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

With its leadership battle continuing to escalate, Desjardins Securities analyst Jerome Dubreuil thinks an increased risk premium for Rogers Communications Inc. (RCI.B-T) is warranted, citing increased uncertainty about its future strategy and the length of time it may take to resolve the conflict.

Accordingly, he lowered his rating for its shares to “hold” from a “buy” recommendation on Tuesday.

Edward Rogers’s lawyers ask company to back expedited court hearing amid OSC inquiries

Rethinking Rogers’s dual-class share structure

“Two groups claiming to have control of the board is certainly not a common occurrence,” said Mr. Dubreuil in a research report. “While we believe the issues will eventually be resolved without significantly affecting RCI’s results, the current situation makes it difficult to have much comfort with where the company is headed. Moreover, mounting questions on RCI’s governance practices (which we believe are of growing importance to investors) and the occurrence of a major distraction at a crucial point in RCI’s strategic planning have led us to adopt a more cautious stance.

“We believe the recent events could potentially blur the communication channels between RCI management and the various parties in order to reach agreement on the SJR transaction. We continue to expect the transaction to close ultimately, although the timing is now less certain in our view.”

The analyst cut his 12-month target for Rogers shares to $68 from $73. The average target on the Street is $70.20.

“While we see attractive long-term (3-plus years) value in RCI shares from the SJR transaction and the reopening of the economy, the significant uncertainty and likely distraction at the board/management level during such a pivotal period in strategic planning makes it difficult for us to recommend adding RCI exposure,” said Mr. Dubreuil. “Our view could change with better visibility on the company’s strategy.”

Elsewhere, others making target adjustments include:

* BMO’s Tim Casey to $68 from $72 with an “outperform” rating.

“Despite all the unprecedented drama and confusion, we are maintaining our Outperform rating on RCI as we believe both the Rogers and Shaw families, and their companies, remain committed to the transaction,” said Mr. Casey. “In our view, they both need the deal, it makes compelling industrial logic, and the pro forma cash flow profile of the combined entities suggest value in RCI at current trading prices. We think Edward Rogers will ultimately prevail in terms of control at RCI, but the timing to clarity is unclear given litigation.”

* National Bank Financial analyst Adam Shine to $69 from $75 with an “outperform” rating.

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Though he sees reasons for “cautious optimism,” RBC Dominion Securities’ Christopher Carril expects cost pressures to continue to weigh on Restaurant Brands International Inc. (QSR-N, QSR-T), seeing a “still-challenging” operating environment leaving “less room for error around strategy and execution.”

Mr. Carril was one of several equity analysts on the Street to reduce their targets for the parent company of Tim Hortons and Burger King following Monday’s release of its third-quarter financial results, which sent its shares down by 4.8 per cent in Toronto.

“While increased confidence and clarity around 2021 (and ‘22) development was encouraging, challenges for BK and PLK in the U.S., and lack of further improvement in Tims Canada trends (post-July), weighed on QSR stock [Monday],” he said.

Restaurant Brands continues to see slow improvement in its same-store sales at Tim Hortons in Canada from pandemic-driven lows a year ago. However, its growth at U.S. Burger King locations fell 1.6 per cent quarter-over-quarter, missing the Street’s projection of a 3.8-per-cent increase.

While he expressed confidence in its growth outlook and new Burger King leadership, Mr. Carril cut his target for Restaurant Brands shares to US$71 from US$74 with an “outperform” rating. The average on the Street is US$71.01, according to Refinitiv data.

“Despite above average global system sales growth and accelerating comp growth at Burger King and Popeyes, QSR’s valuation remains in line with the global ‘all-franchised’ restaurant peer group average, driven in large part by continued weakness at Tim Hortons (responsible for 50 per cent of total operating profit),” he said. “While TH sales improvement remains the primary catalyst for QSR shares, we see the combination of BK-driven, near-best-in-class unit growth (normalized 5 per cent-plus), current momentum at PLK, significant scale and potential to add brands in the future as key positives for a stock that remains attractively valued, in our view.”

Elsewhere, BMO Nesbitt Burns analyst Peter Sklar downgraded the stock to “market perform” from “outperform.”

“We are downgrading Restaurant Brands International to Market Perform: (1) the positive impact on Tim Hortons will not be as timely and robust as previously believed as COVID-19 lingers on; (2) labour shortages limited Q3/21 store hours and services, and we suspect that all RBI banners will continue to be pressured; (3) commodity price inflation particularly impacting Tim’s wholesale operations as price increases cannot be passed onto retail quickly enough; and (4) BK U.S. continues to languish, stumbling to find the right customer proposition on the menu,” he said.

Mr. Sklar cut his target to $63 from $80, adding: “Our prior Outperform rating has been based on the premise that Tim Hortons’ comps would improve above expectations. In the early days of re-opening in both U.S. and Canada, we argued that restaurant visits would recover quickly as society climbs out of COVID-19 with vaccinations and consumer mobility returning somewhat to prepandemic levels. Especially for Tim Hortons, which comprises 50 per cent of RBI’s EBITDA, it has been disadvantaged through COVID-19 with the disruption of everyday routines (fewer coffee/snack occasions associated with work/school) and a menu being not as amenable to the rise in delivery or takeout trend as more people worked from home and sought more full family meals (as opposed to Tim Hortons’ snacking menu orientation). As a result, we believed that the recovery would be more robust than other QSR chains as coffee/snack types of occasions returned. However, we no longer believe our thesis will play out within a reasonable investment horizon due to a number of developments.”

Others making target changes include:

* CIBC World Markets’ Mark Petrie to US$68 from US$78 with an “outperformer” rating.

“Weak Burger King (BK) U.S. sales results have increased doubts about its growth prospects,” said Mr. Petrie. “While we believe headwinds will persist into early 2022, we see a turnaround as much simpler to achieve vs. Tim Hortons (TH) Canada. At TH, we are encouraged by the steps, but a structural shift in remote work should limit net progress. A record discount to MCD and near 6-per-cent FCF yield limits downside, and we see material upside as BK recovers.”

“Though we are not optimistic about a near-term change in trajectory on results, we maintain our Outperformer rating in large part due to our view that downside in share price is limited, and upside could materialize quickly at the first indication of momentum at BK. We do not believe that asset is broken, nor should it require nearly the level of fundamental work that has been required at Tims Canada”

* Credit Suisse’s Lauren Silberman to US$73 from US$76 with an “outperform” rating.

“BK will remain the powerhouse, though we expect increasing contribution from TH (primarily China) & PLK. Confidence in the unit growth outlook is supported by RBI’s well-capitalized franchisee network, visibility into the development pipeline given the MFJV structure & new formats increasing addressable markets. While we recognize near-term noise, we note RBI has demonstrated its ability to execute on unit growth and valuation looks compelling for this heavily franchised business model,” said Ms. Silberman.

* Stephens’ James Rutherford to US$65 from US$74 with an “equal-weight” rating.

“The recovery of TH was progressing slowly until Delta variant caused delays in mobility normalization in August. Comp sales are not yet fully back to pre-pandemic levels. BK again disappointed this quarter and decelerated sequentially, with the most proximate cause being an intentional pullback on paper coupons and lower success of national promotions. More broadly, BK is at the early stages of a bigger turnaround program that will entail core menu, breakfast, restaurant reimaging, operations, marketing, promotions, and other areas. PLK also missed expectations modestly this quarter as traffic was impacted by labor shortages. Global unit growth is the bright spot, which is still expected to be at/near 2018/2019 levels in 2021 and accelerating in 2022 and beyond. Due largely to the structural questions on BK U.S. and the temporary headwinds from PLK staffing and TH reopening, we remain EW,” said Mr. Rutherford.

The recovery of TH was progressing slowly until Delta variant caused delays in mobility normalization in August. Comp sales are not yet fully back to pre-pandemic levels. BK again disappointed this quarter and decelerated sequentially, with the most proximate cause being an intentional pullback on paper coupons and lower success of national promotions. More broadly, BK is at the early stages of a bigger turnaround program that will entail core menu, breakfast, restaurant reimaging, operations, marketing, promotions, and other areas. PLK also missed expectations modestly this quarter as traffic was impacted by labor shortages. Global unit growth is the bright spot, which is still expected to be at/near 2018/2019 levels in 2021 and accelerating in 2022 and beyond. Due largely to the structural questions on BK U.S. and the temporary headwinds from PLK staffing and TH reopening, we remain EW.”

* Morgan Stanley’s John Glass to US$66 from US$71 with an “equal-weight” rating.

“Weaker sales across all three brands versus our forecasts underscored both ongoing challenges QSR faces as it continues to recover from Covid, especially in Canada, but also some company-specific issues at BK US and to some degree Popeye’s where lapping strong performance last year has proven tougher. These challenges, combined with some cost increases (investment in G&A, which is company specific, and perhaps more transient inflationary impacts at Tim’s Canadian distribution business) cause our numbers to fall 5 per cent in the 4Q21 and in FY22,” said Mr. Glass.

* Cowen and Co.’s Andrew Charles to US$62 from US$70 with a “market perform” rating.

* Evercore ISI’s David Palmer to US$72 from US$75 with an “in-line” rating.

* Oppenheimer’s Brian Bittner to US$76 from US$80 with an “outperform” rating.

* Truist Securities’ Jake Bartlett to US$76 from US$80 with a “buy” rating.

* UBS’ Dennis Geiger to US$77 from US$80 without a specified rating.

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RBC Dominion Securities analyst Matt Logan expressed confidence in Colliers International Group Inc.’s (CIGI-Q, CIGI-T) ability to achieve the ambitious goals laid out in its “Enterprise ‘25″ plan, expecting investors to raise their already lofty expectations.

On Monday, the Toronto-based company revealed the five-year growth strategy, aiming to more than double its profitability with at least 65 per cent of adjusted EBITDA coming from recurring revenue by the end of 2025. Its targets include revenue of US$5.6-billion, adjusted EBITDA of US$830-million, and adjusted earnings per share of US$8.40.

“After doubling adjusted EBITDA between 2015 and 2020, we think most investors expected a similarly ambitious plan for 2020–25,”said Mr. Logan. “What flies under the radar, in our view, is accelerating growth in recurring services, which have increased to 54 per cent of TTM EBITDA as at Q2/21, from 31 per cent in 2017. Looking ahead, we believe this continued evolution will underpin an upward rerating — particularly as recurring EBITDA reaches 65–70 per cent.”

“If you believe that CIGI can achieve its ambitious growth targets, we think the best way to value the business is not a one-year forward multiple, but rather to: 1) discount 2025E EBITDA back to 2023E; and 2) apply a sum-of-the parts multiple to reflect CIGI’s evolution into a highly diversified professional services company.”

Pointing to a record third quarter and its year-to-date U.S. transaction volumes, Mr. Logan said he’s “comfortable, if not optimistic” about Collier’s setup for the second half of the year.

Though he made no changes to his 2022–23 estimates and only minor “tweaks” to his 2024–26 forecast, he hiked his target for Colliers shares to US$185 from US$160 with an “outperform” rating. The average on the Street is US$158.60.

“While shares have rallied 62 per cent year-to-date, we remain constructive on the multi-year outlook for the business,” he said. “The stock trades at 13.5 times 2022 estimated EBITDA vs. the normalized 11.2-times average since the 2015 spin-out — warranted, in our view, in light of CIGI’s continued evolution and strong track record (i.e., 21-per-cent EBITDA CAGR in 2004–20).”

Others making adjustments include:

* BMO’s Stephen MacLeod to US$164 from US$153 with an “outperform” rating.

“Colliers released its ambitious Enterprise ‘25 growth strategy, which as expected, outlines targets to more than double profitability while creating a more recurring, higher-margin professional services firm over the next five years. Simply put, the successful execution of this plan is expected to lead to shareholder value creation, building upon management’s long-term track record of success. While valuation has recently pushed higher, we see attractive risk-reward in the stock and continue to believe Colliers will be a multi-year compounder of shareholder value,” said Mr. MacLeod.

* TD Securities’ Daryl Young to US$170 from US$155 with a “buy” rating.

“We are attracted to Colliers’ large and highly fragmented markets, demonstrated ability to add value through M&A, and improving mix of recurring revenues,” he said.

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Ahead of the start of third-quarter earnings season for Canadian diversified financial firms, CIBC World Markets analyst Nik Priebe downgraded both Onex Corp. (ONEX-T) and Power Corporation of Canada (POW-T) to “neutral” recommendations from “outperformer” on Tuesday, feeling his investment theses have “played out well” but seeing less upside than a year ago.

“Our total return expectations for POW are lower owing to: 1) a less constructive outlook on NAV growth, 2) the stock trading at a narrower discount to NAV, and 3) a lower dividend yield. We believe Onex continues to perform well fundamentally, but feel much of the upside associated with a potential re-rating has now been achieved. We see opportunities for both companies to surface further value (e.g., the sale of standalone businesses for POW or the expansion of fee-related earnings for Onex), but believe the upside is not as compelling as it was one year ago,” he said.

Mr. Priebe said he continues to “like the Onex story overall, see few impediments for NAV growth and believe there is a lot to like from a fundamental point of view. However, we simply see less upside than we did one year ago, particularly after the run of an impressive bull market.”

He maintained a target of $110 for Onex shares. The average on the Street is $112.80.

“Approximately one year ago, Onex shares traded at a 31-per-cent discount to the fair market value of its proprietary investing capital (i.e., NAV),” the analyst said. “Our investment thesis had been predicated on a view that the market value of Onex’ stock at the time implied greater downside to the private marks than was warranted. We believed this would be proven out over time, and would result in a shrinking discount to NAV and contribute to outperformance when compounded by the impact of NAV growth. We feel this thesis has largely played out. Since that time, Onex’ NAV/share (measured in USD) has increased 29 per cent and the discount to NAV has narrowed from 31 per cent to 1 per cent. Accordingly, the stock has advanced 72 per cent versus the S&P/TSX composite index at 36 per cent and the S&P 500 at 39 per cent.

“We feel a 1.0 times P/NAV multiple is more appropriate in the context of our expectation for longterm NAV/share growth of 10 per cent to 12 per cent annually. This growth will never occur in a completely linear fashion, but is consistent with what has been achieved since Onex began reporting its NAV over 10 years ago (and reasonable, in our view, based on the targeted asset mix).”

Though he thinks Power Corp. shares continue to “offer an attractive total return profile,” he maintained a target of $47, exceeding the Street’s average of $45.50.

“When we initially assumed coverage, our investment thesis was predicated on: 1) a constructive outlook for shares of GWO (currently rated Neutral by Paul Holden), 2) upside from a tightening NAV discount, and 3) an above-average dividend yield of 7.4 per cent,” he said. “Since that time, shares of POW have increased 75 per cent versus the S&P/TSX composite index at 29 per cent. Although the stock has outperformed, we believe the upside is somewhat less compelling than it was at the time of our transfer. For one, we have tempered our outlook for Great-West Lifeco (which represents over half of gross asset value) and downgraded the shares in August on the basis of relative value. In addition, POW’s stock trades at a narrower discount to NAV than it did at the time of our transfer (20 per cent versus 28 per cent). Although we continue to advocate that the stock could justifiably trade below 20%, we believe some of the upside has already been recognized. Lastly, the strong performance of the stock has translated to a lower dividend yield of 4.2 per cent. As a result, our total return expectations are lower than they were at the time of the transfer.

“We continue to view the strategy favourably, and believe that management remains highly focused on execution (e.g., M&A at the operating company level, holding company expense reductions, cleaning up the corporate structure, simplifying the story and scaling the alternative asset management platform with an emphasis on third-party capital). We also acknowledge that shares of POW offer exposure to attractive, higher-growth investments like Wealthsimple and ChinaAMC. However, we believe that exposure can be more meaningfully obtained through IGM Financial (rated Outperformer) where the value of those investments is more material relative to the market value of the firm.”

At the same time, Mr. Priebe said he’s becoming “increasingly constructive” on CI Financial Corp. (CIX-T), raising his target to $35 from $30 with an “outperformer” recommendation. The average is $30.67.

“.The company prereported net flows for Q3 which demonstrated a further acceleration from the prior quarter,” he said. “We recently upgraded shares of CIX to Outperformer in recognition of an abrupt reversal in the trajectory of net flows, which we believe could be sustainable. We feel that CI’s valuation can no longer be justified by the organic growth outlook in the asset management segment. We expect the tone to be positive and encouraging on the conference call.”

Mr. Priebe also increased his Alaris Equity Partners Income Trust (AD.UN-T) target to $21 from $20, above the $22.06 average, with an “outperformer” rating, while he lowered his target for Fiera Capital Corp. (FSZ-T) to $11 from $11.25, below the $12.02 average, with a “neutral” rating.

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In his own diversified financials preview, RBC Dominion Securities Geoffrey Kwan made a trio of target price changes.

They are:

  • Equitable Group Inc. (EQB-T, “sector perform”) to $85 from $81.5. The average is $79.25.
  • Home Capital Group Inc. (HCG-T, “outperform”) to $53 from $52. Average: $47.75.
  • CI Financial Corp. (CIX-T, “outperform”) to $32 from $30. Average: $30.67.

Mr. Kwan also reaffirmed Element Fleet Corp. (EFN-T) as his “best idea,” seeing it “a relative winner in a higher inflation and/or interest rate environment.” He has an “outperform” rating and $19 target (unchanged) for its shares.

He said: “Although EFN has been executing on its growth strategy, we think recent weakness in the share price already reflects investors’ expectation that originations are likely to be subdued for the next few quarters due to the chip shortage, although there are recent early signs that OEM production has troughed and is improving. Elsewhere, we expect BAM to report another strong quarter, and we look for updates on fundraising, new product launches, and monetizations. For IFC, we look for RSA integration color and Auto trends. We see attractive value in our private equity coverage (ONEX, BBU, AD) with improving asset values, increasing M&A/monetization activity, and a favorable fundraising environment being at odds with the wide discounts to NAV. We expect the mortgage companies (HCG, EQB, FN) to report another quarter of very strong originations and low loan loss provisions, and we look for insights regarding future housing activity. Finally, mutual fund industry net sales remain strong, and we focus on net sales outlook insights and operating leverage.”

Meanwhile, expecting outperformance in the third quarter, Scotia Capital analyst Phil Hardie made these changes:

  • AGF Management Ltd. (AGF.B-T, “sector perform”) to $10.50 from $9. Average: $9.39.
  • CI Financial Corp. (CIX-T, “sector perform”) to $32 from $27. Average: $30.67.
  • IGM Financial Inc. (IGM-T, “sector perform”) to $56 from $52. Average: $52.26.
  • Guardian Capital Group Ltd. (GCG.A-T, “sector outperform”) to $47 from $44. Average: $44.

“Despite some broad market weakness in the month of September, operating conditions remain very favourable across the asset management industry, with close to record levels of assets under management at the end of Q3/21 and very strong retail flows,” he said.

“For the large caps, we expect double-digit sequential growth in operating earnings for CIX and IGM, benefiting from higher levels of average AUM and AUA and strong flows in both their asset management and wealth management businesses. For FSZ and Guardian, expense control will be a key area focus in the quarter, and we expect a sequential decline in operating earnings, driven by higher opex.”

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Analysts on the Street see PrairieSky Royalty Ltd. (PSK-T) continuing to benefit from rising commodity prices and improved investor sentiment.

Late Monday, the Calgary-based company reported largely in-line third-quarter financial results. Production of 19,900 barrels of oil equivalent per day and cash flow per share of 32 cents both match the consensus estimate.

“Once again, PrairieSky has been able to squeak ahead of our estimates this quarter propelled by better-than-expected realized prices (driven by a beat on NGL pricing) and, as always, extremely low costs,” said iA Capital Markets analyst Elias Foscolos. “In our view, this was a great quarter for the Company that closed nearly $200-million in acquisitions, expanded its bank line, and extended the term out until 2025, all of which enhance its financial flexibility, which may be instrumental in helping the Company complete other acquisitions as opportunities arise.”

Mr. Foscolos raised his target for PrairieSky shares to $19 from $18, keeping a “buy” recommendation. The average on the Street is $17.95.

Others making target adjustments include:

* Stifel’s Robert Fitzmartyn to $18.75 from $17.50 with a “buy” rating.

“PrairieSky reported 3Q21 results slightly ahead of our expectations and the market. The biggest news out of the period will be a lift and extension to its LOC ($225-million >> $425-million) via the establishment of a Sustainability-Linked Credit Facility, though strong E&P activity levels and further acquisition activity should buoy forward market estimates,” he said.

* RBC’s Luke Davis raised to $18 from $17 with a “sector perform” rating.

“PrairieSky’s quarter was largely in-line with drilling activity heating up in key oil plays. The company expanded its credit facility and added a sustainability linked pricing mechanism, further incentivizing improved ESG scores, which we think will be well received by investors.,” said Mr. Davis.

* Raymond James’ Jeremy McCrea to $22 from $21 with an “outperform” rating.

“3Q21 results came in roughly in-line with expectations and were largely uneventful from a news flow perspective,” he said.. That said, we remain confident that a number of catalysts are on the horizon for PSK heading into year-end ... We expect the rising commodity price to drive a material uplift in activity on PSK’s lands leading to positive estimate revisions looking into 2022. This in combination with the encouraging results we continue to see in the Clearwater (especially the jump in activity quarter-over-quarter from this play – i.e., 7 to 51 wells). With sentiment and interest picking up, we think PSK’s share price continues to perform well heading into year-end.”

* TD Securities’ Aaron Bilkoski to $18.50 from $18 with a “buy” rating.

“We are seeing early signs that private companies are not living by the same capital restraint as their public peers. Given PSK’s exposure to these private companies (including in the Clearwater), we forecast no-cost volume growth through Q1/22 and beyond. What’s more, the potential for growth in royalty production, FCF, and PSK’s dividend is biased to the upside the longer WTI (and gas) track well above our current assumptions,” said Mr. Bilkoski.

* Canaccord Genuity analyst Anthony Petrucci to $19 from $17 with a “buy” rating.

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Admitting he generally prefers producers, Credit Suisse analyst Fahad Tariq thinks the current valuation for Triple Flag Precious Metals Corp. (TFPM-T) is “hard to ignore.”

Accordingly, he raised his rating for its shares to “outperform” from “neutral” on Tuesday.

“As we have written previously, in a rising gold price environment (our house view), we generally prefer producers for operational leverage, but we think TFPM’s current valuation is hard to ignore, particularly as underlying operations are set to improve in 2022,” he said. “TFPM currently trades at 0.9 times P/NAV, well below royalty/streaming peers we cover WPM and FNV at 1.7 times and 3.3 times (based on our models), and even factoring in an illiquidity discount, the gap seems unjustifiably wide.”

“Since the May 20 IPO, the stock has declined 28 per cent, while gold has declined 6.0 per cent. Given the stock has limited float and trading volume, it is somewhat difficult to determine the fundamental cause of the sell-off as limited shareholder activity can disproportionately impact the stock price. One source of the underperformance was the Oct. 12 guidance cut to 80-83kGEO from 83-87kGEO (-4.1%) due to ATO operational issues. Had it not been for the lower ATO production, which has been deferred to 2022, we understand TFPM would have exceeded its original 2021 guidance range.”

Mr. Tariq maintained a $16 target for shares of the Toronto-based company. The average is $19.89.

“We think the stock is trading at an attractive valuation given the dividend yield (approximately 2.0 per cent; highest among royalty/streaming peers), embedded production growth (up 22 per cent year-over-year in 2022) not requiring further deals, re-rating potential from improving underlying operations (e.g. ATO, Pumpkin Hollow), and potential support from a recently announced buyback program,” he said. “While we recognize the stock is challenged on liquidity (13-per-cent float), we think investors that do not have a liquidity constraint could benefit from the current attractive entry point.”

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With secular tailwinds driving growth in the home care market and possessing an “establish M&A playbook,” Echelon Partners analyst Stefan Quenneville sees “stellar growth prospects” for Nova Leap Health Corp. (NLH-X).

He initiated coverage of the Halifax-based company home health care services provider with a “buy” recommendation.

“The home care industry is expected to grow at a 7-per-cent CAGR [compound annual growth rate], driven by an ageing population, technology that facilitates its delivery, convenience for patients and cost savings to the healthcare system,” said Mr. Quenneville.

Mr. Quenneville expects Nova Leap to see “strong” organic growth of 6.5 per cent annually, noting it has the ability to acquire approximately US$10-million in revenues per year to “build on its track record of accretive deals, having paid just a median of just 0.6 times LTM [last 12-month] sales and 4.2 times EV/EBITDA for its acquisitions to date.”

“M&A opportunities are aplenty in this highly fragmented industry, with the 10 largest players comprising only 26 per cent of the market,” he said. “Many small, privately owned players serve only local markets and, given the asset-light nature of the operations, have little access to growth capital from traditional sources.”

“As management continues its track record of accretive M&A, its stated targets are to grow sales and expand the operational EBITDA margin to 20 per cent plus (before corporate expenses) and 8-10 per cent on a consolidated basis. We view this as a reasonable goal given the Company’s track record to date.”

Seeing Nova Leap as a potential target for large companies in the sector given its top line and footprint, Mr. Quenneville set a target of $1 per share. The average is $1.40.

“While there are no publicly traded, pure-play, non-medical home care peers, we believe that this higher-end valuation over the mostly medical, reimbursement-based home healthcare peers is warranted due to the Company’s meaningfully higher expected growth rate, lower risk payor mix and the pure-play nature of its operations. Peers’ revenues and earnings are also at least in part derived from facility-based care, which limits the companies’ organic growth due to its lower degree of scalability,” he said.

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In other analyst actions:

* In a note previewing third-quarter earnings for software and IT services providers, Scotia Capital analyst Paul Steep raised his target for Thomson Reuters Corp. (TRI-N/TRI-T, “sector perform”) to US$113 from US$112 and trimmed his CGI Inc. (GIB.A-T, “sector outperform”) target to $127 from $130. The averages on the Street are US$114.82 and $123.62, respectively.

“We are anticipating another busy earnings season ahead as the majority of firms in our universe should continue to deliver year-over-year topline growth as economies reopen. Our expectation is that the ongoing supply chain shortages in the news impact relatively few of our companies (e.g., Celestica) and potentially benefit demand for Descartes and Kinaxis in the medium term. For those that report in Canadian dollars, calendar Q3 is likely to represent an ongoing headwind given the year-over-year appreciation of the US dollar. We would also expect that changes in pandemic restrictions should have to facilitate on-site consulting and installation services in Q3 extending into Q4.”

* In response to a “frenetic run” in lithium prices thus far this year, IA Capital Markets analyst Puneet Singh raised his target for Lithium Americas Corp. (LAC-T) to $42 with a “speculative buy” rating. The average is $31.63.

“With so many catalysts ahead combined with the way lithium prices have brought funds flow to the sub-sector, we think LAC will command a premium as it heads into production next year,” said Mr. Singh.

* A day after its shares surged 6.6 per cent in New York, RBC’s Douglas Miehm raised his target for shares of Victoria-based Aurinia Pharmaceuticals Inc. (AUPH-Q, AUP-T) to US$34 from US$33, topping the US$29.56 average, with an “outperform” rating.

“As per an unconfirmed Bloomberg article, Bristol Myers Squibb has expressed interest in acquiring Aurinia,” said Mr. Miehm. “We note that Aurinia’s stock had likely strengthened over the past two months related to a potential takeover. Based on our analysis of the past M&A transactions in the biotech industry, we think much of the upside from a potential acquisition is already priced in. In our view, apart from BMY, AZN, BI, Roche, Takeda and AbbVie could also be potential acquirers. We incorporate a 70-per-cent probability of an acquisition in our base case scenario resulting in a revised price target.”

* Raymond James analyst Brad Sturges raised his Dream Industrial Real Estate Investment Trust (DIR.UN-T) target to $19 from $18 with an “outperform” rating. The average is $18.39.

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