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

In response to the new life-of-mine plan for its Copper Mountain mine in British Columbia, Industrial Alliance Securities analyst George Topping upgraded Copper Mountain Mining Corp. (CMMC-T) to “strong buy” from “buy,” believing the planned expansion is “even more attractive to the industry” and declaring it’s “good timing for more copper.”

On Monday, the Vancouver-based company revealed the plan, which includes a proposed mill expansion to 65,000 tons per day for its 75-per-cent-owned mine. That increased on comes on top of the 45-million-ton-per-day expansion currently underway.

“We draw comparisons to Lundin Mining’s (LUN-T, $10.38, “buy”, Target $13.90) Chapada mine in Brazil,” said Mr. Topping. “LUN acquired Chapada from Yamana (YRI-T, Not Rated) in 2019 for US$800-million (when copper prices were US$2.93 per pound) when the mine was running at 65Ktpd. We estimate that the mine will produce 105 million pounds of copper and 80,000 ounces gold this year and that LUN will eventually expand Chapada to 100Ktpd mining 0.25-per-cent copper on average. Based on recent exploration results, a similar plan for the CM mine makes sense.”

Expecting partner Mitsubishi, which holds the remaining 25-per-cent stake as well as the majority of Copper Mountain’s debt, to remain supportive, Mr. Topping raised his target for the company’s shares to $2.50 from $1.50, noting it’s “highly sensitive” to copper prices. The average target on the Street is $1.70.

“Copper Mountain has high torque to copper as the stock has risen 41 per cent (copper prices up 14 per cent) over the last month,” he said. “The low-cost, low-risk expansion plan will add significantly to the scale, increasing copper and gold production by 40 per cent. Copper-focused mining companies are scarce such that funds flow into the sector, made popular by copper’s irreplaceable role in ‘green’ initiatives, will drive share prices higher.”

Elsewhere, other analyst raising their targets included:

* CIBC World Markets’ Raphael de Souza to $1.80 from $1.30 with a “neutral” rating.

“We continue to believe potential returns are well balanced with the risks of a still uncertain macro economic outlook and limited stock price upside vs. our price target. However, we acknowledge that additional strength in copper prices and a better-than-expected partial or full divestment of the Eva Copper Project could lead to a further stock re-rating,” he said.

* Scotia Capital’s Orest Wowkodaw to $1.75 from $1.50 with a “sector perform” rating.

* BMO Nesbitt Burns’ Rene Cartier to $1.80 from $1.60 with an “outperform” rating.


A trio of equity analysts downgraded Lundin Mining Corp. (LUN-T) in response to Monday’s release of lower-than-anticipated three-year guidance.

“LUN’s 3-year guidance was universally weak relative to our estimates,” said Canaccord Genuity’s Dalton Baretto. “Production guidance for all three major metals (Cu, Au and Zn) was weaker than we had forecast for all three years and was also meaningfully below previous guidance. 2021 cash cost guidance was also weaker than our forecast for all assets except Eagle. 2021 sustaining capex was 19 per cent above our estimate, with almost all of the increase at Candelaria. We also highlight Neves Corvo, where production and cost guidance was substantially worse than we had forecast. The ZEP project is now scheduled to be commissioned in H1 2022, almost 2.5 years behind the original schedule.

“On a more positive note, LUN announced that a 50-per-cent increase to the base dividend is expected to be approved at the Board meeting in February 2021. The higher 6 cents per share quarterly dividend implies a very respectable yield of 2.3 per cent at the current share price.”

Mr. Baretto lowered the Toronto-based miner to a “hold” recommendation from “buy” with a $10.50 target, down from $11. The average on the Street is $10.78.

Elsewhere, National Bank Financial analyst Shane Nagle lowered the stock to “sector perform” from “outperform” with a $10.25 target, down from $9.75.

TD Securities’ Greg Barnes moved it to “hold” from “buy” with a $10 target, down from $10.50.

Analysts making target price changes included:

  • Scotia Capital’s Orest Wowkodaw to $9.50 from $10 with a “sector outperform” rating
  • BMO’s Jackie Przybylowski to $11.50 from $12.50 with an “outperform” rating.


Park Lawn Corp. (PLC-T) is “at an inflection point not fully recognized by investors,” according to RBC Dominion Securities analyst Irene Nattel, who thinks the Toronto-based funeral home operator has a path to achieving its earnings targets that “should not require incremental equity, which should in turn deliver rising returns to equity holders.”

In a research report released Tuesday, Ms. Nattel initiated coverage with an “outperform” rating, seeing a “credible” plan to achieve and even exceed its EBITDA run-rate target of $100-million by the end of 2022 through both M&A and organic growth.

“Our forecasts point to solid earnings growth over fiscal 2020 to 2022, with EBITDA CAGR [compound annual growth rate] of 17 per cent and EPS CAGR of 22 per cent, with

$65-million in annual M&A spend,” she said. “Although forecasts show slowing EBITDA growth relative to the F14-19 period (more than 60 per cent), accelerating EPS growth reflects moderating equity-capital requirements. Based on discussions with management, it is our view that investors have yet to fully recognize this critical shift and the concurrent benefit to equity holders. The caveat to our ‘no equity’ scenario would be sizeable M&A (i.e. above our upside scenario’s $150-million resulting in EBITDA/EPS growth in excess of 30 per cent/40 per cent), but the offset should be incremental EBITDA growth.”

Ms. Nattel said Park Lawn leads her coverage universe in potential earnings growth, seeing returns “accelerate meaningfully as the company pivots from equity-funded to self/credit-funded growth.”

Calling it an “attractively priced growth story supported by favourable demographic backdrop,” she set a $36 target for its shares. The average is $34.72.

“In our view, EBITDA valuation should be sustainable across our forecast horizon despite normalizing growth, as the higher base of earnings moderates relative contribution of goforward M&A,” said Ms. Nattel. “Our EBITDA target multiple of 13.5 times reflects: i) industry-leading EBITDA CAGR 17 per cent over our forecast horizon, ii) improving risk profile underpinned by a diversified base of business across North America and economic moat attributes, most notably relative exposure to cemetery services where significant barriers to entry exist, and iii) shift from equity-funded M&A to self-funding for all but sizeable transactions.”


Seeing “plenty of potential pipeline” with it “going for growth,” Credit Suisse analyst Andrew Kuske initiated coverage of Boralex Inc. (BLX-T) with a “neutral” rating

“BLX is a very well-established participant in Canada’s renewable power market, niche exposure in France and a growing asset base in the U.S.,” he said. “Recently, BLX announced acquisitions that consolidated ownership interests in Québec-based facilities and expanded the U.S. presence. Before these deals, BLX had 2,085 mega watts of capacity with aspirations to grow to 2,800MW by 2023. On close, BLX’s portfolio will total 2,330MW of net capacity. We view BLX as well positioned for ongoing growth from the existing development pipeline - that could provide valuation upside in the case of accelerated growth. In our view, an accelerated growth strategy may result in a more constructive outlook – that is possible given the size of BLX’s existing asset base.”

Mr. Kuske set a $45 target. The average is $44.64.

“Boralex’s growth plan of 40-per-cent capacity by 2023 is reasonable even with a handicapping of the existing pipeline – largely because of the company’s current size,” he said. “In our view, beyond the current broader market affinity for renewable power stocks, BLX’s ability to execute and finance the growth plans along with both absolute and relative valuation issues are key to the direction of the share price.”

In a separate note, Mr. Kuske increased his target for Northland Power Inc. (NPI-T) to $47.50 from $46, keeping a “neutral” rating. The average is $45.13.

“Northland Power Inc. (NPI) delivered share price performance of 10 per cent, 31 per cent and 64 per cent over Q4 to-date, H2 to date and the YTD, respectively,” he said. “Going into NPI’s MSCI Canada promotion, our Index Team viewed 3.5 days of the stock’s trading volume to satisfy indexers for US$111m of value. Brookfield Renewable Corporation (BEPC) and NPI had the greatest and third most value to trade on the November 30 Index review, respectively. As per past work, there continues to be an affinity for renewables with TSX Renewable and Clean Technology Index returns of 15 per cent, 32 per cent and 50 per cent on Q4 TD, H2TD and YTD, respectively. With this note, we also slightly boosted the target price ... on the back of results, changes to forecasts and debt outlook.”


After the closing of $495-million in financing on Monday, a group of equity analysts raised their target prices for shares of CAE Inc. (CAE-T).

RBC Dominion Securities analyst RBC Dominion Securities’ Steve Arthur sees the Montreal-based flight simulator manufacturer “positioning for organic and inorganic growth.”

“We see this as a solid move from two perspectives: Offensively, it positions the company to execute on targeted acquisitions (such as FSC and TRU, discussed below), pursue outsourcing agreements with more airlines, and continue R&D investment in evolving technologies to drive further long-term growth,” he said. “Defensively, the added cash reduces leverage to under 3 times and provides further buffer considering elevated uncertainty around the COVID path in coming months and the pace of longer-term recovery for CAE’s airline customers.”

Keeping a “sector perform” rating, Mr. Arthur raised his target to $33 from $30. The average is $33.22.

“With recent share price strength, near-term risk/reward appears balanced,” he said.

Others making target price changes included:

* CIBC World Markets’ Kevin Chiang to $33 from $32 with a “neutral” rating.

“With this raise, we see CAE ready to go on the offensive as the aviation sector recovers from the impact of COVID-19. We maintain our long-term positive view on CAE but view it as relatively fully valued at current levels,” said Mr. Chiang

* Scotia Capital’s Konark Gupta to $38 from $33 with a “sector outperform” rating.

“We maintain our Sector Outperform rating and would encourage investors to take advantage of any pullback after the recent strength (stock is 72 per cent quarter-to-date) as CAE is much better positioned to participate in further industry consolidation and to potentially reinstate a dividend,” he said.

* BMO Nesbitt Burns’ Fadi Chamoun to $35 from $32 with a “sector perform” rating.

Analysts resumed coverage included:

* National Bank Financial’s Cameron Doerksen with a “sector perform” rating and $34 target.

* TD Securities’ Tim James with a “hold” rating and $34 target.

* Desjardins Securities’ Benoit Poirier with a “hold” rating and $35 target, up from $32 previously.


The fundamentals for TSX-listed midstream energy and pipeline stocks “support upside,” according to Industrial Alliance Securities analyst Elias Foscolos.

“Over the last four weeks, Midstream and Pipelines stocks have been on a tear,” he said in a research note released Tuesday. “This stock price appreciation seems to have been driven by COVID-19 vaccine news adding to the belief that the economy will recover sooner, spurring energy consumption. Despite the pullback in stocks [Monday], Midstream and Pipelines stocks have been on a wild ride.

“In the first half of Q4, the stocks underperformed the TSX by 12 per cent, and since then they have outperformed almost narrowing the gap. Clearly the news of the vaccine by Pfizer (PFE-N) on November 9 was the initial catalyst event. We have always believed that a recovery in energy consumption would occur, but the vaccine news made others believers also, boosting returns on all stocks related to oil and gas. The recent strength in share prices has caused us to pause and reflect. While we see upside in both Midstream and Pipelines stocks, we are favouring the larger cap pipelines due to their stability and robust multi-year growth capital projects.”

After adjusting his valuation multiples for companies in his coverage universe, Mr. Foscolos downgraded Pembina Pipeline Corp. (PPL-T) to “hold” from “buy,” pointing to its current price. His target rose to $37 per share from $34, falling short of the average on the Street by 95 cents.

He also made several target price adjustments, including:

  • Enbridge Inc. (ENB-T, “strong buy”) to $50 from $48. Average: $50.61.
  • TC Energy Corp. (TRP-T, “buy”) to $70 from $68. Average: $70.35.
  • Gibson Energy Inc. (GEI-T, “buy”) to $24 from $23. Average: $24.74.
  • Inter Pipeline Ltd. (IPL-T, “hold”) to $15.50 from $15. Average: $14.54.
  • Keyera Corp. (KEY-T, “buy”) to $26 from $25. Average: $26.32.


Pointing to a “positive long-term view on air travel recovery,” Scotia Capital analyst Konark Gupta raised his target for Air Canada (AC-T) shares to $30 from $24 with a “sector outperform” rating. The average is $24.72.

“AC shares saw their best monthly performance in November (up 68 per cent) since the pandemic began,” he said. “Although it’s a big move, the stock is still down 49 per cent year-to-date and lagging the majority of North American airlines. In the absence of a meaningful air travel recovery so far, we believe vaccine hopes and value rotation were the key drivers behind this gain. We still see a lot of upside potential as vaccine becomes a reality and air travel recovery accelerates, more likely from late 2021. That said, we wouldn’t be surprised by some near-term volatility due to potential tax loss selling or lackluster fundamentals. Any sectoral support from the government may or may not be a major catalyst, depending on the terms (e.g. cost of funding and ticket refunds).”


After its fourth-quarter earnings fell short of the Street’s expectations, Haywood Securities analyst Neal Gilmer downgraded Organigram Holdings Inc. (OGI-T), awaiting “a return of top-line growth, particularly in the Canadian adult-use market, lower inventory write-downs and comfort the company has returned to positive EBITDA on a quarterly basis.”

On Monday, the Moncton-based company reported revenue of $20.4-million, exceeding the analyst’s forecast of $19.6-million and the Street’s consensus estimate of $20.3-million. However, an adjusted EBITDA loss of $2.7-million missed the projection of a loss of $1.6-million of both Mr. Gilmer and the Street.

“Organigram’s Q4/F20 results contained a number of extraordinary items,” the analyst said. “Within cost of sales, the Company included a write-off of $11.1-million of excess and unsaleable inventory as well as $3.5-million in unabsorbed fixed costs due to lower production volumes. Management commented that it is evaluating increasing production rates, however our takeaway was that the unabsorbed costs will persist in Q1/21 as well as at least part of Q2/21.”

“With limited sales growth across an expanding market and a somewhat muted outlook for Q1/F21 we have lowered our estimates for F2021 and F2022. While the recent launch of new SKUs since July and further SKUs this quarter could translate to improved top-line growth in H2/F21, we await further evidence that this is the case.”

Moving the stock to “hold” from “buy,” he cut his target to $2 from $2.50. The average is $2.86.

“We believe that Organigram is well-positioned for revenue growth with several established brands in the market and potential future product line extensions as the cannabis market continues to evolve,” he said. “Following a strong start to the adult-use market, F2020 was more moderate for the Company as it launched some new products as well as brands and re-positioned other certain products. Going forward we expect limited near-term growth with improving conditions in H2/21 that should enable the company to return to positive EBITDA.”

Elsewhere, Canaccord Genuity analyst Matt Bottomley trimmed his target to $2.50 from $3, keeping a “speculative buy” rating.

“Although we expect headwinds to bleed into FQ1/21 as the company continues to ramp-up its additional product offerings, we expect OGI to return to adj. EBITDA profitability in the first half of FY2021,” he said.

ATB Capital Markets’ David Kideckel lowered his target to $1.90 from $2.30 with a “sector perform” rating (unchanged).

“OGI reported its financial results for Q4/FY20 and FY2020 (ending August 31, 2020), which we view as mixed,” he said. “OGI’s 13-per-cent quarter-over-quarter net sales increase was mostly driven by (i) international sales to Israel, which we view as having limited but opportunistic growth, and (ii) dried flower sales in the value segment, which may continue to pressure margins. Over the near-term, we believe that industry-wide headwinds in the Canadian market (product oversupply, pricing pressure, and increased competition) will persist. Over time, we believe these headwinds will dissipate as OGI launches new products (+18 SKUs anticipated in Q2/FY21) and sales in the overall industry continue to increase. We have reduced our margin estimates due to OGI’s increased presence in the value segment and inefficiencies associated with the early ramping of cannabis derivatives manufacturing. Our top-line estimates remain unchanged. Given the uncertainty in the Canadian cannabis market, we maintain our neutral view on OGI.”


Citing its “strong execution, solid access to capital and optionality,” Industrial Alliance Securities analyst Frédéric Blondeau raised his financial expectations for Granite REIT (GRT.UN-T) following the mid-November closing of bought deal agreement with potential gross proceeds of $250-million.

That announcement came alongside the completion of $564-million in acquisItions, including four assets in both the United States and the Netherlands, leading Mr. Blondeau to say the Toronto-based REIT is pursuing “tremendous” external growth.

“The average age of the acquired properties is 4.5 years, while the average occupancy is 95 per cent, with a WALT [weighted average lease term] of 14.3 years,” he said. “Management expects to complete the remaining acquisitions in Q4/20.

“We note that estimated capital requirements for the newly announced acquisitions and development commitments total over $700-million, which will translate into the addition of more than 6.6 million of GLA [gross leasable area] to the REIT’s portfolio.”

Maintaining a “buy” rating, Mr. Blondeau increased his target to $87 from $84. The average is $84.79.

“GRT remains one of our top risk/return ideas,” he said. “For modelling purposes, we do not expect the REIT to announce new acquisitions during the remainder of 2020, and expect GRT to acquire $800-million in property in 2021.”


Karora Resources Inc. (KRR-T) is “poised to unlock a newly unencumbered district,” according to Canaccord Genuity analyst Tom Gallo.

In a research report released Tuesday, he initiated coverage of the Toronto-based miner, which owns and operates the Higginsville Gold Operation (HGO) and Beta Hunt gold project in Western Australia, with a “buy” rating.

“The company recently acquired Higginsville (2019), giving it the ability to process its own material and double production,” said Mr. Gallo. “The company successfully renegotiated gold royalties at both properties, which provides an unencumbered platform from which to explore and grow resources. We believe there is opportunity for the company to increase its production profile with higher grades, optimize and possibly expand its plant, and extend mine life through exploration. Management has a strong operating track record and is focused on reducing costs while integrating near-mine resources. We believe the company’s strategic location (and flexible mill), its reduced royalty commitments, and its focus on near-mine exploration give it a huge advantage for growth beyond our base case. We look for Karora to perform strongly in 2021 on the back of a new resource/reserve model and ongoing drilling and cost cutting programs.”

The analyst set a target of $5.75 per share, exceeding the $5.63 consensus.


A group of equity analysts adjusted their target prices for shares of Vancouver-based Ero Copper Corp. (ERO-T) in response to Monday’s release of an updated life-of-mine plan for its Vale do Curaçá Property in Brazil.

Raymond James’ Farooq Hamed increased his target to $24 from $23 with an “outperform” rating. The average on the Street is $22.97.

“Overall, we view this latest update as a positive step in the ongoing evolution of the Curaca Valley,” he said. “While the production and NAV growth resulting from this latest update are positives, we view the sanctioning of the shaft to access the Pilar Deeps as an important milestone that we expect will allow ERO to deliver more high grade tonnes to the mill while also allowing the company to continue to expand the resource at depth.”

Conversely, these analyst lowered their targets:

  • Scotia Capital’s Orest Wowkodaw to $21.50 from $22.50 with a “sector perform” rating.
  • National Bank’s Shane Nagle to $24 from $25 with a “sector perform” rating.
  • BMO’s Jackie Przybylowski to $22.50 from $24 with an “outperform” rating.


In other analyst actions:

* Touting its “attractive” valuation, Haywood Securities analyst Pierre Vaillancourt initiated coverage of Artemis Gold Inc. (ARTG-X) with a “buy” rating and $10 target, which exceeds the consensus by 12 cents.

* TD Securities’ Michael Tupholme increased his target for Nutrien Ltd. (NTR-N, NTR-T) to US$58 from US$47 with a “buy” rating, while BMO’s Joel Jackson hiked his target to US$55 from US$50 with an “outperform” rating. The average is US$48.95.

* National Bank Financial initiated coverage of Headwater Exploration Inc. (HWX-T) with an “outperform” rating and $3 target. The average is $2.42.

* National Bank’s Travis Wood raised his target for Suncor Energy Inc. (SU-T) by a loonie to $22 with a “sector perform” recommendation, while TD Securities’ Menno Hulshof bumped his target to $27 from $26 with a “buy” rating. The average is $36.48.

* Desjardins Securities analyst John Chu raised his target for Auxly Cannabis Group Inc. (XLY-X) to 65 cents from 60 cents, keeping a “buy” rating. The average on the Street is 49 cents.

“Auxly’s 3Q results and new product launches reiterate our view of robust sales growth,” he said.

* Desjardins Securities’ Michael Markidis increased his target for Artis Real Estate Investment Trust (AX.UN-T) to $11 from $9.50 with a “hold” rating. The average is $11.19.

“Significant turnover at the board level should result in improved governance,” he said. “There is a significant disconnect between the current unit price, our NAV estimate ($13) and Sandpiper’s view of intrinsic value (more than $16). Enhanced disclosure and investor engagement are potential catalysts.”

* Raymond James analyst Steven Li raised his target for Mogo Inc. (MOGO-T) to $4.50 from $4 with an “outperform” rating. The current average on the Street is $4.38.

“[Bitcoin] has had a stellar year thus far,” said Mr. Li The strong rally past $19,400 marks an almost 170-per-cent price increase year-to-date. Mogo has done well to capitalize on this momentum. ... We highlighted the success Mogo has been having in its BTC trading segment. Though BTC

revenues are still immaterial, members’ accounts have grown 237 per cent year-over-year (to slightly under 100k) and doubling 3Q levels in October. With this momentum, it is possible we see meaningful BTC revenues in F2021.”

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