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

National Bank Financial raised its price target on Shopify Inc. (SHOP-N) to US$1,250 - the highest on the Street - believing the Canadian tech star “is in the early stages of a market that’s structurally changing.”

Analyst Richard Tse, who reiterated an “outperform” rating, previously had a US$850 target. The stock closed in New York Tuesday at US$971.83.

“We are increasing our target to $1,250 based on revisions to our mid and long-term assumptions in our discounted cash flow (DCF) that come from an expanding addressable market with expectations for scaling growth in international, enterprise and fulfillment, not to mention an incremental tailwind coming from an accelerated shift towards e-Commerce and related solutions.,” he said in a note.

“We believe Shopify remains a leading e-Commerce disruptor and we believe upside in the stock will come from a number of different incremental growth drivers noted above. We reiterate our Outperform rating ... based on our DCF which captures the (longer-term) outlook beyond our forecast period. That DCF implies a target EV/sales multiple of 55.8x on F21E (was 37.5x), and as noted, the stock is pricing in opportunities beyond our shorter-term forecast period.”

The previous highest price target on the Street was from Goldman Sachs, at US$1,127, according to Bloomberg.


Piper Sandler analyst Alexander Potter still sees substantial gains ahead for shares of high-flying Tesla Inc. (TSLA-Q), even after a year-to-date price rally of a staggering 260 per cent.

He raised his price target to US$2,322 - the highest on the Street - from $939. He maintained an “overweight” rating. The median analyst price target is US$745, according to Refinitiv Eikon.

“In our view, Tesla is the most consequential company in the mobility ecosystem, and this is unlikely to change in the next decade,” the analyst commented.

While Tesla could see nearly 4 million in automobile deliveries in 2025 - a market share of almost 10 per cent of the U.S. market - it’s the company’s software potential that has Mr. Potter so bullish.

“While deliveries are a key driver of our increased near-term estimates, software is the biggest driver of our increased discounted cash flow-based price target,” he said. “Tesla has noted the possibility for 30%+ gross margins if/when more customers opt-in for purchasing the company’s full self-driving (FSD) software, and with our updated model, we can now explicitly stress-test this claim.”

Tesla’s Chief Executive Elon Musk responded to Mr. Potter’s changes with a single word on social media.


RBC analyst Sabahat Khan initiated coverage on Aecon Group Inc. (ARE-T) with a “sector perform” rating, advising investors to await a better entry point given the potential for COVID-19 to impact construction projects.

The analyst set a price target of $17, cautioning that the construction and engineering industry is not an easy business and the current working environment is a difficult one.

“Aecon has established a leading position in the Canadian construction market, and is viewed as a partner of choice for domestic and international firms that are forming consortiums to bid on large-scale projects in Canada,” the RBC analyst said. “However, the underlying fixed-fee construction work is inherently risky and has contributed to some uneven results over the recent years.”

“Based on our relative valuation framework, we rank Aecon in the lower half of the Canadian E&C peers (see our accompanying E&C industry report here ). This is attributable to Aecon’s uneven growth profile over the recent years and its high geographic concentration in Canada. Aecon has, however, reduced its exposure to cyclical end-markets and has maintained a “clean” balance sheet, both of which are supportive factors. Based on our relative valuation framework, and the average trading multiple for Aecon’s North American Construction peers, we attribute an ~6.0x EBITDA multiple to the Construction segment. We also see some risk to the outlook for the company’s Concessions segment (~33% of consolidated Adjusted EBITDA in 2020). The largest single contributor to this segment is Aecon’s 100% interest in the Bermuda Airport concession. This is a volume-based concession and we expect there will be some risk over the coming quarters given the uncertain trajectory of the ramp-up to run-rate volumes following the re-opening of the airport on July 1, 2020.”

The median analyst price target is $20.


Canaccord Genuity analyst Doug Taylor initiated coverage of Blackline Safety Corp. (BLN-X) with a buy rating, saying he expects the company “will deliver outsized revenue growth in the near and medium term, with a growing base of recurring services revenue.”

Calgary-based Blackline Safety develops and makes gas detection and connected safety solutions, including safety gear workers wear and related cloud services. “These solutions enable improved visibility to worker safety and reduce the burden of satisfying regulatory obligations regarding safety protocols,” Mr. Taylor wrote.

“Blackline’s solution is delivered through a line-up of proprietary wearable devices. However, each active unit carries a recurring revenue stream that starts at $30/month. Service tiers range from basic connectivity to outsourced monitoring through Blackline’s proprietary monitoring center. On an last twelve months basis, the company generated ~60% of revenue through recurring services, carrying ~70% gross margins, and ~40% through hardware sales.”

Mr. Taylor set a price target of $7.50 for Blackline, saying he believes premium growth and attractive business model warrants a high valuation.” The analyst median target is $9.


RBC analyst Sabahat Khan initiated coverage on SNC-Lavalin Group Inc. (SNC-T) with an “outperform” rating, saying he believes the Quebec engineering company’s new strategic direction after a challenging few years has repositioned it for growth in the global design sector.

“SNC has diversified geographic end-market exposure, albeit with relatively higher exposure to cyclical end markets (i.e., Resources) and LSTK construction projects, which drove execution challenges over the recent years. As part of its new strategic direction (announced July 2019), the company is winding down its LSTK construction work and also reassessing its Resources platform. The company’s leverage profile is in line with that of its peers, while its free cash flow conversion outlook is below that of its peers, but expected to improve over our forecast horizon. As the company winds down its LSTK construction projects and improves its weighting towards non-cyclical industries (and towards more “design” work), we see its relative ranking improving over time (which would also drive higher valuation multiples),” Mr. Khan wrote.

He set a price target of $33 for the stock. The median price target is $34.


Citing new leadership, BMO Capital Markets analyst Gerrick Johnson upgraded shares of Harley-Davidson Inc. (HOG-N) to “outperform” from “market perform.”

“New CEO, Jochen Zeitz, brings with him a high level of credibility that has been embraced by investors,” he wrote. “As strategic changes are implemented over the next several quarters retail sales may struggle, but other key metrics, such as used bike prices and dealer inventory levels, should improve, providing “evidence” the turnaround is taking hold.”

Mr. Johnson also hiked his price target to US$33 from $23. The median price target on the Street is US$28.


In other analyst actions:

* Intertape Polymer Group Inc (ITP-T): CIBC raises target price to C$13.50 from C$12.50

* WSP Global Inc (WSP-T): RBC starts with outperform rating; target price C$101

* Baytex Energy Corp (BTE-T) Credit Suisse raises target price to C$0.7 from C$0.60

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