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

After Wednesday’s release of “good” third-quarter financial results that featured a beat across most key metrics, National Bank Financial analyst Vishal Shreedhar said Loblaw Companies Ltd. (L-T) is “developing a track record of solid execution.”

“We maintain a favourable view on L and recommend it as our preferred grocer, supported by several key themes: (1) Benefits from various improvement initiatives; (2) Continued EPS growth supported by better business performance and share repurchases (8 per cent plus); and (3) The ability to pass on elevated food inflation coupled with solid performance in drug store,” he said in a research note.

Loblaw, Metro sales and profit grow as Canadian grocers face inflation scrutiny

Shares of the Canada’s largest grocer rose 2.3 per cent on Wednesday after it reported consolidated revenue of $17.338-billion, up from $16.050-billion during the same period a year ago and above Mr. Shreedhar’s forecast of $16.973-billion. Earnings per share of $2.01 was an improvement of 42 cents year-over-year and also topped both the analyst’s $1.90 projection and the consensus estimate of $1.96.

“Given solid year-to-date performance and momentum exiting Q3, management now expects 2022 EPS growth to be in the high teens (was mid-to-high teens; we model Q4 EPS growth of 9 per cent year-over-year),” said Mr. Shreedhar. “Other aspects of the 2022 outlook remain unchanged. We have increased our estimates; 2022 EPS goes to $6.72 from $6.60 and 2023 EPS goes to $7.32 from $7.15.

“L noted continued strong performance in its discount banners, coupled with a shift to private label. Drug retail continued to benefit from higher margin categories (beauty, OTC) ...During the quarter, there was an 120 basis points negative impact to sales growth related to pressure in general merchandise.”

With his increased revenue and earnings estimates, Mr. Shreedhar raised his target for Loblaw shares to $130 from $126, maintaining an “outperform” recommendation. The average on the Street is $134.15, according to Refinitiv data.

Elsewhere, others making target changes include:

* Desjardins Securities’ Chris Li to $120 from $124 with a “hold” rating.

“L reported another solid quarter with better-than-expected same-store sales in both Food and Drug,” said Mr. Li. “Even as food inflation moderates next year and Shoppers laps strong comps, we believe L is well-positioned to achieve 10-per-cent EPS growth in 2023. While we believe valuation is reasonable at 15 times forward P/E vs its 14.5 times average and 18 times for MRU, we expect slowing food inflation and sector rotation to limit meaningful expansion in valuations unless EPS growth is meaningfully higher than 10 per cent next year.”

* ATB Capital Markets’ Kenric Tyghe to $140 from $135 with an “outperform” rating.

“While we are mindful of the particularly tough (inflation-driven comps) heading into 2023, we see little indication (or risk) of a sharp decline in food inflation (we do of course expect the pace of inflation to slow from current record levels), which we believe supports positive revisions to our estimates,” said Mr. Tyghe. “While the current levels of inflation elevate the negative surprise risk, Loblaw, in our opinion, has proven particularly adept at managing through the inflationary storm, due (in large part) to its best-in-class beauty and loyalty offerings.”

* Scotia’s George Doumet to $126.50 from $125 with a “sector perform” rating.

“Loblaw reported a strong Q3 that was characterized by continued momentum in food (with sequential improvement in tonnage), an acceleration at the front-end at Shoppers and healthy operating leverage across all businesses,” he said. :Our Q4 estimates are largely unchanged. We see EBITDA/EPS growth reverting towards the 4 per cent/10 per cent next year vs. 9 per cent/21 per cent this year. While we could see upside from improved operating leverage on the SG&A line (from specific cost containment initiatives underway), we are mindful of tough comps next year at the front-end (which could likely come with negative margin implications). All in all, we see risk/reward at current levels as balanced – with the shares currently trading at 15.3 times NTM [next 12-month] P/E or ~+1 times standard deviation from its historical average.”

* CIBC World Markets’ Mark Petrie to $145 from $136 with an “outperformer” rating.

“Loblaw posted strong Q3 results, highlighting accelerating top-line momentum and the continued payoff from its various retail excellence initiatives. Though revised guidance implies a deceleration in EPS growth in Q4, we chalk this up to conservatism and leave our forecast little changed. Furthermore, we believe management has demonstrated it has the levers in place to deliver at least 8-10-per-cent EPS growth in F2023, in line with its financial framework, with potential upside depending on the external backdrop,” said Mr. Petrie.


Desjardins Securities analyst Chris Li sees Metro Inc. (MRU-T) displaying “solid execution in a volatile environment,” however its current valuation is keeping him “on the sidelines.”

“In the near term, we believe continuing favourable industry fundamentals, solid execution and investors’ preference to remain defensive should support MRU’s premium valuation,” he said. “Looking out to next year, we believe sector rotation and slowing food inflation could have an impact on valuation. While we view MRU as a high-quality company with consistent execution, we would wait for a more attractive entry point. If MRU’s forward P/E reverts to its average of 16 per cent, the implied downside valuation is approximately $66.”

Like peer Loblaw, shares of Metro gained ground on Wednesday, rising 2.7 per cent, following the release of better-than-anticipated third-quarter results. Adjusted earnings per share of 92 cents exceeded both Mr. Li’s 88-cent estimate and the consensus forecast of 90 cents, driven by better-than-anticipated same-store sales in both Food and Pharmacy.

“Similar to Loblaw, management’s comments suggest the strength is sustainable in the near term,” the analyst said. “Growth in Food is driven by persistently high inflation (food CPI in October was 11.0 per cent vs 11.4 per cent in September), an accelerating shift to discount and market share gains. Growth in high-margin front-store categories (beauty and OTC) is expected to continue with beauty being largely resilient to a recession. For FY23, we expect EPS growth to moderate to 8 per cent from 11 per cent in FY22 (same-week basis). This assumes food inflation remains elevated until at least 1H FY23, Rx and front-store same-store sales moderate from record highs in 2022, and a stable gross margin and cost containment keep SG&A rate steady. While capex is increasing to $800-million (from $621-million in FY22), mainly for supply chain modernization, we believe MRU’s solid FCF and balance sheet should continue to support strong share buybacks.”

After raising his full-year EPS projections for 2022 and 2023 to $4.18 and $4.45, respectively, from $4.13 and $4.39, Mr. Li maintained a $73 target with a “hold” rating. The average is $76.10.

Analysts making target changes include:

* National Bank’s Vishal Shreedhar to $79 from $75 with a “sector perform” rating.

“We believe Metro is a solid company which has delivered superior long-term returns (although decelerating) supported by strong execution and capital allocation; however, these favourable attributes are adequately reflected in valuation, in our view.,” he said. “For reference, MRU trades at 11.5 times our NTM [next 12-month] EBITDA vs. the five-year average of 11.0 times and L/EMP at 8.2/6.5 times respectively.”

* ATB Capital Markets’ Kenric Tyghe to $80 from $76 with a “sector perform” rating.

“The increased traction of Metro’s discount banners (most notably Super C in Quebec) and a partial recoupment of the share lost earlier in the year to hard discounters (Wal-Mart and Costco) were reflected in the Company’s better-than-expected Food Retail SSS growth in-quarter. The Pharmacy Retail performance continued to benefit from the recovery in beauty,” said Mr.Tyghe.

* Scotia’s George Doumet to $79 from $77 with a “sector perform” rating.

“MRU posted a healthy Q4 quarter that beat consensus revenue, EBITDA and adj. EPS expectations by approximately 4 per cent, 3 per cent and 2 per cent,” said Mr. Doumet. “The positive takeaways are a sequential improvement in tonnage, strong front-end pharma sales and stable gross margins. MRU did have some pressure on the opex rate, which didn’t translate in the typical level of operating leverage we’re accustomed to seeing (we expect this to improve next year) ... We believe continued strong merchandising execution, good expense control, and return of cash to shareholders will continue to support MRU’s premium valuation (which currently sits at 17.4 times P/E and 2.6-per-cent FCF yield on our F23 estimates). That said, we see limited upside from current levels.”

* RBC’s Irene Nattel to $76 from $75 with a “sector perform” rating.

“Q4/F22 solid with adjusted EPS/EBITDA a baguette above forecast, discount underpinning tonnage and share growth, and SSS in both food and pharmacy stronger than expected and directionally in line with Loblaw. Results supportive of MRU’s hard-earned premium valuation,” said Ms. Nattel.

* BMO’s Peter Sklar to $82 from $78 with an “outperform” rating.

“Metro reported a beat on the top-line with particularly strong sales comps across the board,” he said. “Notably, Metro reported tonnage gains for the first time following a series of quarterly tonnage losses. We believe grocery-tonnage numbers could continue to improve considerably in calendar H2/22 as the grocers lap the large COVID-19 pantry-building tonnage numbers. Improving tonnage trends, coupled with continued high food inflation could provide one more significant leg up for the Canadian grocery stocks that will unfold over the course of the remainder of this calendar year.”

* TD Securities’ Michael Van Aelst to $76 from $75 with a “hold” rating.

“High inflation and strong execution delivered another year of EPS growth within its targeted 8-10-per-cent range,” he said. “We see 8-per-cent growth in F2023 and F2024, slightly below Loblaw and Empire as Metro has less room remaining to cut costs. Investors have rewarded this consistency with a premium valuation in recent years; though the above-average valuation gap and better near-term growth and FCF expected from Loblaw is hard to ignore.”

* CIBC World Markets’ Mark Petrie to $72 from $71 with a “neutral” rating.

“Q4 results highlighted the combined effects of accelerating inflation on sales and costs, along with highly disciplined merchandising. We expect food inflation to persist above average through at least mid-2023 with higher costs as well. As a result, we expect MRU to deliver earnings growth just shy of its traditional framework. Our estimates rise modestly,” he said.


In a research report titled Opportunity Meets Preparation in Nevada, National Bank Financial analyst Don DeMarco initiated coverage of i-80 Gold Corp. (IAU-T) with an “outperform” recommendation, touting the potential of its “infrastructure paired with world-class resource.”

“i-80 Gold Corporation is a Junior producer executing on a plan to transition to an Intermediate producer, exclusively through organic growth, employing a hub-and-spoke operating model to create a comprehensive Nevada-focused mining complex,” he said. “Pursuant to its plan, i-80 is to develop its portfolio of 100-per-cent-owned mining assets in Nevada, including Lone Tree, Ruby Hill, Granite Creek and McCoy-Cove.”

“i-80′s portfolio features infrastructure with eminent optionality, highlighted by a 2,500 tpd autoclave on care & maintenance at Lone Tree and additionally a processing facility at Ruby Hill including an oxide mill and active heap leach processing. The infrastructure is paired with i-80′s world-class 14.6 million oz gold mineral resource including 4.1 million oz above 8 grams per ton highgrade underground resources below historic open pit mines, with mineralized extensions open at depth and along strike and additionally a potential worldclass base metals system.”

Mr. DeMarco said he likes the Reno, Nev.-based company’s organic production growth plan, seeing a phased approach to expansion that is “offering flexibility to sequence financing and capex spend.” He also touted its “low capex intensity development,” noting: “Existing processing infrastructure including refractory processing capabilities on the mining complex makes for an exceptional development opportunity targeting world-class production levels, transforming assets which are limited individually but provide a heightened ROI collectively.”

Seeing its upside tied to execution, Mr. DeMarco set a target of $4.25 per share. The average is $4.78.

“Our rating is based on an elevated return to target, and as i-80 de-risks development and increases production, it should get cash flow and multiple growth,” he said. “Furthermore, i-80 has measurable exploration upside potential, which provides visibility for resource and NAV accretion when realized. Our view is tempered by uncertainty in our mine plan estimates, including capex, though is largely expected to be addressed with technical reports pending release ~early next year. Our model scenarios show a 124-per-cent blue-sky upside on successful execution, rationalizing Ruby Hill grades higher, lowering discount rate on the mining complex and moving our DCF forward to Q1/25 upon the start-up of the Lone Tree autoclave and implementing Phase 2. Our target is based on a 1.25 times NAVPS estimate of $3.41.”


Scotia Capital analyst Michael Doumet warned investors the industry conditions surrounding Stelco Holdings Inc. (STLC-T) are poised to deteriorate over the next year.

“The last two years have been special for STLC,” he said. “Since 2021, STLC generated FCF of $2.2 billion and will have returned $1.5 billion to shareholders through repurchases and dividends.

“The NTM [next 12 months] will be a different story as HRC [hot rolled coil] prices moderate more quickly than costs. At spot HRC, we forecast EBITDA of less than $100 million per Q (and modest FCF generation), but expect a rebound in 2Q23 as the company works through its higher cost inventories (i.e. we expect lower coal, scrap, nat gas, and alloy prices will progressively flow through by 2Q23). Our HRC forecast largely mimics the futures curve – i.e. we forecast a bottom in Nov/Dec to US$665 per ton followed by a modest recovery to US$750/nt through mid-2023 (and flat thereafter).”

Shares of Stelco jumped almost 11 per cent on Wednesday following the release of better-than-expected third-quarter results, including earnings per share of $2.40 (versus the Street’s $2.01 forecast). It also announced a special dividend of $3 per share and a 40-per-cent increase to its quarterly dividend (to 42 cents).

“The company reiterated its outlook that challenging market conditions, namely inflationary pressures, have continued into 4Q,” warned Mr. Doumet. “Previous guidance issued in 2Q, stated that: ‘adjusted EBITDA in Q3 will be materially below the Q2 level, and further weakening is expected in Q4 results. This assumes that the lower prices and shorter lead-times being experienced currently fully impact results and prevail through the remainder of 2022.’ On the 3Q call, management noted lower input costs such as coal, scrap, nat gas, and alloys, which they expect will lower costs in subsequent quarters (not likely to benefit immediately, due to the lag shipments and inventory pricing). Further, the company said it is performing well from an order book perspective given customers’ businesses are flat to down.”

Mr. Doumet raised his target for Stelco shares to $45.50 from $41.50 with a “sector perform” rating (unchanged). The average is $47.32.

Others making changes include:

* National Bank’s Maxim Sytchev to $47 from $44 with a “sector perform” rating, who said

“Management continues with a shareholder-friendly approach of distributing excess cash,” he said. “HRC, on the other hand, is showing lackluster momentum (even though on the call management was more constructive about it bottoming, sometime in early 2023). While the 10-year treasury yield appears to have plateaued (or at least anchored near a 4-per-cent handle), the prior rate hikes are only starting to be fed into the real economy. On top of usual cyclicality, we also have some incremental supply coming to the U.S. market in 2023 & 2024. Auto demand is arguably depressed due to chip shortages, but we suspect normalization will take place right around slowing demand. Management’s comments around M&A have been floated around before and at this point it’s hard to ascribe numeric optionality. That being said, as significant shareholders themselves, we do believe STLC will make the right capital allocation decisions for investors. Overall, we continue to be impressed by company’s execution but see the risk / reward at this point as balanced.”

* Stifel’s Ian Gillies to $36 from $32.50 with a “hold” rating.

“Stelco’s share price rose sharply [Wednesday] after a good quarterly print coupled with a $3.00 per share special dividend and a 40-per-cent dividend bump,” said Mr. Gillies. “Taking a step back, we believe the stock is getting expensive at this price point given it’s trading at an 0.9-times premium compared to its BOF peers based on 2023 estimated EV/EBITDA. In our view, consensus estimates will likely continue to migrate lower for 4Q22 and 2023 given declining HRC price and elevated costs. Conversely, we believe there is improved downside support for the stock given the company’s ability to return capital back to shareholders via buybacks and dividends.”

* BMO’s David Gagliano to $56 from $49 with an “outperform” rating.

“Stelco delivered solid 3Q’22 results/ resilient FCF generation. Looking ahead, weaker underlying conditions means lower FCF vs. recent quarters. But, with nearly $1.0-billion of cash, no debt, and limited obvious large-scale cash outflows coming, in our view Stelco remains positioned to withstand extended weakness in underlying steel markets, and/or continue returning cash to shareholders via specials/buybacks if underlying conditions stabilize/improve. STLC shares remain inexpensive in our view,” said Mr. Gagliano.

* RBC’s Alexander Jackson to $44 from $42 with a “sector perform” rating.

“We believe Stelco provides investors strong leverage to the North American steel market in a highly fixed, low cost operator; however, given our outlook on steel prices and the current valuation we remain neutral. We continue to see upside potential if steel prices are stronger than we forecast or management grows earnings via investment. We have revised our estimates, lowering opex slightly, increasing non-steel earnings and marking to market for lower steel in Q4E and H1/23E. As a result of these changes our target increases,” said Mr. Jackson.


Citi analyst Stephen Trent sees Bombardier Inc. (BBD.B-T) “poised to continue its strong operational performance over the coming quarters.”

“In light of ongoing economic uncertainty, it is difficult to say that any company is an island,” he said. “However, it is worth noting that demand for large cabin business jets had remained relatively stable during the credit crunch, versus smaller business jets. Moving through the economic cycle, Bombardier now has the benefit of a less complex product mix, in addition to more robust services revenue.”

While trimming his revenue expectations through fiscal 2025 by 2.6 per cent annually, Mr. Trent hiked his earnings per share estimates. His 2023 forecast jumped 205.1 per cent to $1.19 from a loss of $1.13. His 2024 and 2025 projections rose 423.3 per cent and 285.3 per cent, respectively, to $2.98 and $4.57 from $57 cents and $1.19.

“Forecast adjustments for Bombardier include the incorporation of (A) slightly more conservative jet delivery mix assumptions, (B) a stronger, expected weighting of services revenue, (C) lower amortization, (D) lower net interest expense and (E) 3Q’22 results into our model,” he said. “As a result, Citi’s ‘23E – ‘25E EBITDA for the Canadian jet manufacturer increase marginally — but expected net financial leverage also improves. At the same time, Citi rolls forward its valuation reference period from ‘23E to ‘24E EBITDA and trims the target multiple from 7.5 times to 6.5 times — or from a fair valuation range of 7.5 times to 8 times to a new range of 6 times to 7 times. The revised multiple reflects a 15-per-cent discount to the stock’s normalized, long-term historical average. We trim the multiple in order to avoid the double counting-type effect of applying the same multiple to a higher estimate, which is one year deeper into the future.”

With those changes, Mr. Trent bumped his target for Bombardier shares to $52 from $50, reiterating a “buy” rating. The average on the Street is $58.88.

“On the back of successive, significant corporate re-shufflings and production adjustments, the company’s business model is more simplified. Although aerospace EBITDA generation is still recovering and the debt load remains high, the company’s efforts to boost its operational metrics and de-risk the balance sheet are trending stronger than we had anticipated,” he concluded.


Real Matters Inc. (REAL-T) is proving its ability to limit losses in the worst mortgage market in decades, according to ATB Capital Markets analyst Martin Toner, who thinks it should “give investors confidence that the company will prevent balance sheet deterioration and create a floor in the stock.”

“For investors who value a margin of safety, we believe the risk/reward in Real Matters’ stock is attractive,” he said in a note titled Hunger Games.

On Wednesday, the Toronto-based tech firm, which provides a network management services platform for the mortgage and insurance industries, reported consolidated revenues of US$58.2-million, down 53.7 per cent year-over-year and below the consensus estimate of US$71.7-million. Adjusted earnings per share of 0 cents was narrowly better than the Street’s expectation of a 1-US-cent loss.

“In Q4/22, Real Matters continued to demonstrate impressive cost discipline, in our opinion,” said Mr. Toner. “The Company generated an EBITDA loss of $1.1-million in Q4/22, when gross revenue and net revenue were 26.0 per cent and 20.4 per cent lower sequentially. The Company ended the quarter with a cost base that would have allowed it to be adjusted EBITDA positive. The purchase market deteriorated rapidly in Q4/22, which made it difficult for Real Matters to flex its cost structure quickly enough to avoid a loss. The Company ended the quarter with $46.1-million in cash, no debt, and quarterly operating expenses in the low-teen millions, leaving it with ample liquidity to ride out any future quarters when markets deteriorate as rapidly as Q4/FY22.”

The analyst expects a difficult industry backdrop to linger given the higher interest rate environment.

“With industry sources forecasting refinance and purchase markets to be at multi-decade lows in 2023, Real Matters is preparing to weather the worst-case scenario,” said Mr. Toner. “The Company is holding to its commitment to remain adjusted EBITDA breakeven in any scenario. With 30-year mortgage rates at 7.0 per cent, housing affordability remains challenged, and the financial incentive to refinance is almost nil. A number of countercyclical factors provide some cushion and a floor on market volumes. Waivers are declining, and home equity loans are picking up. Even though the previous low for refinance volumes in a calendar year was 1.8 million, the Mortgage Bankers Association (MBA), Fannie Mae, and Freddie Mac have forecast 2023 volumes to range between 0.8-1.2 million. The MBA forecast for total mortgage originations in 2023 is 4.7 million, another multi-decade low. Those estimates, along with the reality of the fight against inflation and 30-year mortgage rates of 7.0 per cent, caused Real Matters to continue to get ahead of the rationalization to its expense base necessary to prevent losses. The Company believes it will be able to exit FY24 with an expense base of close to $11.0-million.”

Though he reduced his 2023 and 2024 revenue and earnings estimates, Mr. Toner reiterated an “outperform” rating and his Street-high $8 target for Real Matters shares. The average is $5.79.

“We expect strong purchase markets to return as the economy stabilizes and mortgage rates normalize, which should seed the market for a future refinance wave. We expect Real Matters to have considerably higher market share when that time comes, translating into significant free cash flow,” he said.

Elsewhere, analysts making target adjustments include:

* Raymond James’ Steven Li to $6 from $6.50 with an “outperform” rating.

“Big reset on F2023 forecasts but excellent cost control keeps them close to break-even despite the expected sharp decline in revenues. Cyclical headwinds aside, REAL continues to gain market share with all its large Tier 1 vendors and reiterated its F2025 market share targets. REAL also continues to win new customers and add new channels in both Appraisal and Title,” he said.

* Canaccord Genuity’s Robert Young to $4 from $4.75 with a “hold” rating.

“While the company is targeting EBITDA neutrality exiting F23, we believe lower seasonality in the December and March quarters along with restructuring costs implies Real Matters will likely see EBITDA burn in H1/F23. Higher mortgage rates and potential for further economic downturn implies Title and Appraisal will both remain under pressure with MBA data indicating potential for improvement in the back half of F23. While Real Matters has sufficient cash to sustain operations in the medium term, we see potential for further volume decline and therefore more pressure,” said Mr. Young.

* BMO’s Thanos Moschopoulos to $4.50 from $5 with a “market perform” rating.

“We remain Market Perform on REAL and have reduced our estimates and target price following Q4/22 results— which were below consensus, as the cyclical downturn in the U.S. mortgage market is having a greater impact on the business than previously expected. While we expect that REAL will ultimately return to growth and demonstrate strong operating leverage whenever the cycle turns, we think it’s still too early to call the bottom (we note that MBA forecasts call for another 41% decline in industry volumes in FY2023),” he said.

* TD Securities’ Daniel Chan to $4.50 from $5.50 with a “hold” rating.

“Despite the market challenges, the company continued to execute well, gaining wallet share at large customers and adding new customers,” said Mr. Chan. “It increased its wallet share by 6pp at its five largest customers, which is impressive, considering that it has 20-30-per-cent average wallet share at those accounts. Real also has more than 50-per-cent market share at one of its T1 customers, suggesting that significant wallet-share opportunity is possible at other major lenders. Real continues to rank at the top of its customers’ scorecards, implying that wallet-share gains can continue as lenders look to consolidate partners in the current environment.”


Citing concerns about its capital needs and the duration of partner programs, Raymond James analyst Michael Glen downgraded Exro Technologies Inc. (EXRO-T) to “market perform” from “outperform” on Thursday.

“While we continue to have an optimistic outlook for Exro’s core Coil Driver product, we believe that investors need to recognize the company will be facing a tight capital position exiting 4Q22,” he said. “As such, we anticipate additional financing or capital raises in the near-term. At current levels, we are opting to downgrade the stock to Market Perform pending clarity on the financing front.

“Specifically, Exro finished 3Q with cash and equivalents of $13.1-million (this is inclusive of the capital raises completed in September), and the current pace of cash burn is roughly $10-million per quarter. As we assess the timing considerations with respect to revenue generation, coupled with ongoing capital requirements with respect to program development and the build-out of the new Calgary facility, we are now factoring in an additional equity raise of $30-million during 1Q23 (priced at $1.50), which is followed by the assumption that the $1.36 warrants associated with the Sept 22 capital raise convert in 2024E. As we have seen with other early-stage companies in the electric vehicle value chain, we believe that the entry of a strategic partner (i.e., Tier 1 partner) or strategic investor for such an equity raise would help provide a strong confirmation point surrounding the functionality and ultimate underlying demand potential of the Coil Driver product. An alternative source of capital that the company could look at is the sale of their equity position in SEA Electric, which had a book value of $13.6-million at the end of 3Q22 (SEA Electric is a private company).”

Mr. Glen cut his target for shares of the Calgary-based company to $1.60 from $2.75. The average on the Street is $3.55.

“As we have previously discussed, we are still waiting for a number of important updates regarding core development programs ongoing at EXRO, the primary one being SEA Electric (where we have always placed a substantial amount of emphasis given the opportunity set),” he said. “As it stands, our expectations are that the SEA Electric pilot(s) will ship during November, but we must also acknowledge there will be a testing phase to take place after this delivery. We are also watching for activity with respect to Linamar, where pilot delivery is anticipated over the next few weeks, which will be followed by testing.

“Additionally, we are aware the company has openly discussed the prospect of adding another large strategic partner before year-end, but we see limited value in this unless such a partner is willing to commit capital resources to the project. As it stands, Exro is extremely resource constrained and capital allocation needs to be respected. As we think about the balance of 2022, we continue to expect updates on pilot/prototype programs with SEA Electric, Linamar, and also Vicinity Motor. Given that there has previously been some slippage and delays on some of these programs, we view such updates as representing very important milestones for the business.”


In response to the announcement of a shift in its strategy following the release of its third-quarter financial results, Raymond James analyst Rahul Sarugaser lowered his recommendation for Perimeter Medical Imaging AI Inc. (PINK-X) to “market perform” from “outperform.”

The Dallas-based medical technology company, which is focused on ultra-high-resolution, real-time, advanced imaging tools for cancer surgery, will concentrate on the clinical development of its AI-enabled B-Series Optical Coherence Tomography (OCT) device, while dialing back its commercial efforts on its non-AI S-Series device. Perimeter cited continued headwinds with customers and clinical partners, leading it to withdraw its guidance of the deployment of 10-15 S-Series devices in 2022.

“Recall that PINK has been enrolling breast cancer patients — approximately 330 patients across 8 clinical sites — in its pivotal clinical trial evaluation of the B-Series OCT with ImgAssist AI in lumpectomy procedures,” said Mr. Sarugaser. “With all 8 of its pivotal clinical trial sites now active, the FDA has just approved the company’s application to expand the number of sites in order to accelerate recruitment. We see this as a very good thing, as it keeps PINK well on track to the trial concluding in ‘early 2023′, which puts our estimate of FDA clearance in 1Q24. (Re-)initiation of its commercial engine should then follow in early 2024.”

The analyst adjusted his financial forecast for Perimeter after pushing back his adoption timeline by two years to 2026.

That led him to lower his recommendation and cut its target for its shares to $2 from $6. The average is $5.06.


In other analyst actions:

* In a research note previewing the Dec. 7 release of its third-quarter 2023 financial results titled The Commencement of a New Price Point Era, TD Securities’ Brian Morrison trimmed his Dollarama Inc. (DOL-T) target to $89 from $91 with a “buy” recommendation. The average on the Street is $86.81.

“We anticipate Dollarama’s EPS growth rate to slow to the mid-to-high teens in Q3/F23 relative to its performance in H1/F23 (up approximately 37 per cent) as it no longer compares to quarters restricted to the sale of essential items only,” he said. “We expect to see above trend SSSG [same-store sales growth] as it benefits from heightened traffic with consumers ‘trading down,’ from price increases implemented, and the introduction of its new price points. Its current pricing flexibility should enable its gross margin to be sustained offsetting a mix shift to lower margin consumables, while SG&A as a percentage of sales should benefit from scale. Our EPS estimate of $0.71 is in line with consensus at $0.70.”

“We remain positive on the outlook for Dollarama. This is a function of the many drivers within its business model that we believe should continue to drive attractive and consistent earnings/FCF growth. This in our view should sustain a premium valuation relative to the market.”

* RBC Dominion Securities’ Pammi Bir cut his Extendicare Inc. (EXE-T) target to $7.50 from $8, maintaining a “sector perform” rating. The average is $7.25.

“Post a sizeable Q3 shortfall, we’ve taken our estimates down another notch,” said Mr. Bir. “Indeed, labour shortages, operating cost pressures, and uneven government funding will likely continue to create volatility in EXE’s results. We expect a recovery to eventually unfold as pandemic pressures begin to ease, which should ultimately support a sustained rebound in valuation. As the timing however remains uncertain, we continue to watch from the sidelines.”

* Scotia Capital’s Mario Saric trimmed his H&R REIT (HR.UN-T) target to $16.25 from $17 with a “sector perform” rating. The average is $15.36.

* RBC’s Jimmy Shan lowered his Nexus Industrial REIT (NXR.UN-T) target to $11.75 from $12.25, below the $12.91 average, with a “sector perform” rating, while Desjardins Securities’ Kyle Stanley cut his target to $13.25 from $13.75 with a “buy” rating.

“NXR now represents the only pure-play Canadian option for investors looking for industrial exposure,” said Mr. Stanley. “Despite year-to-date market turbulence, it has been active on the transaction front, with a renewed focus on Ontario and Québec. We view the current 17-per-cent discount to NAV as an attractive entry point given its 8-per-cent annualized FFOPU [funds from operations per unit] growth profile through 2024.”

* TD Securities’ Daryl Young lowered his target for NFI Group Inc. (NFI-T) by $1 to $10.50, keeping a “hold” rating. The average is $13.1.

“It remains our view that NFI has industry-leading products and that it is best-positioned to capitalize on the transition to ZEBs over the long term,” said Mr. Young. “However, given the significant near-term forecast uncertainty and elevated financial leverage, we are inclined to wait for evidence of stability in results before becoming more constructive on the shares.”

* Barclays’ Benjamin Theurer cut his Nutrien Ltd. (NTR-N, NTR-T) target to US$95 from US$105, keeping an “overweight” recommendation. The average is US$104.

* Scotia Capital’s Himanshu Gupta cut his Sienna Senior Living Inc. (SIA-T) target to $14 from $16 with a “sector perform” rating. The average is $14.63.

Follow David Leeder on Twitter: @daveleederOpens in a new window

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