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

Believing its risk-reward proposition for investors “feels balanced” for the year ahead, RBC Dominion Securities analyst Sam Crittenden lowered his recommendation for shares of First Quantum Minerals Ltd. (FM-T) to “sector perform” from “outperform” on Thursday.

“We are downgrading First Quantum ... as it is trading inline with peers, FCF is limited next year, and we see risks around 2024 guidance and potential headline risks around the Panama election next May,” he said. “At the same time we continue to see strong leverage to copper, production growth starting in 2025, and takeout potential.”

In a research note released before the bell, Mr. Crittenden reduced his financial expectations for the Toronto-based miner for the remainder of 2023 and 2024 following Tuesday’s aftermarket release of its third-quarter financial results, which sent its shares lowered by almost 3 per cent on Wednesday.

“Cobre Panama had a strong Q3 and is nearing the design capacity of 100Mtpa with potential upside in 2024; however, Kansanshi remains in transition before the S3 expansion is completed while hard rocks encountered in Q3 at Sentinel could impact 2024 results,” he said. “We reduced 2023 production to reflect updated guidance (copper production down 6 per cent, gold down 14 per cent, and nickel down 18 per cent) and we lowered 2024 estimates for Sentinel and Kansanshi. This took our NAVPS [net asset value per share] down by 13 per cent, 2024 EBITDA down 8 per cent.”

“At spot copper we calculate FCF in 2024 of negative $130-million for a yield of negative 0.9 per cent which compares to large cap copper peers at 5.9 per cent and would keep FM’s net debt at current levels ($5.6B, 2.0 times 2024 estimated EBITDA). We expect FCF to improve in 2025 as the S3 expansion at Kansanshi is completed, and we estimate FCF of $768-million (yield of 5.3 per cent vs. peers at 7.1 per cent) as consolidated copper production grows to 819kt from 776kt in 2022. Post 2024, First Quantum could consider a large scale greenfield project such as Taca Taca in Argentina or La Granja in Peru (55-per-cent FM/45-per-cent Rio Tinto) to take advantage of their unique mine building ability.”

Mr. Crittenden also warned of the impact of its ongoing profit sharing dispute with Panama’s government over its Cobre Panama copper mine.

“The National Assembly of Panama approved the new mining contract and tax regime last week; however, since then there have been widespread protests primarily against mining in general, and not necessarily around the specifics of the contract,” he said. “First Quantum management believes the process and legal protections ensure the stability of the contract; however, they also acknowledged the need to better promote the positive impacts of the mine and acknowledged some risks around the election. The current protests may subside in the coming days; however, we believe this could again be topical in the 2024 general election which presents continued headline risks, in our view.”

Seeing First Quantum currently trading inline with large-cap copper producers, Mr. Crittenden lowered his target for its shares to $38 from $42. The average target on the Street is $36.02, according to Refinitiv data.

Elsewhere, others making target changes include:

* Scotia Capital’s Orest Wowkodaw to $38 from $40 with a “sector outperform” rating.

“FM reported markedly better-than-anticipated Q3/23 results. Although the company materially reduced its 2023 operating guidance, the revised outlook was largely in line with our expectations,” said Mr. Wowkodaw. “Overall, we view the update as mixed for the shares.

“We rate FM shares Sector Outperform based on the company’s solid growth profile, high Cu leverage, takeover optionality, and attractive valuation.”

* TD Securities’ Greg Barnes to $38 from $44 with a “buy” rating.

“We have reduced our target price, reflecting more cautious production estimates for Sentinel in H1/24, and we have also pushed out development of the Taca Taca copper project (with first production now in 2029),” he said.


National Bank Financial analyst Cameron Doerksen continues to be “positive” on the long-term growth of Canadian Pacific Kansas City Ltd. (CP-T, CP-N), believing it deserves a premium multiple “given its unique growth opportunities.”

However, he made modest reductions to his forecast for 2024 and 2025 after Wednesday’s after-market release of its third-quarter financial results, which was accompanied by a cut to its full-year guidance.

“CPKC trimmed its 2023 guidance and now expects EPS to be flat to slightly positive versus the prior forecast for mid-single-digit EPS growth,” he said. “We note that our forecast was already for flattish EPS while the consensus was for slight growth, so the market looks to have already factored in some of the volume headwinds CPKC has experienced.”

For the third quarter, CPKC reported revenue of $3.339-billion, down 4 per cent year-over-year and narrowly below the Street’s expectations of $3.371-billion. Reported earnings per share of 84 cents also fell short of the consensus estimate by 7 cents as revenue ton miles slid 3 per cent and yield dipped 1 per cent.

“So far, early in Q4, CPKC’s RTMs are down 1.2 per cent year-over-year with softness in intermodal volumes (down 10.4 per cent) and grain (down 8.2 per cent) offset by strength in coal (up 28.3 per cent on easy comps) and potash (up 15.4 per cent),” said Mr. Doerksen. “Volumes have more recently inflected positively so CPKC expects Q4 RTMs to finish up 4-5 per cent year-over-year. We have previously highlighted

Canadian grain as a potential headwind for CPKC in the coming quarters and management is seeing demand below committed capacity; however, CPKC is seeing new opportunities to shift capacity to its U.S. grain franchise as it capitalizes on new markets made possible through the merger.”

Now expecting EPS for 2023 of $3.77 and 2024 of $4.62, down from previous projections of $3.83 and $4.53, respectively, Mr. Doerksen lowered his target for CPKC shares to $107 from $109. The average is $116.14.

“The current stock valuation at 21.2 times our 2024 EPS forecast looks fair relative to the U.S. peer average of 15.7 times 2024 EPS,” he said. “We continue to value CPKC shares by applying a 20.0 times multiple to our 2025 forecast.”

Elsewhere, Raymond James’ Steve Hansen raised his recommendation for CPKC shares to “outperform” from “market perform” with a $115 target (unchanged).

“We are upgrading our rating on Canadian Pacific Kansas City (CP) to Outperform (vs. Market Perform prior) based upon the firm’s solid 3Q23 print and associated commentary suggesting: 1) the worst of the freight recession is behind us (traffic growth is re-emerging); 2) revenue/cost synergies are tracking ahead of plan; 3) key operating metrics are gathering momentum; and 4) notwithstanding lingering macro volatility, management remains confident in the 2024 outlook,” said Mr. Hansen. “Lastly, while CP shares still command a lofty valuation premium over its Class 1 peers, we believe the sharp pullback over the past month has introduced a more attractive, risk-adjusted entry-point for long-term investors.”

Others making target changes include:

* RBC’s Walter Spracklin to $128 from $133 with an “outperform” rating.

“While a negative, we flag that consensus was already there at 2023 EPS growth of 0.7 per cent going into the print,” said Mr. Spracklin. “As a result, we may see a muted share price reaction tomorrow. Key here is that we are still in the early innings of a transformative integration; and the guidance change was primarily on the macro (less concerning) and ‘other near-term challenges’ (more concerning). Still, we continue to favour CP in the mid- to long-term.”

* TD Securities’ Cherilyn Radbourne to $115 from $125 with a “buy” rating.

“We anticipate that consensus expectations will have to recalibrate in line with our own downward forecast revisions, but we expect that related share-price pressure will be contained based on the upside potential associated with CPKC’s vastly enhanced network reach and unique positioning to benefit from supply-chain reshoring,” he said.

* Desjardins Securities’ Benoit Poirier to $108 from $109 with a “buy” rating.

“We have two main concerns heading into 2024 — the consumer demand environment for intermodal (macro) and the smaller Canadian grain crop (the Street has not fully priced in the impact),” he said. “We continue to believe that the 21-per-cent EPS growth currently being baked into consensus for next year will have to come down, as it seems overly optimistic given the current U.S. industrial production growth forecast (sitting at down 0.05 per cent). We continue to conservatively forecast 14-per-cent EPS growth in 2024 to $4.35.”

* ATB Capital Markets’ Chris Murray to $117 from $120 with an “outperform” rating.

“CPKC reported mixed results, reflecting the impact of the softer volume environment with the port strike and ongoing integration, representing added headwinds,” said Mr. Murray. “While management adjusted guidance downward to account for the current environment, volumes are expected to return to growth in Q4/23, albeit mixed by freight type, with moderating headcount and early cost synergies expected to support a sub-60 operating ratio. Management confirmed that synergy realization is ahead of schedule and longer-term targets remain intact. While results came in below expectations, we believe the volume outlook and near-term operating ratio guidance will be well-received by investors and reaffirms our view that CPKC remains a best-in-class growth story and deserving of its premium multiple.”

* Scotia’s Konark Gupta to $120 from $123 with a “sector outperform” rating.

“The CPKC combination continues to unlock synergies while bulks and merchandise are showing relative resilience over consumer-related segments during this freight recession,” said Mr. Gupta. “Although we have pushed our forecasts slightly to the right, we continue to estimate mid-teen EPS CAGR [compound annual growth rate] through 2028 as synergies ramp up, share buybacks potentially resume in late 2024, and the freight markets rebound after probably one more year of uncertainty.”

* BMO’s Fadi Chamoun to $125 from $128 with an “outperform” rating.

“Results were largely in line with expectations. As anticipated, management lowered F2023 guidance reflecting a more muted macro. Synergies, however, are developing at a strong pace, and we continue to anticipate that CPKC will deliver solid operating leverage and robust free cash flow against its multi-year growth pipeline. We reduce our target price ... and lower our estimates to reflect a more muted near-term demand backdrop. Despite this, our constructive multi-year growth thesis remains intact, and we reiterate CPKC as our top idea in the rail sector,” he said.

* CIBC’s Kevin Chiang to $118 from $123 with an “outperformer” rating.

“While CPKC will need to execute against its plan, we believe the pieces are in place to achieve industry-leading earnings growth starting next year. We have revised our estimates lower to reflect a slower pace of recovery in the freight cycle,” he said.

* Stephens’ Justin Long to US$78 from US$79 with an “equal-weight” rating.

* JP Morgan’s Brian Ossenbeck to $117 from $121 with a “buy” rating.


Raymond James analyst Frederic Bastien says he’s “moving to the sidelines” on Aecon Group Ltd. (ARE-T) after the late Wednesday release of “another disappointing” quarterly report, leading him to downgrade its shares to “market perform” from “outperform” previously.

“To be clear, the company still has lots going for it. ARE’s nuclear refurbishment and utility contracting services are enjoying strong momentum just as the supply-demand pendulum has swung back in its favour,” he said. “But challenges in ring-fencing the BIG 4′s losses are simply proving too hard for us to ignore in today’s increasingly volatile macro environment. With the year-end audit likely to bring more losses, and the seasonally weak first quarter unlikely to act as a catalyst, investors can revisit this stock at a later date.”

After the bell, the Toronto-based construction company reported revenue for its third quarter of $1.24-billion, down 6 per cent year-over-year and below the Street’s expectation of $1.28-billion. Adjusted EBITDA of $32-million also fell below the consensus projection of $84-billion.

“For the second quarter in a row, two of four legacy fixed-price jobs won in or around 2018 spoiled Aecon’s results (they combined for $91-million of losses in the period, versus our estimate of $30-million),” said Mr. Bastien. Below the EBITDA line, gains from the partial sale of the Bermuda Skyport Concession brought adjusted EPS ahead of expectations, with the reported figure of $1.63 comparing favourably to our target of $0.38 and the analysts’ average forecast of $0.43.”

“Adjusting for the above losses, Aecon delivered adjusted EBITDA of $123-million, the highest for a third quarter since 2020, which points towards the continued execution and solid demand for Aecon’s expertise in spaces such as nuclear, utilities and civil works. With this said, it is our view that the current risk surrounding the three remaining projects is too great to expect outperformance versus the market. We are stepping to the sidelines until provided evidence ARE is finding its way out of the woods”

Mr. Bastien lowered his target for Aecon shares to $14 from $16. The current average is $13.65.


National Bank Financial analyst Richard Tse and John Shao expect “in-line to soft” third-quarter results for Canadian technology companies, believing “a softening economic backdrop is slowing the cadence of spend, particularly in enterprise going into year-end.”

In a research report released Thursday, the analysts caution investors that valuations across the sector are not inexpensive, particularly given the difficult economic conditions. They note the S&P Info Tech index is trading approximately 1.3 standard deviations above its average dating back to January 1991 “in the face of heightened rates and what we believe to be forthcoming downward estimate revisions across the group given a softening economic backdrop.”

“Despite the past week, Technology has outperformed, albeit across a narrow group,” they said. “Year-to-date, the S&P Info Tech, NASDAQ 100 and S&P/TSX Info Tech indices are up 35.1 per cent, 32.3 per cent and 33.9 per cent respectively. In the U.S., that outperformance has been largely driven by the mega caps in NVDA, META, MSFT, GOOGL, AAPL, AMZN and TSLA. What’s interesting, in the context of our Canadian coverage universe, is that the S&P/TSX Info Tech Index has also outperformed, despite the absence of mega caps, in names like CLS, SHOP, CSU, GIB.a and OTEX. Like the U.S., it would appear the larger relative names have held up this group. And like the U.S., where the AI thematic has contributed to some of that lift in the pure-play/adjacent names, the other reason for the relative outperformance in those larger relative names has been a flight to relative ‘safety’ as that relative group holds growth along with common defensive attributes (profitability and recurring cash flow).”

The analysts recommend investors should continue to overweight in defensive larger cap names, pointing to Constellation Software Inc. (CSU-T, “outperform” and $3,250 target), CGI Inc. (GIB.A-T, “outperform” and $175) and Open Text Corp. (OTEX-T, “outperform” and US$60). They also think a move to become “opportunistic (on a sector pullback) in growth names” is prudent, pointing to Altus Group Ltd. (AIF-T, “outperform” and $65), Coveo Solutions Inc. (CVO-T, “outperform” and $14), Docebo Inc. (DCBO-T, “outperform” and US$50), Kinaxis Inc. (KXS-T, “outperform” and $250), Lightspeed Commerce Inc. (LSPD-T, “outperform” and US$20), Nuvei Corp. (NVEI-T, “outperform” and US$23) and Shopify Inc. (SHOP-T, “outperform” and US$80).”

Mr. Tse made four target changes to stocks in his coverage universe. They are:

* Farmers Edge Inc. (FDGE-T, “sector perform”) to 20 cents from $25. The average is 18 cents.

Analyst: “We see downside risk to Farmers Edge’s FQ3 results ... The appetite for technological deployment in farming remains challenged given that approximately 3/4 of respondents in the Farm Capital Investment Index Survey for September said they view this as a bad time to make large investments in their farm operation care of rising interest rates and the rise in prices for equipment and construction. ... All in, lack of execution, high burn, continued IP dispute and growing questions around the underlying business model results in considerable risk in this name.”

* Lightspeed Commerce Inc. (LSPD-N/LSPD-T, “outperform”) to US$20 from US$23. The average is US$19.57.

Analyst: “We’re expecting in-line FQ2 (CQ3) results from Lightspeed based on conservatism built into Management’s guidance. That guidance implied little to no expansion in payment penetration and flat to negative quarter-over-quarter growth in GTV and total customer locations.”

* Nuvei Corp. (NVEI-Q/NVEI-T, “outperform”) to US$23 from US$27. The average is US$37.22.

Analyst: “We’re expecting in-line FQ3 results from Nuvei. ... We see an attractive risk-to-reward profile given a valuation of 7.5 times (EV/EBITDA F23) against expectations that we’ve reset considerably last quarter. In our view, we see upside to those conservative expectations. ... We continue to think Nuvei has differentiated itself by focusing on outsized growth segments with an à la carte go-to-market while (more recently) expanding its TAM into larger enterprise merchants. In our view, the risk-to-reward profile is compelling.”

* Telus International Canada Inc. (TIXT-N/TIXT-T, “sector perform” to US$10 from US$16. The average is US$13.91.

Analyst: “We’re expecting in-line FQ3 results from TELUS International with some potential for upside given the conservative cut to guidance. ... TI is moving on a significant cost efficiency program that includes staff reductions to address lower service volumes, particularly in the technology vertical. That program is expected to provide savings of approximately $40-million in H2′23; that should have Adj. EBITDA margins rebounding to approximately 23 per cent exiting FQ4. That margin rebound is supposed to reflect the combined cost savings against a conservative outlook for the remainder of the year.”


Desjardins Securities analyst Jerome Dubreuil cut his forecasts for IT Service providers to reflect higher interest rates and the downside risk for near-term estimates, acknowledging soaring interest in artificial intelligence is “showing promising signs of growth” but warning investors it is “not material yet.”

“Recent updates from global IT service providers suggest that macro uncertainty and/or elevated interest rates are affecting near-term demand for IT services,” he said. “We still believe that medium- and longterm digitization prospects are robust as a large portion of the corporate world acknowledges that having strong digital capabilities continues to be an excellent way to adjust recurring cost structures to their respective evolving environment. We generally expect estimates for the next few quarters to come down in the coming weeks.”

Mr. Dubreuil noted IT service providers have “performed relatively well compared with the S&P 500 during past periods of rapid interest rate increases as well as decreases.”

“IT Services may look fundamentally expensive but we believe the sector remains attractive in relation to the S&P 500,” he added. “Despite a decline in valuations from their peak at the close of 2021, current valuations are aligned with 2019 levels. However, it is important to note that interest rates are substantially higher than they were during that period, and the anticipated growth for the coming year is notably lower vs growth expectations at that time. ... IT service providers’ valuation look better when compared with the S&P 500. Indeed, the valuation spread between the sector and the index is tighter than it has been historically even though the sector shows attractive characteristics including stable free cash flow generation, nimble business models and defensive properties stemming from increased investments in technology from companies implementing cost-cutting initiatives.”

The analyst made these target adjustments:

* CGI Group Inc. (GIB.A-T, “buy”) to $152 from $154. The average on the Street is $148.57.

“Our forecast is now slightly below the Street’s as we believe organic growth should continue to slow in light of recent results from global peers,” he said. “GIB’s relatively small exposure to consulting (which is more discretionary), high exposure to the government vertical, and recent strong bookings should help protect its results.”

* Quisitive Technology Solutions Inc. (QUIS-T, “buy”) to 60 cents from 80 cents. Average: 88 cents.

“The company is not immune to headwinds in cloud, and its liquidity situation appears tighter than we had previously thought despite its reasonable leverage. We are closely monitoring its strategic review, which could be a catalyst for value creation down the road,” he said.

* Alithya Group Inc. (ALYA-T, “buy”) to $3.15 from $3.30. Average: $3.38.

“Our estimates are broadly in line with expectations but we expect questions on the company’s ability to meet run-rate guidance at the end of the fiscal year in March amid challenges in the financial services vertical,” he said.

His target for Converge Technology Solutions Corp. (CTS-T, “buy”) remains $4.50, below the $5.33 average.

“The company pre-released an 8-per-cent adjusted EBITDA beat in the quarter (at the mid-point of guidance), with double-digit organic growth in gross profit,” said Mr. Dubreuil. “This is a step in the right direction but we believe investors are still waiting to see more consistency in results.”


National Bank Financial analyst Adam Shine thinks shares of Canadian telecommunications companies likely hit a bottom in early October with the surge in yields.

“We can’t ignore the possibility of another rate hike or know for sure when potential cuts may arise in 2024, but we are working our way into the reporting of 3Q results in November which shouldn’t offer material negative surprises, moving nearer to 4Q reporting in February when 2024 guidance will be provided, and all the while getting progressively closer to seeing more light at the end of this rate-hiking cycle,” he said. “Additionally, we’ll have clarity next month on the amount of spending that was done in the 3800 MHz spectrum auction which began Oct. 24 and whose related outlays will likely occur in 4Q or 1Q24 (20 per cent) and 2Q24 (80 per cent).”

In a quarterly earnings preview, Mr. Shine said valuation multiples have also “materially compressed seemingly disproportionately due to rising rates than necessarily driven equally by also competition and regulation.”

“The latter appears destined to bring more insights around wholesale Internet in 2024 which could still trigger reduced capex and more headcount reductions as well as appeals,” he said. “In the meantime, pricing pressures in wireless are being less driven by Quebecor/Freedom moves and more to do with Big 3 actions that don’t appear sustainable post-2023 if carriers wish to avoid repricing their bases.”

Updating his net asset valuation assumptions, Mr. Shine reduced his target prices for stocks in the sector. His changes are:

  • BCE Inc. (BCE-T, “outperform”) to $56 from $60. The average on the Street is $59.08.
  • Cogeco Communications Inc. (CCA-T, “sector perform”) to $67 from $75. Average: $76.11.
  • Quebecor Inc. (QBR.B-T, “outperform”) to $38 from $41. Average: $38.
  • Rogers Communications Inc. (RCI.B-T, “outperform”) to $75 from $80. Average: $71.63.
  • Telus Corp. (T-T, “outperform”) to $26 from $27. Average: $27.50.


Ahead of third-quarter earnings seasons for in Canada’s Diversified Financial sector, CIBC World Markets analyst Nik Priebe reduced his target prices for a series of stocks.

“With long bond yields advancing higher and equity markets repricing lower, enthusiasm has waned for a number of our market-sensitive names and we are revising price targets lower for a variety of companies under coverage,” he said. “In the current environment, however, we feel our Outperformer rating on Fairfax has only strengthened.”

Mr. Priebe’s target for Fairfax Financial Holdings Ltd. (FFH-T, “outperformer”) rose to $1,500 from $1,400. The average is currently $1,485.09.

“Since mid-May, long bond yields have been advancing rapidly as a ‘higher-for-longer’ narrative creeps into the discourse around the future trajectory of policy rates,” he said. “We believe that Fairfax is positioned to benefit disproportionately versus other financials and P&C insurers. Even in the context of a strong run-up in the shares, we believe that the magnitude of the yield enhancement opportunity might be underappreciated by the market. In this note we also highlight how management’s “soft guidance” on run-rate earnings is probably understated and could be revised upward at year-end. The company is well positioned to participate in hard markets for property-CAT risks, and should be putting better quality business on its books in the current environment. Thematically, the company is well positioned for a risk-off environment, and we see little incentive for profit-taking on the basis of relative value. Overall, we believe that momentum is clearly on the side of Fairfax and the stock has become increasingly difficult to ignore.”

His other changes included:

  • CI Financial Corp. (CIX-T, “neutral”) to $15 from $18. The average is $18.57.
  • ECN Capital Corp. (ECN-T, “neutral”) to $2.25 from $2.75. Average: $3.04.
  • Fiera Capital Corp. (FSZ-T, “neutral”) to $5 from $7. Average: $6.93.
  • First National Financial Corp. (FN-T, “neutral”) to $37 from $44. Average: $41.67.
  • Goeasy Ltd. (GSY-T, “outperformer”) to $150 from $170. Average: $172.
  • IGM Financial Inc. (IGM-T, “outperformer”) to $42 from $50. Average: $45.33.
  • Power Corp. of Canada (POW-T, “neutral”) to $38 from $42. Average: $41.79.
  • Trisura Group Ltd. (TSU-T, “outperformer”) to $50 from $55. Average: $52.17.


In other analyst actions:

* Reducing his forecast for Spin Master Corp. (TOY-T) in response to a “negative industry read-through” from the quarterly results from U.S. peers Hasbro and Mattel, Stifel analyst Martin Landry cut his target for the Toronto-based toymaker’s shares to $50 from $54, keeping a “buy” rating. The average on the Street is $53.29.

“The management teams of both companies discussed softening industry trends for the toy market,” he said. “Hasbro revised downward its full year EBITDA guidance by 21 per cent, a material revision. Both stocks appear down 10-12 per cent pre-market. In our view, Spin Master will also be impacted by this general market weakness and the company’s full year guidance is at risk. We are revising our H2/23 estimate for Spin Master downward to reflect softening market conditions. Our Q3/23 and Q4/23 EPS forecast decrease by $0.16 and $0.10. Our Q3/23 EPS estimate of $1.01, is lower than consensus of $1.07, and we see downside risk to consensus estimates. Our target price decreases by $4 to $50.00 reflecting our lower 2024 estimate. We believe that Spin Master’s shares will trade down today as investors digests industry results.”

* Despite “solid” quarter results, TD Securities’ Greg Barnes reduced his Agnico Eagle Mines Ltd. (AEM-N, AEM-T) target to US$61 from US$69 with a “buy” rating. The average is US$65.60.

“We have elected to reduce our target multiples, reflecting lower sector multiples, weak investor interest in the gold sector as a whole, and our expectation that the gold price is likely to reverse some of the gains seen over the past several weeks as the recent safe-haven/short-covering rally dissipates,” he said.

* Desjardins Securities’ Gary Ho increased his target for Chemtrade Logistics Income Fund (CHE.UN-T) to $12 from $11.50 with a “buy” rating prior to its quarterly release on Nov. 14. The average is $11.71.

“We have formally baked in the new guidance raise in our model while pushing the resumption of the Arizona project to mid-2024,” he said. “With deferred growth capex, we expect buybacks (to offset converts dilution) in 2025 while leverage remains sub-2.5 times over the forecast horizon.”

* BMO’s Étienne Ricard lowered his Fiera Capital Corp. (FSZ-T) target to $7.50 from $8 with an “outperform” rating. The average is $6.93.

“FSZ’s stock price grants zero value to AUM sub-advised by PineStone,” he said. “We frame the value of FSZ’s in-house strategies in the $4.00-4.50 range with an additional $3.00-3.50 derived from PineStone. The risk of AUM leakage at PineStone has been the key pushback raised in our investor discussions. With the stock now fully writing off PineStone sub-advised AUM, we struggle to see material downside at current levels. We reiterate our Outperform on an attractive risk-reward.”

* National Bank’s Vishal Shreedhar lowered his target for Premium Brands Holdings Corp. (PBH-T) to $117 from $121, keeping a “sector perform” rating ahead of the release of its third-quarter results on Nov. 14 to reflect “a lower multiple (heightened macroeconomic risk).” The average is $122.22.

“We anticipate the key themes during the quarter to be solid organic growth (sales initiatives and normalizing backdrop) and continued margin improvement supported by resilient consumer demand, better mix, better capacity utilization and operational efficiencies (process automation and optimization initiatives),” he said. “These benefits should magnify through the year.”

* In response to the release of “neutral” third-quarter results after the bell on Wednesday, Desjardins Securities’ Lorne Kalmar trimmed his StorageVault Canada Inc. (SVI-T) target to $5.75, below the $5.97 average, from $6 with a “buy” rating.

“SVI delivered 12-per-cent year-over-year FFOPS [funds from operations per share] growth in 3Q, and SPNOI [same-property net operating income] ticked back up to 4.7 per cent,” said Mr. Kalmar. “We maintain that the business is capable of delivering double-digit FFOPS growth on a normalized basis and view the recent sell-off (negative 35-per-cent year-to-date total return) as an over-reaction. We see the current share price as a rare opportunity to acquire a high-quality name with peer-leading forecast FFOPS growth and a track record of outperformance at an excessively discounted valuation.”

* Following the release of “strong” third-quarter results alongside the release of 2024 guidance that fell below the Street’s expectations, Scotia’s Jason Bouvier lowered his Whitecap Resources Inc. (WCP-T) target by $1 to $12 to reflect decreased free cash flow generation, maintaining a “sector perform” rating, while Raymond James’ Jeremy McCrea trimmed his target to $15.50 from $16 with a “strong buy” rating.. The average is $14.30.

“One of the most important attributes with any E&P company is its ability to recognize, pivot, and improve its land/inventory base, especially as the Canadian E&P landscape shifts to a return-focus business,” said Mr. McCrea. “From that point, there are few companies that have better upgraded its inventory over the last several years, especially with the inventory duration WCP now has in the Montney/Duvernay. This ‘rate of change’ is typically when a multiple expansion occurs and why we believe this should be the case for WCP – especially as we see more well results related to the XTO acquisition in 2024. Q3 results showed some preliminary results out of the Duvernay exceeding company expectations. That said, the guidance to lower production/higher capex for 2023 may weigh on sentiment along with the higher capital allocation to EOR projects (that in a high interest rate environment might dissuade some investors). Nonetheless, the anticipated 5-per-cent increase in production year-over-year, and the commitment to allocate 75 per cent of FCF to shareholders, while delivering high return well results should still keep most investors quite encouraged.”

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/02/24 2:17pm EST.

SymbolName% changeLast
Aecon Group Inc
Agnico Eagle Mines Ltd
Altus Group Ltd
Alithya Group
Canadian Pacific Kansas City Ltd
Chemtrade Logistics Income Fund
CI Financial Corp
Cogeco Communications Inc
Constellation Software Inc
Converge Technology Solutions Corp
Coveo Solutions Inc
CGI Group Inc Cl A Sv
Docebo Inc
Ecn Capital Corp
Fairfax Financial Holdings Ltd
Farmers Edge Inc
Fiera Capital Corp
First National Financial Corp
First Quantum Minerals Ltd
Goeasy Ltd
Igm Financial Inc
Kinaxis Inc
Lightspeed Commerce Inc.
Nuvei Corp
Open Text Corp
Power Corp of Canada Sv
Quebecor Inc Cl B Sv
Quisitive Technology Solutions Inc
Rogers Communications Inc Cl B NV
Shopify Inc
Spin Master Corp
Storagevault Canada Inc
Telus Corp
Telus International [Cda] Inc Subordinate Voting
Trisura Group Ltd
Whitecap Resources Inc

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