Inside the Market’s roundup of some of today’s key analyst actions
Barclays analyst Manav Patnaik upgraded Thomson Reuters Corp (TRI-N, TRI-T) to “overweight” from “equal weight” while bolstering his price target to US$180 from US$150.
The move came after Thomson Reuters held its Investor Day this week.
“We have been constructive on the ongoing transformation at TRI, and [the day] gave us a much anticipated look ‘under the hood’ to convince us that TRI’s content-enabled technology growth is still only in the early innings,” Mr. Patnaik said in a note to clients.
CIBC analyst Scott Fletcher also raised his price target on Thomson Reuters, to US$152 from US$146, but reiterated a less enthusiastic “neutral” rating.
“While the company did not update its financial targets, the TRI team projected confidence in the GenAI strategy and was convincing in its belief that TRI is well positioned to benefit from structural tailwinds in its end markets,” Mr. Fletcher summarized in a note to clients. “While we were certainly believers in TRI’s GenAI strategy prior to the event, we left the investor day incrementally more confident that TRI has the team in place to execute on its strategy and hit the accelerating organic growth targets in 2024 and beyond. While it is admittedly difficult to square our positive view on the strategy, management team, and TRI’s strong capital position with our Neutral rating, TRI continues to trade at 23.5x 2025E EBITDA, a notable premium to information services peers at 21.5x. After historically trading at a discount to peers, TRI’s embrace and integration of GenAI likely warrants a shift in that dynamic, but with shares already at a premium, it is hard to bank on additional multiple expansion from current levels.”
The average analyst price target is US$155.50, according to Refinitiv Eikon data.
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Several analysts raised their price targets on Information Services Corp (ISV-T) following an earnings beat this week and the company revealing a five-year plan to double revenue.
CIBC raised its target price to C$32 from C$31; RBC raised its target price to C$27 from C$24; and Raymond James increased its target to C$34 from C$27.
The average analyst price target is now C$31.40.
The company, which provides registry and information management services for public data and records, reported revenue of $57.5 million versus consensus at $56.2 million. Reported adjusted EBITDA of $21.3 million was also ahead of consensus at $20.2 million.
“While the smallest of ISV’s reporting segments, Technology Solutions has shown a marked improvement in results after Covid led to many project delays and declining growth for the last 2 years,” commented Raymond James analyst Stephen Boland. “The performance across this segment was a positive surprise this quarter and management expects continued momentum in 2024.”
Mr. Boland noted that the new strategic goal to double both revenue and EBITDA over the next five years will be achieved through a combination of organic growth and selective M&A. “Despite these ambitions, ISV remains committed to reducing the company’s leverage towards its long-term target of 2.0x-2.5x debt-to-EBITDA.”
“Heading into 2024, the recent fee adjustments on the MSA renewal positions the company well for a solid year of double-digit revenue and 20%+ EBITDA growth. In addition, we may see further upside to our current estimates if real estate activity improves sequentially through the year (the market is currently being held back by low supply). Monetary policy is likely to be an important factor in this regard. Regardless, ISV remains one of the most resilient and high-quality businesses in our coverage,” Mr. Boland said. He is maintaining an “outperform” rating.
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RBC analyst Sabahat Khan sliced his price target on Jamieson Wellness Inc (JWEL-T) after the vitamin company’s fourth quarter results fell short of forecasts. He wasn’t alone.
Revenue of $220.4 million was up 14.3 per cent from a year ago, but missed the consensus expectation of $228.9 million. Adjusted EBITDA of $50.6 million was up 3.6 per cent from a year earlier, but missed consensus at $54.2 million.
“At a high level, the top-line miss was partly driven by destocking at one particularly large Canadian retail customer. That said, POS trends remain strong, with the company pointing towards double-digit % growth from both a unit and dollar perspective in Q4,” Mr. Khan said in a note to clients.
The company’s guidance for 2024 also fell short of expectations. The company is forecasting an EPS range of $1.55-$1.65, versus $1.55 in 2023 and the consensus at $1.89.
RBC cut its target price to C$31 from C$35 but reiterated an “outperform” rating.
“Our $31 price target is based on ~13.0x our 2024 Adjusted EBITDA forecast of $140.7 million. Our valuation multiple remains above the average multiple for Jamieson’s Global Health and Wellness peers given its stronger growth profile. We believe our valuation multiple fairly reflects the strong earnings growth outlook, potential for future acquisitions, a strong FCF profile, and a number of risks that could impact earnings,” said Mr. Khan.
Elsewhere, BMO cut its target to C$35 from C$40; National Bank of Canada trimmed its target to C$36 from C$38.50; Scotiabank cut its target to C$29 from C$32; Eight Capital cut its target price to C$38 from C$46; and Stifel cut its target price to C$42 from C$45.
TD Securities also cut its price target, to C$39 from C$42, and also downgraded its rating on Jamieson, to “buy” from “action list buy” - which is a list of its highest conviction stocks to own.
The average analyst price target is now C$35.56.
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Echelon Capital Markets analyst Andrew Semple downgraded The Cannabist Company Holdings Inc (CBST-NEO) to “hold” from “speculative buy” following underwhelming fourth quarter results and an outlook for 2024 that’s turned hazy. His price target was slashed to 50 cents from C$1.40.
The company reported results that fell short of Echelon’s EBITDA estimate as well as the consensus.
“The company faced ongoing margin pressure due to underutilized cultivation/processing facilities in certain markets, as well as from heightened inventory liquidation activity. As a result of these pressures, adj. EBITDA declined by nearly 40% q/q. Fortunately, many underutilized facilities have clear catalysts for improved demand and inventory liquidation should slow in the quarters ahead. As adult-use sales commence in key states, The Cannabist Company should experience an improvement to its margin profile by leveraging existing infrastructure to capitalize on an expanding market. We are optimistic Cannabis can return to earnings growth in the quarters ahead,” Mr. Semple said in a note.
“That said, the company has a narrow margin of safety on its current liquidity position, leaving little room for error in 2024,” he added.
Cannabist ended the fourth quarter of 2023 with $36 million in cash, of which $13 million is earmarked for a debt maturity in May 2024.
“Although we forecast Cannabist having sufficient liquidity in 2024, we believe there is a considerable degree of uncertainty with our 2024 cashflow outlook,” the analyst cautioned.
The average analyst target is C$1.81.
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In other analyst actions:
Tesla Inc (TSLA-Q): UBS cuts target price to US$165 from US$225 with a “neutral” rating. UBS said the price target cut was in response to lowering delivery expectations, but added that buyside expectations and sentiment is already low. The average analyst price target is now down to US$201.04, from US$229.49 at the start of this year.
Birchcliff Energy Ltd (BIR-T): CIBC raises target price to C$5.75 from C$5
Boardwalk REIT (BEI-UN-T): Cormark Securities raises PT to C$86 from C$72
Converge Technology Solutions Corp (CTS-T): Scotiabank raises PT to C$8 from C$7
North American Construction Group (NOA-T): Atb Capital Markets cuts PT to C$45 from C$46; BMO raises price target to C$42 from C$39; TD Securities raises PT to C$34 from C$33
Prime Mining Corp (PRYM-T): Eight Capital initiates with buy rating; PT C$3.8
Propel Holdings Inc (PRL-T): Eight Capital raises target price to C$25 from C$20
Transcontinental Inc (TCL-A-T): RBC raises target price to C$21 from C$20; BMO raises target price to C$15.5 from C$14; Cormark Securities raises PT to C$23 from C$21.5
Caterpillar Inc (CAT-N): Truist Securities initiates coverage with buy rating; price target US$390
Citigroup Inc (C-N): Goldman Sachs raises target price to US$68 and upgrades rating to “buy” from “neutral”
Dollar Tree Inc (DLTR-Q): Jefferies cuts target price to US$128 from US$130; JP Morgan cuts target price to US$144 from US$165; Piper Sandler cuts target price to US$168 from US$171
Darcy Keith