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

After its first-quarter 2023 financial results fell “well below” his expectations, RBC Dominion Securities analyst Walter Spracklin warned headwinds facing its Defence segment are likely to weigh on CAE Inc. (CAE-T) in the near term.

TSX-listed shares of the Montreal-based flight simulator manufacturer plummeted 17.6 per cent on Wednesday following its earnings release, which saw adjusted operating income of $61-million miss the expectations of both Mr. Spracklin ($129-million) and the Street ($122-million). The analyst attributed the variance to “weaker results in Defense driven by contract profit adjustments as well as reflecting delayed customer contract negotiations, inefficiencies from supply chain disruption and skilled labour shortages.”

CAE also dropped its full-year guidance, expecting adjusted operating income growth in the mid-20-per-cent range, down from a previous estimate of mid-30-per-cent due largely to results in Defence.

“Notable is that the updated guide implies robust results during the remainder of the year or adj. operating income FQ2 to FQ4 of $495-million, which compares to consensus coming into the quarter of $465-million,” said Mr. Spracklin. “Our view is that a turnaround of this magnitude would indeed be impressive, but we see risk to the downside (and subsequently took lower our Defence target multiple) as certain headwinds that affected FQ1 results are back-half weighted and carry with them a degree of uncertainty.”

In response to the guidance, Mr. Spracklin dropped his 2023 EBITDA estimate to $884-million, down from $953-million. It represents year-over-year growth of 22 per cent. His 2024 and 2025 projections were largely left unchanged “due to favourable industry tailwinds, including recovering passenger travel and increased defense spending by NATO members.”

“We have updated our estimates to align with guidance; however, we note that guidance is back half weighted and assumes improvement in labour, supply chain and contract issues — much of which carries a degree of uncertainty / low predictability,” he said. “We therefore see risk to the downside, and as such, we have lowered our Defence multiple.”

Keeping an “outperform” recommendation for CAE shares, Mr. Spracklin cut his target to $37 from $40. The average is $38.54.

Elsewhere, other analysts making changes include:

* Desjardins Securities’ Benoit Poirier to $36 from $40 with a “buy” rating.

“CAE’s 1Q FY23 results were disappointing as they reflect the negative impact of charges from two defence contracts and acute global issues that watered down profitability in the Defence and Healthcare segments. However, the heightened level of demand for air travel combined with accrued defence spending should still provide an encouraging set-up for CAE. To reflect our new outlook, we are reducing our target,” said Mr. Poirier.

* BMO’s Fadi Chamoun to $36 from $42 with an “outperform” rating.

“We characterize CAE’s Q1/F23 results in the Civil segment as consistent with our expectations, but the impact of a second significant underperformance in the Defense segment in less than a year will take time to heal, particularly when it comes on the heels of an Investors’ Day that painted a generally more positive outlook in early June,” said Mr. Chamoun. “The near 18-per-cent pullback in valuation post results does keep the risk/reward on the favorable side, however, even in the context of Defense segment recovery being more gradual than anticipated.”

* National Bank Financial’s Cameron Doerksen to $38 from $44 with an “outperform” rating.

* CIBC’s Kevin Chiang to $35 from $41with an “outperformer” rating.

* TD Securities’ Tim James to $34 from $41 with a “buy” rating.


Despite better-than-anticipated second-quarter results, Raymond James analyst Michael Glen made further reductions to his mid/longer-term sales forecast for Ballard Power Systems Inc. (BLDP-Q, BLDP-T), citing “lower expectations surrounding China, and prolonged timing surrounding the hydrogen strategy and outlook.”

Also anticipating pressure on gross margins from its indicated pricing strategy for its next generation fuel cell product as well as higher overhead costs, Mr. Glen thinks “near-term factors give some pause,” leading him to lowered his recommendation for its shares to “market perform” from “outperform” previously.

“We continue to have a favourable long-term view on Ballard’s growth prospects, but do see some near-term macro headwinds in terms of key markets — namely, Europe and China,” the analyst said. “Additionally, we need to further assess the competitive implications of the negative gross margin, which is clearly not sustainable. Finally, while we are seeing some concrete actions come together in both Europe and the U.S. to promote scaling of green hydrogen production, which remains a compelling energy diversification mechanism for many parts of the world, it will take time and a substantial amount of capital.”

Shares of the Vancouver-based company rose 5.1 per cent on Wednesday following the earnings release. It included earnings per share of a loss of 7 US cents, topping the analyst’s projection by 5 US cents.

“Regarding the order backlog, this did decline sequentially to $91.2-million (was $99.8-million at 1Q22), but management continues to reference strong levels of customer engagement and activity,” said Mr. Glen. “Our view remains that we should see better growth in the backlog in late 2022. Looking forward, while Ballard is working with a number of different sales engagements, we continue to see the biggest potential order gains from: (1) a rebound in China which will ultimately be driven by the Weichai-Ballard JV (and stem from clarity on the government’s hydrogen policy); and (2) higher activity in bus orders out of Europe where we continue to wait for a step higher in the volume on unit order, particularly on the bus side with Ballard referencing some potential wins upcoming out of the German and UK markets. Along those lines, Ballard continues to emphasize their leadership position in the fuel cell market, an aspect that we view as critical when taking into consideration the evolving competitive environment. We would note that exiting 2Q, Ballard remains well capitalized with $1.0-billion in cash and zero debt.”

Trimming his 2022 and 2023 revenue and earnings estimates, Mr. Glen raised his target for Ballard shares to US$10 from US$9. The average is US$12.31.

Elsewhere, calling the results “soft,” National Bank Financial analyst Rupert Merer sees near-term market challenge, but he thinks " visibility on the hydrogen market is “improving.” He lowered his target by US$1 to US$12 with an “outperform” rating.

Others making changes include:

* Citi’s P.J. Juvekar to US$10 from US$7.50 with a “neutral” rating.

“Our top three takeaways from BLDP’s earnings call include: 1) Europe sales increased 25 per cent quarter-over-quarter, while North America was up 30 per cent. The US Inflation Reduction Act (IRA) is positive for reducing the cost of hydrogen (H2) fuel, accounting for 30-70 per cent of total cost of ownership in various applications, down to at or below competing fossil fuel technology; 2) Sales and margins missed our estimates as expected sizable orders were pushed out including in bus and rail applications. However, management expects orders particularly in bus and stationary applications to improve in the near-term; and 3) BLDP has visibility on over 100 fuel cell electric buses (FCEB) orders,” he said.

* TD Securities’ Aaron MacNeil to US$12.50 from US$11 with a “speculative buy” recommendation.


After a “much improved” quarter, Raymond James analyst Stephen Boland upgraded Element Fleet Management Corp. (EFN-T) to “outperform” from “market perform” based on a “better” outlook.

He was one of three analysts on the Street to raise their recommendations for the Toronto-based company after it reported adjusted earnings per share of 29 cents after the bell on Wednesday, exceeding the analyst’s 24-cent estimate and the consensus forecast of 22 cents.

“While backlog issues remain, origination growth has resumed. Servicing income has benefited from the recent macro headwinds and was largely responsible for the quarter-over-quarter improvement,” said Mr. Boland. “Notably, older vehicle fleets among EFN’s customer base has increased the demand for services and maintenance. In addition, parts and labour cost inflation has also translated into higher revenue for EFN.

“Following on from the strong quarter, management increased its full-year guidance for 2022 (and indicated 2023 guidance is too low). Revenue is now expected to grow 10-12 per cent year-over-year (vs. 4-6 per cent prior) while adjusted EPS is now expected to grow 22-27 per cent year-over-year (vs. 9-14 per cent prior). While management expects Q2 to be the strongest quarter in 2022, we still expect the continued OEM and inflationary environment will keep servicing income elevated in the back half of the year. In addition, there are signs that the order backlog may have finally peaked, having declined marginally in the quarter.”

With its increases to his earnings expectations for the next two full fiscal years, the analyst increased his target for the company’s shares to $18 from $14. The average is $12.17.

Elsewhere, BMO’s Tom MacKinnon moved the stock to “outperform” from “market perform” and hiked his target to $19 from $13.50.

“With a scalable platform and continued robust client demand, we see continued EPS/ FCF per share acceleration through 2023 and beyond, with its outsized order backlog that remains $1.7-billion above average levels on robust client demand and ongoing OEM production delays, providing a continued tailwind to revenue growth,” said Mr. MacKinnon.” After its second consecutive beat/guidance increase, we lift estimates by 9-10 per cent. TP increases to $19, now based on 12.5 times 2023E FCF per share of $1.52, a valuation metric we believe is more relevant to EFN (minimal cash taxes), given its large/regenerating tax shield.”

TD Securities’ Mario Mendonca upgraded Element Fleet to “buy” from “hold” with a $19 target, rising from $13.

Others making changes include:

* RBC’s Geoffrey Kwan to $22 from $19 with an “outperform” rating.

“Q1/22 results were great, but Q2/22 results were so much better on so many fronts and all this despite OEM production still stagnating. When OEM production normalizes, given positive momentum on new client wins + cross-selling existing clients fleet services (e.g., AMZN), we forecast a 16-per-cent 5-year EPS CAGR, yet the shares trade at just 12 times P/E and 10-per-cent FCF yield. 2022 guidance was increased again this quarter and we think it may be too low (H1/22 EPS annualized = high end of new guidance). Q3/22 results should see 2023 guidance substantially increased + dividend increase announcement. EFN is a rare Financial stock with EPS tailwinds in a weaker economic environment. We view EFN as a relative and possibly absolute winner in a recessionary, high-inflation and/or higher interest rate environment. With none of its key competitors publicly traded, we view EFN as a hidden gem in our coverage,” said Mr. Kwan.

* Barclays’ John Aiken to $19 from $17 with an “overweight” rating.

“We believe that the market had been anticipating (and pricing in) an eventual inflection point where the thawing of OEM production would lead to a step-up in earnings. Element provided that in its second quarter, ahead of schedule, with significant room for additional upside,” he said.

* Scotia Capital’s Phil Hardie to $17.50 from $16 with a “sector outperform” rating.

* CIBC’s Todd Coupland to $17 from $15.50 with a “neutral” rating.


The “massive” quarterly earnings beat from Boyd Group Services Inc. (BYD-T) signals an “acceleration” in its recovery, according to Desjardins Securities analyst Gary Ho.

“BYD put pedal to the metal with a massive 2Q beat, driven by 22.3-per-cent SSSG [same-store sales growth] and ongoing success in price increases,” he said. “While more is needed to address labour issues, we are accelerating our margin recovery and organic growth expectations, thus increasing our estimates across the board. BYD remains committed to doubling the business by 2025. We believe it is on the cusp of an inflection point, benefiting from both margin and valuation expansion.”

Shares of the Winnipeg-based company soared 20.6 per cent on Wednesday following the release of its second-quarter results, which included adjusted EBITDA of US$72-million, exceeding Mr. Ho’s estimate of US$58-million by 24 per cent as well as the Street’s expectation for US$59-million. Revenue of US$613-million also topped the analyst’s estimate (US$567-million).

“More importantly, SSSG in 3Q to date has tracked near 1H22 levels of 18 per cent, driven by the pass-through of higher parts costs, price increases, volume recovery and higher severity,” he said. “We increased our SSSG outlook as a result.

“Our focus for 2Q was on margins, and BYD did not disappoint—at 11.7 per cent, this was better vs our 10.2 per cent (9.7 per cent in 1Q). Management remains confident that margins can recover to the historical level of 14 per cent.”

Mr. Ho said demand “continues to substantially outstrip capacity,” noting greater price increases are needed to restore labour margins. He also noted the supply chain is “seeing early signs of normalization.”

After raising his earnings expectations for both 2022 and 2023, Mr. Ho hiked his target for Boyd shares to $222 from $190. The average is $196.38.

“Our investment thesis is based on: (1) quality compounder with a history of delivering SSSG and robust ROIC; (2) proven and disciplined M&A track record in a fragmented US$40-billion industry; (3) with scale (#2 in North America), BYD has a competitive advantage (parts procurement, DRP, OEM cert, etc); and (4) collision repair is a highly recession-resistant industry,” he said.

Elsewhere, after “significant” forecast increases due to a “much stronger” organic growth outlook, Stifel analyst Maggie MacDougall raised Boyd to “buy” from “hold” with a $210 target, up from $150.

“Some price increases from carriers, parts inflation, higher average cost of repair, greater accident severity, lower rate of total write-offs due to vehicle shortages, and a record industry backlog of work, all bode well for upcoming organic growth,” she said.

“Given modest M&A modeled, we see upside to this target should inorganic growth accelerate. We are thus upgrading the stock.”

Other analyst making target increases include:

* RBC’s Sabahat Khan to $220 from $195 with an “outperform” rating.

“In our view, Boyd’s results reflect good progress on pricing from insurers to-date and support our thesis that Boyd’s margins should continue to revert toward historical levels over the medium-term,” said Mr. Khan.

* Raymond James’ Steven Hansen to $225 from $195 with a “strong buy” rating.

* Jefferies’ Bret Jordan to $221 from $180 with a “buy” rating.

* ATB Capital Markets’ Chris Murray to $250 from $230 with an “outperform” rating.

* Scotia’s Michael Doumet to $215 from $200 with a “sector outperform” rating.

* CIBC’s Krista Friesen to $194 from $156 with a “neutral” rating.

* TD Securities’ Daryl Young to $225 from $200 with a “buy” rating.


National Bank Financial analyst Lola Aganga sees “significant blue sky potential” for Bravo Mining Corp. (BRVO-X) pending exploration success at its wholly owned Luanga deposit in Brazil.

In a research report released Thursday, she initiated coverage of Vancouver-based company, which is in the midst of an “aggressive US$30-million exploration program aimed at validating the historical resource,” with an “outperform” recommendation.

“Recent exploration results have consistently intersected high-grade horizons of mineralization and favourably compare to the current Historical Resource of 142 million tonnes grading 1.24 PGE + Au (excluding Rhodium),” said Ms. Aganga.

“Beyond our base case, we see the potential for further NAV accretion of up to 103 per cent over the next five years, should 100 per cent of the Historical Resource be defined, a reduction of our discount rate from 10 per cent at a development decision mandate, and assuming an accelerated development timeline which sees production beginning two years sooner than our base case estimates.”

Emphasizing Luanga’s “large-scale resource, attractive project economics (based on our DCF valuation and after discounting for dilutive elements) and management’s track record for generating shareholder value,” Ms. Aganga, currently the lone analyst on the Street covering Bravo following its mid-July initial public offering, set a target of $2.50 per share.


Metro Inc. (MRU-T) is “continuing solid execution in a volatile environment,” said Desjardins Securities analyst Chris Li following Wednesday’s third-quarter earnings release, which sent its shares down 2.1 per cent in Toronto.

“In the near term, we expect valuation to be supported by improving Food SSSG, stable margins and share buybacks, translating into 8–10-per-cent EPS growth,” he said. “Looking out to next year, we believe sector rotation and potential food deflation could have an impact on valuation. While we continue to view MRU as a high-quality company with consistent execution, we would wait for a more attractive entry point due to its above-average valuation (17 times vs 16 times forward P/E) and limited upside to our target price (6 per cent).”

Mr. Li expects same-store sales for Montreal-based retailer’s Food and Drug business to remain “solid” in the near term.

“We believe this is key to sustaining the current valuation,” he said. “We expect food SSSG of 5–6 per cent for the next few quarters, up from 1 per cent in recent quarters, reflecting 6–7-per-cent inflation (vs 8.5 per cent in 3Q FY22) and flat to slightly lower tonnage (vs down 7 per cent in 3Q FY22) as MRU laps periods of no COVID-19 restrictions. MRU is well-positioned to benefit from the shift to discount (35–40 per cent of sales). We expect front-store sales growth to remain elevated in the high single digits, supported by strong OTC drug sales that drive traffic and have a halo effect on other products. Cosmetics recovery should continue until year-end.”

The analyst also thinks gross margin will remain stable, which he calls a “key support for valuation.”

“For Food, while competition remains intense with promo penetration slightly above pre-pandemic levels as consumers hunt for value, it remains rational,” said Mr. Li. “Conventional store margins are holding up well, helped by strong sales of higher margin products such as hot foods, deli and private label. While Food margins declined slightly as MRU is absorbing some of the cost increases, it was offset by growth in Drug. MRU is also managing SG&A expenses well despite ongoing cost inflation from labour, transportation, energy, etc.”

Raising his earnings per share estimates for 2022 and 2023 to $3.80 and $4.13, respectively, from $3.76 and $4.11, Mr. Li increased his target for Metro shares to $73 from $70. The average is $74.10.

“For the rest of the year, we expect valuation to be supported by improving Food SSSG, stable margins and share buybacks, translating into 8–10-per-cent EPS growth,” he said. “Looking out to next year, we believe sector rotation and potential food deflation could have an impact on valuation. While we continue to view MRU as a high-quality company, we would wait for a more attractive entry point.”

Elsewhere, CIBC’s Mark Petrie lowered his Metro Inc. (MRU-T) target to $71 from $73 with a “neutral” rating.


Citing “the uncertainty over the timing of Öksüt’s permits, concern that the extending mine life plan at Mount Milligan could come with capital cost risk, and the unknowns implied by the suspension of 2023 guidance,” Scotia Capital analyst Trevor Turnbull downgraded Centerra Gold Inc. (CG-T) to “sector perform” from “sector outperform,” calling the Wednesday release of its quarterly results “negative.”

“The Turkish government cited concerns over operation of the Öksüt gold heap leach operation, and it denied Centerra’s request to store gold in activated carbon on site while it upgrades its gold room to handle mercury contamination,” he said. “Hence, the company is suspending stacking and heap leaching, and it will submit a new EIA (environmental impact assessment) by the end of August for approval. Centerra is still assessing its new extended Mount Milligan mine plan for the impact of capital costs and tailings expansion requirements. An announcement on a new COO remains pending.”

Mr. Turnbull reduced his target for Centerra shares to US$7 from US$12. The average is $9.49.

Others making changes include:

* RBC’s Michael Siperco $11 from $15 with an “outperform” rating.

“While the impact on 2Q22 results from Oksut was expected, the suspension of stacking and leaching and no more gold sales over the balance of 2022 was not,” said Mr. Siperco. “We maintain our Outperform rating, but our target is lowered ... on the delayed FCF, higher costs and lower target multiples until uncertainty over timing/permitting in Turkey is resolved.”

* CIBC’s Anita Soni to $8.25 from $14.25 with a “neutral” rating.

* TD Securities’ Steven Green to $7.50 from $10 with a “hold” rating.


In other analyst actions:

* CIBC World Markets analyst Robert Catellier upgraded TC Energy Corp. (TRP-T) to “outperformer” from “neutral” with a $75 target, up from $74 and above the $70.05 average on the Street.

“The agreement with the CFE improves our outlook through a high-returning project and the return on capital placed into service from pipelines previously subject to arbitration. We acknowledge the recent equity issue can create an overhang, but the return to our price target is compelling,” he said.

* CIBC’s Kevin Chiang raised his Andlauer Healthcare Group Inc. (AND-T) target to $59 from $53 with a “neutral” rating. Other changes include: Stifel’s Maggie MacDougall to $65 from $55 with a “buy” rating, TD Securities’ Tim James to $56 from $51 with a “hold” rating, National Bank’s Endri Leno to $59 from $54.50 with an “outperform” rating, Scotia Capital’s Konark Gupta to $57 from $54 with a “sector perform” rating and RBC’s Walter Spracklin to $51 from $48 with a “sector perform” rating. The average is $57.83.

“Q2 for AND was a very strong quarter, with results coming in above expectations across the board. Encouragingly, mgmt. is and has been executing on both organic and inorganic opportunities, with longer term opportunity in potential regulation changes in the U.S.. We remain constructive on these growth opportunities, and point to premium valuation as the only consideration for the share price performance going forward in our view,” said Mr. Spracklin.

* CIBC’s Anita Soni lowered her B2Gold Corp. (BTG-N, BTO-T) target to US$5 from US$5.50. The average is US$5.27.

* RBC’s Jimmy Shan cut his Boardwalk REIT (BEI.UN-T) target to $64 from $61 with an “outperform” rating, while CIBC’s Dean Wilkinson cut his target to $56 from $58 with a “neutral” rating and and TD Securities’ Jonathan Kelcher moved his target to $63 from $61 with a “buy” rating. The average is $57.45.

“BEI reported a good quarter with bottom end of 2022 FFO guidance raised by 2 per cent and mid-point up 0.8 per cent. Summer leasing continues to improve with occupancy now at 97 per cent overall, and leasing spreads have accelerated to 3 per cent on renewal and 6.6 per cent on new leases. Given the improved occupancy, Alberta rents remaining affordable and positive migration in Alberta, we expect incentives to continue to burn off, this being the most immediate and biggest driver to NAV and to the stock,” said Mr. Shan.

* TD Securities’ Vince Valentini cut his Boat Rocker Media Inc. (BRMI-T) target to $7 from $9, maintaining a “buy” rating. The average is $7.75.

* CIBC’s Stephanie Price raised her Converge Technology Solutions Corp. (CTS-T) target to $8 from $7, below the $11.10 average, with a “neutral” rating.

* CIBC’s Todd Coupland cut his Copperleaf Technologies Inc. (CPLF-T) target to $9 from $11 with a “neutral” rating, while BMO’s Thanos Moschopoulos reduced his target to $10 from $15 with an “outperform” rating. The average is $12.17.

“We remain Outperform on CPLF and have reduced our estimates and target price following Q2/22 results,” said Mr. Moschopoulos. “While results were ahead of consensus, management’s commentary suggests slower growth in the 2H/22 than we’d previously modeled. We continue to believe that CPLF has a very strong market position and large potential TAM, which should drive robust long-term growth. However, recent quarters have underscored the fact that the business is prone to lumpiness (as CPLF’s growth in any given year is currently predicated on signing a relatively small number of large deals).”

* National Bank Financial’s Zachary Evershed trimmed his Dexterra Group Inc. (DXT-T) target to $10.50 from $12 with an “outperform” rating, while Scotia’s Michael Doumet cut his target to $8 from $10 with a “sector outperform” rating. The average is $9.81.

“While management remains confident that margin pressures will subside in 2H/22 and into 2023, following Q2/22 results, we once again elect to undershoot guidance in our forecasts,” Mr. Evershed said. “Thus, our target moves down to $10 on lower estimates and an unchanged sum-of-parts valuation. Notwithstanding our bearish modeling, we reiterate our Outperform rating given growth catalysts across all segments and the sizable return to target (including a 5.8-per-cent dividend yield).”

* iA Capital Markets’ Chelsea Stellick cut her target for Dialogue Technologies Inc. (CARE-T) to $7.50 from $9.50 with a “buy” rating. The average is $7.17.

“We reaffirm our expectation of a long bull run for CARE once market sentiment turns for the telehealth sector, as a 100.4-per-cent NRR following price increases demonstrates the pricing power Dialogue has achieved with its B2B model,” said Ms. Stellick. “The IHP is well received by prospective customers in the context of a tight labour market as employers seek to increase retention and productivity, and the stickiness of the offering will ensure members are not lost if the labour market contracts. We consider the Tictrac acquisition a success thus far, despite a slow sales cycle, as it opens a high-margin complementary vertical at a relatively modest cost of entry. We revise our target ... due to increased G&A and bring multiples closer to comps.”

* CIBC’s Cosmos Chiu cut his Franco-Nevada Corp. (FNV-T) target to $230 from $260, keeping an “outperformer” rating. The average is $212.65.

* In response to a “strong” quarterly beat and guidance raise, National Bank Financial’s Jaeme Gloyn increased his Goeasy Ltd. (GSY-T) target to $170 from $155 with an “outperform” rating. The average is $198.56.

“We continue to expect GSY will successfully execute on its three-year guidance including i) demonstrating stable credit performance, and ii) executing on several loan growth initiatives (e.g., product, channel, geographic),” he said.

* RBC’s Sabahat Khan moved his High Liner Foods Inc. (HLF-T) target to $14 from $13, below the $18.33 average, with a “sector perform” rating, while Scotia’s George Doumet increased his target to $16 from $14 with a “sector perform” rating.

“High Liner Foods Inc. reported Q2 sales and Adjusted EBITDA ahead of RBC forecasts. The results reflected the benefit of an improving operating backdrop, as well as the continued progress with the company’s operational initiatives,” Mr. Khan said.

* RBC’s Paul Treiber raised his Kinaxis Inc. (KXS-T) to $200 from $175 with a “outperform” rating. Other changes include: BMO’s Thanos Moschopoulos to $200 from $185 with an “outperform” rating, CIBC’s Stephanie Price to $190 from $180 with an “outperformer” rating and Stifel’s Suthan Sukumar to $235 from $215 with a “buy” rating. The average is $215.50.

“Kinaxis reported one of its best quarters yet. SaaS and ARR growth accelerated Q2. We believe revised guidance calls for further acceleration 2H. Key leading indicators are strong. Solid demand reflects organizations making new software investments to help address supply chain disruptions. Kinaxis is benefitting from a larger TAM and improved scalability,” said Mr. Treiber.

* BMO’s Stephen MacLeod raised his Leon’s Furniture Ltd. (LNF-T) target to $22, matching the consensus, from $20 with a “market perform” rating.

“Leon’s reported Q2/22 results that were above our forecasts, driven by solid 10.0-per-cent SSSG vs. a tough comp (similar to ZZZ),” he said. “This was partially offset by lower gross margin and higher inflation-driven SG&A, which led to EBITDA growth of 1 per cent. Customer deposits have moderated from Q1, but Leon’s is cautiously optimistic on the underlying health of the Canadian economy. We see an opportunity for share gains over the long term, given Leon’s brand equity and value proposition to customers.”

* CIBC’s Krista Friesen increased her Linamar Corp. (LNR-T) target to $80 from $71 with an “outperformer” rating. Others making changes include: Scotia’s Mark Neville to $85 from $80 with a “sector outperform” rating, TD Securities’ Brian Morrison to $86 from $80 with a “buy” rating and BMO’s Peter Sklar to $65 from $58 with a “market perform” rating. The average is $78.80.

“Linamar reported a strong Q2/22 normalized diluted EPS of $1.68, stronger than BMO’s $1.46, and the consensus of $1.38,” said Mr. Sklar. “Both the Mobility and the Industrial segments exceeded our projections. In terms of our thesis, we find that auto parts stocks generally underperform the market during periods of Fed tightening, and we believe investors will be reluctant to bid up the price of auto parts stocks until this tightening cycle has run its course.”

* CIBC’s Stephanie Price raised her target for Magnet Forensics Inc. (MAGT-T) to $27 from $25 with an “outperformer” rating. The average is $38.09.

* CIBC’s Dean Wilkinson cut his Minto Apartment REIT (MI.UN-T) target to $22, below the $22.50 average, from $23 with an “outperformer” rating, while National Bank’s Matt Kornack raised his target to $17.50 from $16.25 with an “outperform” rating.

“Minto’s portfolio saw improving occupancy levels and pre-pandemic levels of rent increases on turnover combined with higher leasing velocity – this also required incremental capex as the REIT was active in pursuing suite renovations,” said Mr. Kornack. “End-of-quarter occupancy of approaching 96 per cent should bode well for a figure approaching the 97-98-per-cent range by the end of the busier summer leasing period. It was noted that a meaningful portion of the current vacancy was related to renovations, or had already been leased but tenants had yet to take possession. Management also went to lengths to explain a more cautious outlook on capital allocation in light of an attractive pipeline of opportunities but challenging equity markets. Further to this decision process, assets in Edmonton have been listed for sale while a broader review of the portfolio may yield other areas for select pruning.”

* CIBC’s Todd Coupland raised his Optiva Inc. (OPT-T) target by $1 to $28, matching the average, with a “neutral” rating, while Raymond James’ Steven Li cut his target to $31 from $38 with a “market perform” rating.

* CIBC’s Cosmos Chiu lowered his target for Pan American Silver Corp. (PAAS-Q, PAAS-T) to US$31 from US$36 with an “outperformer” rating, while Scotia’s Trevor Turnbull reduced his target to US$20 from US$22 with a “sector perform” rating. The average is US$26.25.

* National Bank Financial’s Travis Wood trimmed his Peyto Exploration & Development Corp. (PEY-T) target to $19 from $19.50 with an “outperform” rating. The average is $18.56.

* CIBC’s Christopher Thompson raised his Spartan Delta Corp. (SDE-T) target to $19.50 from $18 with an “outperformer” rating. The average is $19.79.

* Desjardins Securities’ Benoit Poirier raised his Street-high target for shares of Stella-Jones Inc. (SJ-T) to $61 from $59 with a “buy” rating. Other changes include: Scotia’s Benoit Laprade to $50 from $56 with a “sector outperform” rating and RBC’s Walter Spracklin to $41 from $40 with a “sector perform” rating. The average is $48.75.

“We are very pleased with SJ’s 2Q results. While the company reported a beat across the board, the outlook for the rest of 2022 appears positive thanks to the continued demand for utility poles. SJ’s solid balance sheet should enable management to unlock shareholder value through continued M&A and/or share buybacks,” Mr. Poirier said.

* RBC’s Drew McReynolds reduced his target for Verticalscope Holdings Inc. (FORA-T) to $26 from $27 with an “outperform” rating. The average is $26.06.

“In a challenging and choppy operating environment, we believe VerticalScope delivered exceptionally strong Q2/22 results that highlight the company’s profitable and resilient business model. Factoring in a higher share count offset in part by a higher growth trajectory, we are trimming our price target,” said Mr. McReynolds.

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