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

In response to the withdrawal of its plan to split its legacy coal business from its fast-growing critical minerals business, National Bank Financial analyst Shane Nagle lowered his recommendation for shares of Teck Resources Ltd. (TECK.B-T) to “sector perform” from an “outperform” recommendation previously.

“We are downgrading to Sector Perform given recent share price appreciation, uncertainty about the pathway to separate the company’s coal/base metal’s business units, a deteriorated near-term outlook for coking coal prices given macroeconomic headwinds and questions related to regulatory approval for any opportunistic acquisition proposals (including an increased hostile offer from Glencore given TECK/B is currently trading at a 3.6-per-cent discount to the most recent proposal),” he said in a research note. “Since we upgraded Teck Resources on September 27, 2020, shares are up 232 per cent compared to the S&P Global Base Metals Index which is up 84 per cent over the same period. Year-to-date, Teck shares are up 24 per cent compared to the S&P Global Base Metals Index which is up 5 per cent.

“Teck’s balance sheet is capable of weathering a volatile commodity price environment without sacrificing near-term growth objectives and supporting supplemental shareholder distributions. A doubling of copper production with QB2 online and divestiture of Fort Hills is a step in transitioning the portfolio away from carbon-intensive commodities. Additionally, the elimination of the dual-class share structure will make Teck Metal’s portfolio more attractive to potential acquirers, leading to multiple expansion following any potential separation.”

Eric Reguly: Teck’s ambitious break-up proposal crashes and burns. Mistakes were made that worked in Glencore’s favour

The latest turn into its restructuring proposal, which led Glencore PLC to reaffirm its takeover bid on Thursday, came alongside the release of largely in-line first-quarter results and a reiteration of its 2023 and three-year operating outlook.

Vancouver-based Teck reported adjusted earnings before interest, taxes, depreciation and amortization of US$1.972-billion, “modestly” below both Mr. Nagle’s $2-billion projection and the consensus estimate on the Street of US$1.986-billion. Adjusted earnings per share of $1.81 was a penny below the Street and 31 cents lower than the analyst’s projection, which he attributed to higher corporate expenses and taxes paid. It now expects copper production to be 390,000-445,000 tons in 2023 (versus the analyst’s expectation of 404,000 tons).

Mr. Nagle’s concern focused on the decision to withdraw its spin-out plan and the late-day announcement of shareholder approval of a proposal to eliminate Teck’s dual-share structure of a six-year timeframe.

“The company has committed to a simpler and more direct approach to separation of its coal business than previously proposed,” he said. “The move creates more uncertainty on what the proposed separation would look like, including potentially floating a larger market cap coal company into the market which could lead to multiple deterioration and reduce funding to unlock Teck’s copper growth pipeline, in our view. We have reverted to modeling 100 per cent of the coal business and account for recent coking coal price deterioration under our Base Case.”

“In our view, the elimination of the dual-class share structure is an integral component to achieve multiple expansion of the broader base metal business, once separated, as it eliminates potential barriers for acquirers. For the time being, the dual-class share structure will likely prevent any acquisition opportunities of Teck’s portfolio until it has presented an alternative in separating the coal/metals businesses.”

With the changes to his financial model, Mr. Nagle lowered target for Teck shares to $70 from $72.50. The average target on the Street is $68.82, according to Refinitiv data.

Others making target changes include:

* Canaccord Genuity’s Dalton Baretto to $70 from $68 with a “buy” rating.

“The company’s Class B shareholders have indicated that they do not support TECK’s proposed separation plan (see our notes here and here) in sufficient numbers to exceed the required 66 2/3rds threshold required to pass,” said Mr. Baretto. “We share this view - we have written in the past that a clean break between MetalsCo. and CoalCo. would be the preferred alternative, allowing each business to go forward and fulfill its destiny independently (either on its own, or as part of a larger entity). As such, we view the Board’s decision to go back and look at alternatives to achieve this outcome as a win for shareholders (in particular, the Class Bs, who do not often get to reflect their views through votes). We note that the vote to sunset the Class A shares is still planned. Finally, we also note that despite the decision to cancel the separation vote, the Board does not intend to engage with or support the Glencore bid currently on the table.”

* Stifel’s Alex Terentiew to $72 from $66 with a “buy” rating.

“We believe Teck’s proposed met coal separation and Glencore’s persistence to engage in M&A talks brought renewed industry M&A interest to Teck’s portfolio of assets, prompting enough shareholders, and ultimately Teck, to cancel its existing separation plan,” he said. “After removing the planned separation of the met coal division from our forecasts, we have raised our target price ... as we moved the EV/EBITDA component of our valuation to 6 times (from 5 times pre-separation announcement). The higher multiple, in our view, is warranted as the inherent value in Teck’s divisions is now better recognized by the market, management and the Board are pressured to maximize shareholder value, and future M&A can not be ruled out.”

* CIBC’s Bryce Adams to $76 from $65 with an “outperformer” rating.

* TD Securities’ Greg Barnes to $78 from $80 with a “buy” rating.

* Raymond James’ Brian MacArthur to $69 from $68 with an “outperform” rating.


Separately, Mr. Nagle raised his recommendation for First Quantum Minerals Ltd. (FM-T) to “outperform” from “sector perform,” citing an improved operational forecast over the remainder of year.

“We are upgrading to Outperform given more clarity in the near-term operating outlook, upcoming ratification of the Panamá royalty agreement and more attractive valuation relative to peers given the company’s position as an industry-leading copper producer with a robust project pipeline,” he said. “First Quantum’s balance sheet remains in a strong position, focusing on reducing debt in the near term while continuing to deliver organic growth.”

The change came following the late Tuesday release of first-quarter results that fell short of his expectations. Adjusted EBITDA of US$518-million and adjusted EPS of 11 US cents were both below the estimates of Mr. Nagle (US$564-million and 13 US cents) and the Street (US$576-million and 12 US cents), due largely to lower production volumes.

The Toronto-based miner did, however, reiterate its operating guidance through 2025.

“Copper production of 138,753 tons was impacted by elevated rainfall in Zambia and lower grades/downtime at Cobre Panamá,” said Mr. Nagle. “Cash costs for the quarter were higher due to lower production and ongoing inflationary pressures.”

“Copper production guidance of 770,000 - 840,000 tons in 2023 (NBF Estimate of 780,000 tons) remains unchanged. Higher copper production is expected from Cobre Panamá from commissioning of the CP100 expansion project, higher grades are anticipated at Sentinel as the bottom of the pit is dewatered and mining at Kansanshi is moving away from zones with elevated grade variability.”

Also emphasizing its debt reduction efforts, Mr. Nagle raised his target for First Quantum shares by $1 to $39. The average is $33.33.

“Since downgrading to Sector Perform on December 15, 2022, FM shares are up 2 per cent compared with the S&P/TSX Global Base Metals Index up 0.1 per cent,” he said.


A decline in TFI International Inc.’s (TFII-N, TFII-T) less-than-truckload revenue in the first quarter and a reduction to its guidance “reflects the underlying trend that we are indeed in (at least) a freight recession and transports of all kinds are bracing for a more severe impact in 2023 than initially contemplated,” said RBC Dominion Securities analyst Walter Spracklin.

After the bell on Tuesday, the Montreal-based company reported adjusted EBITDA of US$264-million, excluding one-time items, below both Mr. Spracklin’s US$306-million estimate and the Street’s expectation of US$282-million. Also excluding items, adjusted earnings per share came in at US$1.55, also missing projections (US$1.57 and US$1.47), which the analyst attributed to a drop in revenue from LTL, its “most important” segment.

“Management lowered its 2023 guidance from a prior view that contemplated H1 to be weak and H2 better — to one that has now shifted (based on customer conversations) to suggest weakness that picked up in Q1 is expected to amplify and continue through 2023,” the analyst said. “As a result, management has reduced its EPS guidance to $7.00 to $7.25 (from $7.50 to $7.60), below (prior) consensus of $7.44. This new guidance includes M&A deals done to date, but not the full $300-million it expects to be deployed in either M&A or buyback. The new guide is consistent with the narrative of consumers shifting focus to purchasing services rather than goods, leading to (at least for now) the current freight recession.”

Mr. Spracklin lowered his full-year 2023 estimates to “reflect an amplification (and longer duration) of the downturn than we had previously built into expectations, offset by $300-million in capital deployment (which management indicates will either go into M&A or buyback), which we now place into buyback for each of 2023 and 2024.” He’s now projecting EPS of US$7, down from US$7.60 and at the bottom end of the guidance range of US$7-7.60. While expecting a recovery in 2024, his EPS projection slid to US$8.20 from US$8.60.

With those changes, his target for TFI shares dropped to US$123 from US$129, keeping an “outperform” rating on relative implied returns. The average on the Street is US$134.39.

Elsewhere, others making changes include:

* Desjardins Securities’ Benoit Poirier to $180 from $189 with a “buy” rating.

“We view the weaker-than-expected 1Q results as relatively in line when adjusted for one-time items, which is impressive given currently sour freight dynamics,” said Mr. Poirier. “The company’s reduced guidance will put pressure on the stock in the short term but we continue to believe that TFI’s long-term FCF compounding ability is misunderstood by investors. We are reducing our target ... but see the pressure TFI is facing as a buying opportunity given its available dry powder.”

* Scotia’s Konark Gupta to $165 from $175 with a “sector outperform” rating.

“Q1 was reminiscent of Q3/22 results in October when LTL missed while other segments beat, particularly TL,” he said. “So we are not surprised by the market’s knee-jerk reaction similar to that in October, which was actually followed by an outperformance over several months. However, we think an 11-per-cent pullback is punitive, considering that core Q1 results were in line (excluding non-recurring costs at U.S. LTL), about half of the 5.6-per-cent EPS guidance cut is likely due to non-recurring costs, and balance sheet and FCF are still quite solid to drive significant inorganic growth over time. Thus, despite management’s incremental caution on 2H organic outlook, we maintain our Sector Outperform rating to reflect a more attractive valuation (12.4 times our 2024 estimated EPS vs. 14.1 times peer weighted avg.) and potential for $8-$10 EPS beyond 2023 without any large M&A or significant buyback.”

* CIBC World Markets’ Kevin Chiang to US$128 from US$134 with an “outperformer” rating.

* Cormark Securities’ David Ocampo to $157 from $165 with a “buy” rating.

* BMO’s Fadi Chamoun to US$105 from US$115 with an “outperform” rating.

* JP Morgan’s Brian Ossenbeck to US$126 from US$133 with an “overweight” rating.

* TD Cowen’s Jason Seidl to US$144 from US$148 with an “outperform” rating.


Even with recent “robust” gains, Desjardins Securities analyst Jerome Dubreuil continues to see CGI Inc. (GIB.A-T) as “attractive” to investors, citing its " defensive attributes, growing margin profile, sustainable mid-single-digit growth, strong FCF conversion and leverage around 1.0 times.”

Before the bell on Wednesday, the Montreal-based business and technology consulting firm reported revenue of $3.715-billion, up 13.7 per cent year-over-year and above the estimates of the analyst ($3.53-billion) and the Street ($3.56-billion). Adjusted fully diluted earnings per share rose 18.9 per cent to $1.82, also topping expectations ($1.70 and $1.71, respectively).

In a research note titled Cruising through the uncertain macro context, Mr. Dubreuil said the company’s organic growth of 9 per cent year-over-year was “more sustained than expected.”

“We do not think the buy side considers GIB a high-single-digit organic growth stock and, therefore, quarters such as the last two have been a positive surprise,” he said. “That being said, we believe M&A will eventually contribute to organic growth and previous acquisitions are now further in the past. We have increased our top-line forecast and now expect 5.1-per-cent growth in FY24, which appears achievable in light of recent results.”

“While CGI recognized that some clients in certain segments were a bit more hesitant to pull the trigger on new deals (and that the business is not 100-per-cent immune to macro headwinds), management did not seem as concerned as some of its peers during the 2Q FY23 call. Indeed, CGI has historically used prudent strategies, and its recent share price performance signals that the market is now recognizing this, which is especially attractive in the current macro context. Even though there is not as much upside in the stock now as there used to be, in our view the company has what it takes to capitalize on opportunities when others are fearful, especially with leverage currently standing at 1.0 times.”

One of several analysts on the Street to raise their forecast for CGI, Mr. Dubreuil raised his target for its shares to $155 from $145, reaffirming a “buy” recommendation. The average is $147.15.

Others making changes include:

* Canaccord Genuity’s Robert Young to $155 from $135 with a “buy” rating.

“In the near term, we view complementary M&A and continued enterprise spend on IT modernization and optimization as tailwinds for CGI’s stock, which is up 17 per cent year-to-date,” said Mr. Young. “We believe the market is attaching a premium to strong execution, long-term contracts in defensive end markets, and a solid balance sheet. We believe conversion of elongated managed services contracts and margin expansion are catalysts for further upside in addition to our raised estimates. We are reiterating our BUY rating and raising our target price.”

* RBC’s Paul Treiber to $155 from $145 with an “outperform” rating.

“Q2 was one of CGI’s strongest quarters, as organic growth reached new highs, whereas consensus assumed deceleration. CGI is executing very well, as shown by broad-based organic growth and margin expansion. We’re increasing our estimates but still assume organic growth slows. A meaningful ramp in managed services could drive upside to our estimates,” said Mr. Treiber.

* Scotia’s Divya Goyal to $155 from $140 with a “sector outperform” rating.

“CGI continues to be our top pick given the premium quality of the business,” she said. “We get asked all the time whether the CGI stock is already at its peak – we say ‘No’. CGI is a high-quality business led by a seasoned management team which does not rush into decisions. So, while the company maintained a muted stance in 2020/2021, insulating and nurturing its underlying business, resulting in a slower growth, the company’s investments are now starting to shine through. We believe the company has a long runway ahead given it can continue to maintain and sustain its M&A and IP growth strategy.”

* Stifel’s Suthan Sukumar to $155 from $140 with a “buy” rating.

“The company posted its 5th consecutive quarter of double-digit growth, coupled with continued margin expansion, while certain global IT peers are grappling with slowing growth and margin erosion amidst a more challenging and uncertain macro backdrop,” said Mr. Sukumar. “We believe this underscores CGI’s competitive positioning with a local client proximity model and end-to-end offering, allowing them to benefit early from the shift in IT spend priorities to cost-cutting and near-term ROI initiatives, as reflected in a growing pipeline of larger, multi-year managed services deals (up 20 per cent quarter-over-quarter). With bookings and backlog growth providing solid visibility ahead, we see a continued outlook for healthy revenue growth with margin expansion. We raise our target price ... on higher estimates. We see CGI’s strong, consistent execution, defensive characteristics, and M&A optionality supporting a valuation premium vs. peers.”

* CIBC’s Stephanie Price to $150 from $146 with an “outperformer” rating.

* BMO’s Thanos Moschopoulos to $156 from $150 with an “outperform” rating.

* Raymond James’ Steven Li to $150 from $138 with an “outperform” rating.


Citi analyst Tyler Radke said Shopify Inc. (SHOP-N, SHOP-T) merchant activity “appears to be showing signs of sustained growth,” citing web traffic indicators and checks with the Ottawa-based ecommerce giant’s partners.

“We believe this could be indicative of further share gains/idiosyncratic factors amidst consumer spending concerns and a potentially tighter SMB financing environment,” he said in a note. “Although GMV [gross merchandise volume] may be pressured in the near-term as consumer buying power weakens, we are expecting a solid 1Q23 beat with guidance looking relatively conservative.”

While noting broad U.S. e-commerce usage indicators are “slightly down” year-over-year, Mr. Radke sees “strong” merchant adoption of Shopify’s platform based on its store count trends and merchant login web traffic. He said that data, including a 38-per-cent year-over-year jump total login pages in the first quarter, suggests “relative strength in [a] normalizing demand environment.

“Its ‘Shop’ mobile app traffic data also showed an increase in time spent year-over-year in February-March despite stabilization in global monthly active users, suggesting good execution in driving increased mobile engagement with merchants’ end-customers,” he said. “We also spoke with several Shopify partners who acknowledged the slowing GMV environment, but noted sources of growth such as consumable brands, Commerce Components and Shopify Plus.”

Accordingly, Mr. Radke raised his forecast for the first quarter and full-year 2023, seeing a “more favourable” setup for Shopify.

“With stock still off 16 per cent post-4Q22 results and relatively conservative guidance, we see a more favorable set-up in Q1,” he said. “We expect revenue growth to come in a few points ahead of hi-teens guidance, particularly with tailwinds from new store growth and subscription price increases applied to new merchants. We believe 2Q guidance should meet street estimates of 20 per cent year-over-year total revenue growth with very easy comps.”

“We take up our estimates for 1Q23 and FY23 driven primarily by stronger merchant data, positive app/website traffic data, and data points from our Internet team pointing to signs of rebound across the e-commerce space. We increase our GMV growth estimates by 80 basis points and 190bps for 1Q23 and FY23, respectively.”

Keeping a “neutral” recommendation “given ongoing macro uncertainties and as SHOP already trades at the high-end of its peer group valuation multiples,” Mr. Radke raised his target by US$1 to US$51. The average on the Street is US$48.74.

“We rate Shopify shares as Neutral/High Risk because while we appreciate the magnitude of the TAM, an acceleration of secular tailwinds coming into focus, a strong management team, and record of execution, we believe much of this is priced in at the current multiple—which earns a significant premium to the implied multiple of its growth/margin framework and implies a 10-year revenue CAGR [compound annual growth rate] that appears potentially too high,” he said.


Expecting its “robust resource potential” to drive near-term share performance, National Bank Financial’s Lola Aganga initiated coverage of Patriot Battery Metals Inc. (PMET-X) with an “outperform” recommendation on Thursday.

The analyst thinks the Vancouver-based company’s 100-per-cent owned, low-cost Corvette project in the James Bay Region of Quebec is “already yielding impressive results and will “deliver attractive economics in a mining-friendly jurisdiction.”

“PMET is on track to deliver a minimum Inferred Resource by mid-year of a world-class deposit, potentially an Indicated Resource to support a subsequent pre-feasibility study,” he said. “Based on drilling to date on the CV5 trend, we calculate a potential Inferred Resource of 90 million tons grading 1.35-per-cent Li2O.

“Over the last 12 months, PMET’s share price has risen approximately 800 per cent from $1.50 per share in March 2022 to $13.00 per share today and more than doubled since the start of the year, driven primarily by exploration results which boast consistent widths of high-grade lithium spodumene ore.”

Ms. Aganga set a target of $17. The current average is $16.71.


In other analyst actions:

* TD Securities’ Daryl Young upgraded FirstService Corp. (FSV-Q, FSV-T) to “buy” from “hold” and increased his target to US$170 from US$150. Other changes include: BMO’s Stephen MacLeod to US$166 from US$161 with a “market perform” rating and Scotia’s Michael Doumet to US$160 from US$155 with a “sector outperform” rating. The average is US$153.67.

* Citing “ad pressure and e-commerce challenges,” National Bank’s Adam Shine downgraded Verticalscope Holdings Inc. (FORA-T) to “sector perform” from “outperform” with a $4.50 target, down from $10. The average is $11.

* Ahead of earnings season for Canadian asset managers, Canaccord Genuity’s Scott Chan reduced his targets for CI Financial Corp. (CIX-T, “buy”) to $22.50 from $23.50 and Onex Corp. (ONEX-T, “buy”) to $89 from $105, while he raised his IGM Financial Inc. (IGM-T, “buy”) target to $48 from $46. The averages on the Street are $19.50, $93.20 and $46.88, respectively.

* In response to “slightly weaker-than-expected” quarterly results, Desjardins Securities’ Benoit Poirier trimmed his Aecon Group Ltd. (ARE-T) target to $19 from $21, remaining above the $16.32 average, with a “buy” rating. Others making changes include: TD Securities’ Michael Tupholme to $14.50 from $16 with a “hold” rating and Stifel’s Ian Gillies to $14 from $13.75 with a “hold” rating.

“The uncertainty around FCF and the resolution of claims could be a concern for investors in the short term, but we remain open-minded regarding ARE’s future as the four problematic contracts will be largely completed by the start of next year,” Mr. Poirier said. “However, at the end of the day, this is construction and the risk of further writedowns remains given the size and complexity of the projects.”

* CIBC’s Cosmos Chiu raised his Alamos Gold Inc. (AGI-T) target to $24, above the $18.57 average on the Street, from $22 with an “outperformer” rating.

* IA Capital Markets’ Matthew Weekes bumped his AltaGas Ltd. (ALA-T) target to $30 from $29 with a “buy” rating. The average is $31.20.

“ALA’s Q1/23 Normalized EBITDA and EPS were above estimates driven by higher Midstream volumes, favourable FX, and operational efficiencies,” said Mr. Weekes. “The Company reaffirmed its 2023 guidance and continued to advance its strategic priorities, including entering into a JV with Vopak to evaluate the new Ridley Island Energy Export facility to further increase scale and overall efficiency of the export platform. ALA has barriers to entry in global LPG exports through first-mover advantage and scale and de-risks operations through active hedging and contracted tolling. We are rolling our valuation forward to capture the first two quarters of 2024E and increasing our target.”

* ATB Capital Markets’ Chris Murray increased his Canadian Pacific Kansas City Ltd. (CP-T) target to $125, above the $117.54 average, from $120 with an “outperform” rating. Others making changes include: Evercore ISI’s Jonathan Chappell to US$85 from US$83 with an “outperform” rating and TD Securities’ Cherilyn Radbourne to $125 from $120 with a “buy” rating.

“CP delivered strong results on the back of strong price/volume conditions,” said Mr. Murray. “Management was upbeat on the opportunities it sees for CPKC in intermodal after announcing two partnerships in Q2/23. CP did not provide guidance but acknowledged headwinds facing all Class 1 operators, highlighting its bulk franchise’s resiliency. The Company intends to provide a fulsome near-term outlook and revised longer-term targets at its investor day in June, which we see as a near-term catalyst. We remain upbeat on the name given its bulk heavy freight mix and longer-term opportunity in CPKC.”

* As “macro headwinds remain elevated,” BMO’s Fadi Chamoun trimmed his Cargojet Inc. (CJT-T) target to a Street-low $119 from $130 with a “market perform” rating. The average is $164.42.

“CJT is well positioned to weather continued/elevated macro headwinds and the steps taken by management to lower capex and operating costs in recent months should help support free cash flow and prevent financial leverage from creeping higher. But an improvement in valuation is likely to remain elusive in the immediate term in the absence of improved visibility into demand and bottoming of air freight cycle,” he said.

* Following Wednesday’s earnings release, which feature a production guidance reduction and dividend increase, RBC’s Greg Pardy lowered his target for Cenovus Energy Inc. (CVE-T) to $28 from $29 with an “outperform” rating. Other changes include: BMO’s Randy Ollenberger to $26 from $27 with an “outperform” rating and Desjardins Securities’ Chris MacCulloch to $33 from $34 with a “buy” rating. The average is $30.83.

“There is plenty of torque in Cenovus’ U,S, refinery segment to drive cash flow but igniting it will require smooth execution across the board,” said Mr. Pardy. “The good news is that the company’s magic $4 billion net debt floor target should be achieved in the fourth-quarter—which opens the door to 100-per-cent shareholder returns on the other side of the mountain. We are maintaining an Outperform recommendation on Cenovus, but trimming our one-year target price by $1 (3 per cent) to $28 per share on the back of lower estimates.”

* Canaccord Genuity’s Matthew Lee raised his Exchange Income Corp. (EIF-T) target to $66 from $64 with a “buy” rating. The average is $63.45.

“Exchange Income shares have remained relatively flat since reporting December quarter results,” said Mr. Lee. “The company has started the year strongly, deploying $138-million in capital to acquire BVGlazing Systems Ltd. and Hansen Industries, two businesses that fit nicely with its current suite of assets. We expect the firm to continue pursuing acquisitions as economic softness and rising rates depress private company valuation multiples. Our estimates for the quarter are raised to account for the two new assets, with our underlying expectations steady. We remain bullish on the airline segment as leasing revenues begin to recover while part sales remain strong. Given the company’s solid growth profile, cash flow generation, and 4.8-per-cent dividend yield, we maintain our BUY rating. We have increased our target ... after incorporating the accretive acquisitions in the quarter.”

* TD Cowen’s John Kernan raised his Lululemon Athletica Inc. (LULU-Q) target to US$525 from US$500 with an “outperform” rating. The average is US$401.68.

* RBC’s Keith Mackey cut his Precision Drilling Corp. (PD-T) target to $120, below the $133.72 average, from $130 with an “outperform” rating. Other changes include: ATB Capital Markets’ Waqar Syed to $145 from $160 with an “outperform” rating and BMO’s John Gibson to $125 from $115 with an “outperform” rating.

“PD reported a solid quarter, with adj. EBITDA exceeding Street estimates on both revenue and margins,” said Mr. Mackey. “The stock has suffered year-to-date from weak sentiment with respect to the downward trajectory of US natural gas rig demand. We acknowledge the risk, but remain constructive on PD shares given forecast margin expansion, strong Canadian rig demand, and improving FCF. We adjust our EBITDAS estimates by a 1 per cent increase in 2023 and 3 per cent decline in 2024 and maintain our Outperform rating with a $120 price target.”

* RBC’s Drew McReynolds increased his Rogers Communications Inc. (RCI.B-T) target to $70 from $68 with a “sector perform” rating. Other changes include: TD Securities’ Vince Valentini to $83 from $80 with an “action list buy” rating, BMO’s Tim Casey to $72 from $70 with an “outperform” rating, Scotia’s Magher Yaghi to $75.75 from $74.75 with a “sector outperform” rating, Canaccord Genuity’s Aravinda Galappatthige to $72 from $68 with a “buy” rating, Desjardins Securities’ Jerome Dubreuil to $69 from $68 with a “hold” rating and CIBC’s Stephanie Price raised his target to $76 from $75 with an “outperformer” rating. The average is $72.84.

“Operationally, Rogers is entering the integration of Shaw on a good footing,” said Mr. Yaghi. “Momentum in wireless is strong and management has had plenty of time to sharpen the pencil on integration targets. We expect synergies to begin to accrue quickly, however it is the last third of the cost synergies that are usually the hardest to achieve, but this is still a ways to go. Overall, we believe the stock is still undervalued and have slightly increased our target as we upped our short-/medium-term earnings outlook on improved wireless results.”

Editor’s note: An earlier version of this article incorrectly stated Raymond James analyst Brian MacArthur's target price change for shares of Teck Resources. It has been updated

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