outperform” rating, while BMO’s Ryan Kwan hiked his target to $45 from $40 with an “outperform” rating.

“Paramount posted a meaningful cash flow beat in the quarter, primarily related to strong realized pricing,” said Mr. Kwan. “In the context of the current pricing environment, Paramount is balancing shareholder returns (dividend up 25 per cent) and growth (2023 now forecasted at up 16 per cent year-over-year).”

* Credit Suisse’s Kevin McVeigh lowered his Q4 Inc. (QFOR-T) target to $9.50 from $12 with an “outperform” rating, while Canaccord’s Doug Taylor cut his target to $8 from $9 with a “buy” rating. The average is $10.65.

“QFOR announced Q1 results with in-line revenue and a wider-than-expected EBITDA loss,” said Mr. Taylor. “The company confirmed prior growth expectations, noting that the mix may be skewed to ARPA growth through cross-selling and expansions vs. new logo growth in the current market. We have reduced our target ... a reflection of the ongoing market preference shift to profitable growth companies. Management still targets a positive FCF inflection in 2023. We think showing a more convincing trend towards this objective as QFOR begins to harvest growth investments in H2/22, alongside sustained top-line expansion, is the key catalyst for the name to re-inflate what remains an inexpensive valuation.”

* Credit Suisse’s Lauren Silberman cut his Restaurant Brands International Inc. (QSR-N, QSR-T) target to US$68 from US$73 with an “outperform” rating. The average is US$67.76.

“While sentiment has been challenged, in large part driven by home market underperformance, we believe continued improvement at TH, narrowing of the underperformance gap at BK US & execution against RBI’s 5-per-cent long-term unit growth algorithm will encourage investors to get more constructive, noting shares are trading at an absolute & relative discount (4-per-cent dividend yield),” she said.

* RBC’s Alexander Jackson raised his target for Russel Metals Inc. (RUS-T) to $45 from $41, above the $41.21 average, with an “outperform” rating, while Scotia’s Michael Doumet hiked his target to $38.50 from $37 with a “sector perform” rating.

“1Q22 profit levels far exceeded expectations,” said Mr. Doumet. “The Russia-Ukraine war resulted in a supply shock intra-quarter that boosted metal prices. While metal prices have begun to fade since, market conditions/prices – and therefore sales/margins for Russel – should remain above historical levels through 2022. Based on management’s comments, we assume 2Q22 EPS could be as high as (maybe higher than) 1Q22′s. Further, given the backdrop, we forecast strong FCF through 2023, which provides Russel with ample capacity for internal investments and M&A (it had $470 million of total liquidity at the end of Q1).

“The last year has been quite special for Russel. The company smartly divested its OCTG business, collecting cash while maintaining upside exposure. Its MSC gained market share. Its inventory turns have been industry leading and its balance sheet is the best it’s been in years, despite recent completion of a sizable deal. That said, with metal prices fading, upside remains limited, in our view. Longer-term, however, we could see Russel reinvesting its excess capital to compound earnings (and outgrowing its dividend, more meaningfully).”

* Ahead of its first-quarter earnings release, National Bank’s Zachary Evershed cut his Savaria Corp. (SIS-T) target to $23 from $23.50 with an “outperform” rating. The average is $24.17.

“Given broader inflation is an industry-wide issue, we expect Savaria to continue adjusting prices prudently and in line with competitors,” he said. “We note that price hikes require approximately 60 days to take effect and that to catch up, Savaria has implemented previously disclosed price increases during Q1. We believe that past the inflation hump, pricing actions will have a neutral effect on margins and competitive positioning, all else equal.”

* RBC’s Sabahat Khan increased his Spin Master Corp. (TOY-T) target to $65 from $63, keeping an “outperform” rating. The average is $62.

“Spin Master reported stronger-than-expected Q1 results, driven by strong top-line growth and solid margin performance. The company revised its guidance higher for Gross Products Sales and revenue and also provided margin details for its 3 segments, which we believe will be received well,” he said.

* BMO’s Randy Ollenberger raised his Tourmaline Oil Corp. (TOU-T) target to $80 from $75 with an “outperform” rating, while Stifel’s Robert Fitzmartyn increased his target to $87.25 from $80 with a “buy” rating and Raymond James’ Jeremy McCrea hiked his target to $85 from $80 with a “strong buy” rating. The average is $81.25.

“Tourmaline reported strong Q1/22 financial results on higher realized prices and lower-than-expected royalties,” Mr. Ollenberger said. “The company generated record quarterly free cash flow of $618 million and anticipates delivering $3.9 billion in 2022 at current strip prices. It also announced another special dividend of $1.50/share which will be paid out on May 19th. We believe Tourmaline’s premium valuation is justified due to its healthy balance sheet, impressive free cash flow profile and commitment to growing shareholder returns.”

* RBC’s Nelson Ng cut his Transalta Renewables Inc. (RNW-T) to $20 from $21 with a “sector perform” rating. The average is $18.42.

“TransAlta Renewables (RNW) reported strong Q1/22 results and reiterated its 2022 guidance. However, we believe the growth visibility has diminished with TransAlta Corporation (sponsor) indicating that it is not intending to offer the two Oklahoma wind projects under construction as future drop-downs,” said Mr. Ng. “We believe investors should remain on the sidelines until there is more clarity on the post PPA economics of the Sarnia facility and the foundation replacement at Kent Hills gets underway.”

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