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

BTIG analyst Camilo Lyon thinks investors should “buy the dip” in Lululemon Athletica Inc. (LULU-Q), seeing “no cause for concern around the brand’s health” following recent share price depreciation.

Shares of the Vancouver-based apparel maker fell 1.9 per cent on Monday following an update of its fourth-quarter financial results and now has 27 per cent over the last two months.

Lululemon now expects revenue and adjusted earnings per share to come in at the low end of its guidance range of US$2.125-$2.165-billion and US$3.25-$3.32, respectively. Mr. Lyon was projecting US$2.163-billion and US$3.29 and the Street anticipated $2.163-billion and US$3.32.

“After meeting with the company, our suspicions were confirmed that all of this shortfall is a function of the Omicron impact on labor and newly imposed store restrictions rather than a sign of waning demand for the brand,” said Mr. Lyon. “In fact, we would not be surprised to see other companies report similar impacts resulting in a softer end to the holiday shopping season.

“While Omicron dealt a blow to LULU’s store performance at the worst possible time (two very high volume weeks before Christmas) just as the window for e-commerce shipments to arrive in time for the holiday was closing, the good news is traffic has already started rebounding as the worst of Omicron infections appears to have peaked. It is also worth noting that the rapidly spreading variant has disproportionately impacted its Canadian stores where 57 of its 62 stores have been operating under some form of Omicron-related restrictions (50-per-cent capacity, closed on Sundays in certain provinces). That said, the company is comfortable with its current inventory position across categories and expects to finish Q4 with inventory growth at or slightly above the high end of the 20-25-per-cent growth range it outlined on the Q3 call.”

The analyst now sees Lululemon’s store level productivity to fall below 2019 levels, pointing to the importance of the two weeks prior to Christmas. However, he also emphasized its digital business “remains robust, underscoring the reason behind the shortfall is Omicron related and nothing more specific to demand for LULU gear.”

After trimming his comparable same-store sales and gross margin estimates, Mr. Lyon cut his target for Lululemon shares by US$1 to US$489, keeping a “buy” recommendation. The average target on the Street is US$454.18, according to Refinitiv data.

“While we expect COVID-19 to materially impact the retail industry, we believe LULU is well-positioned to weather the current crisis from both a liquidity perspective and a brand perspective,” he said. “We believe LULU is among the few companies that entered the current environment from a position of strength and as such, will exit it stronger. In addition, we believe LULU is a beneficiary of consumers continuing to spend on at-home exercise / workout-related activities in the current COVID-19 environment.

“We believe LULU’s 2023 CAGR [compound annual growth rate] targets (low-teens revenue growth with higher EPS growth) at its investor day remain achievable as well as its goals laid out in its 5-year plan, calling for the company to double sales in men’s and online, quadruple international sales, and continue double-digit growth in women’s and in North America. The company continues to introduce innovative products in its legacy categories as well as expand into new product offerings, which should allow LULU to continue on a path of growth post-pandemic. In addition, we believe LULU’s international expansion efforts, particularly in China, will continue to enhance profitability and expand the brand’s reach.”

Other analysts making target price changes include:

* Citi’s Paul Lejuez to US$400 from US$435 with a “neutral” rating.

“While Covid-19 disruptions will be a near-term headwind, there is no change to LULU’s long-term earnings power. However, with the LULU being valued as one of the most expensive specialty retail concepts ever, we believe the risk/reward is fairly balanced,” he said.

* Truist Securities’ Beth Reed to US$386 from US$435 with a “hold” rating.

“We think secular category tailwinds strengthened during the pandemic as consumers now more than ever want to live active/healthy lifestyles in comfortable and versatile (yet still aesthetically pleasing) apparel. While we think the company’s multiple growth drivers (ecommerce, international, men’s, innovation) can result in strong demand in a post-pandemic environment, we view the margin of error as slim and believe Lululemon needs to operate near perfection for the stock to outperform. In our view, current valuation is full and we would wait for a more attractive entry point,” said Ms. Reed.

* Morgan Stanley’s Kimberly Greenberger to US$300 from US$404 with an “equalweight” rating.

“Despite a strong start to holiday, management attributed softer-than-expected revenue in peak holiday weeks to consequences of the Omicron variant, including store capacity constraints, more limited staff availability, & reduced operating hours,” she said. “This had a disproportionate impact on LULU’s Canada business ... Management also highlighted: 1) higher-than-expected air freight costs, which caused them to lower the 4Q21 GM outlook to down slightly vs. 4Q19 compared to flat prior, & 2) no change to the prior 4Q21 SG&A guidance of 200-250 bps deleverage vs. 4Q19. Taken together, this resulted in LULU lowering its 4Q21 EPS outlook to the low end of its prior range, & suggests consensus’ 4Q21 EPS estimate needs to come down by approximately 3 per cent. This could explain the stock’s negative 2 per cent move [Monday].”

* Deutsche Bank’s Gabriella Carbone to US$453 from US$484 with a “buy” rating.

* Telsey’s Dana Telsey to US$470 from US$515 with an “overweight” rating.

* JP Morgan’s Matthew Boss to US$450 from US$518 with an “overweight” rating.


Following three years of underpeformance versus the TSX Composite, Canaccord Genuity analyst Aravinda Galappatthige sees a “a strong case” to overweight the Canadian telecom sector into 2022.

“The outlook for wireless, in particular, is quite positive when one considers a) further strengthening in wireless fundamentals as international roaming continues to recover (at 50 per cent vs pre-pandemic as of Q3/21) and potentially some margin gains from the current trend towards BYOD b) comparatively manageable competitive environment as pressure from the primary challenger brand (Shaw/ Freedom) is likely to remain muted, and any potential successor emerging from the Rogers-Shaw transaction (we delve into potential scenarios in the report) is unlikely to step up promotional activity in the near term and c) a seemingly constructively regulatory structure,” he said in a research report. “Our projections indicate service revenue growth north of 3 per cent in 2022, a far cry from the 0-1-per-cent growth pre-pandemic. Furthermore, on the Telco side of things (BCE/TELUS), we expect continued share gains on the wireline front, as well as the likelihood of FCF upside post 2022 as the accelerated capex spend on FTTP and fixed wireless moderates.”

Ahead of earnings season in the sector, Mr. Galappatthige said his “preferred approach to the sector is to lead with TELUS and BCE.”

“In addition to the wireline sub gains and FCF upside referred to above, wireless execution at both companies remain impressive,” he said. “This, we estimate, facilitates mid- (in the case of BCE) to high single-digit (TELUS) EBITDA growth in 2022 and potentially through to 2023. Dividend yields are also attractive in both names and we expect to see continuity of the current 5-7-per-cent annual dividend growth policy. While RCI.b is certainly tempting given the underperformance over recent years and resultant discounted valuations, we think a ‘wait and see’ approach at least through H1/22 is more prudent given a) a relatively higher financial impact from the omicron wave b) risks around upswing in balance sheet leverage upon closing of Shaw acquisition c) lower relative visibility around execution on both wireless and cable. In general, we also believe it could take a little while to rebuild investor confidence, following a messy leadership transition last year.”

Mr. Galappatthige raised his target prices for both stocks.

His target for BCE Inc. (BCE-T) rose by $1 to $70 with a “buy” rating. The average on the Street is $65.72.

His Telus Corp. (T-T) target rose to $33 from $32, exceeding the $31.75 average, also with a “buy” rating.

The analyst said combining those companies with a position in Quebecor Inc. (QBR.B-T) and/or Cogeco Communications Inc. (CCA-T) “could be optimal.”

He raised his rating for Quebecor to “buy” from “hold” with a $33 target (unchanged). The average is $37.88.

“We have opted to upgrade QBR alongside this note, recognizing the significant sell off we saw in 2021,” he said. “While the headwinds we have been highlighting through last year in terms of a) pressure on cable subs from BCE’s FTTP rollout, b) stepped up wireless competition in Quebec and c) risk around Shaw wireless acquisition remain applicable, we believe that the 10-per-cent-plus FCF yield, solid current balance sheet and excellent wireless execution justify a Buy rating. Notwithstanding the near-term challenges, one also has to weigh the longer-term opportunity to Quebecor if they can execute successfully in wireless at a national level.

“While the primary risk to the call would be a burdensome balance sheet post a Shaw wireless acquisition, we have more comfort on this front of late. This is owing to two considerations. First, we believe that the likelihood of QBR going alone and bearing the acquisition entirely on its balance sheet is extremely low. Connected to this, we think there are very real opportunities to partner up with other operators/investors. In our opinion, Cogeco can be an option too. The company has long expressed interest in entering the wireless market, albeit primarily focused on its cable footprint, and it has a useful position in 3500MHz, particularly the 30MHz in the GTA. Second, regardless of the financing, we believe that acquiring Shaw wireless closer to the $4-4.5-billion mark, if achieved, would be a meaningful NAV driver for Quebecor. Not only is Shaw wireless a $450-million EBITDA entity at this point, but it also possesses nearly $5-billion worth of spectrum assets. As indicated earlier one should not lose sight of the longer-term opportunity, simply on the basis of near-term risks.”

Mr. Galappatthige kept a “buy” rating and $130 target for Cogeco shares. The average is $128.40.

“Perhaps for investors looking for a more risk-averse route, an option would be to go with CCA at the outset and reassess the CCA/QBR mix through the course of the year depending on developments on the Rogers-Shaw/Shaw wireless auction front. CCA’s attractiveness increased significantly. While its normally attractive FCF yield has been temporarily suppressed by its footprint expansion plans, we believe there are a number of compelling features to the investment thesis,” he said.


Canadian telecom stocks “represent a good place to hide amid the uncertainty” brought on by the Omicron variant of COVID-19, according to Desjardins Securities analyst Jerome Dubreuil, emphasizing their “relatively stable” results through previous waves of the pandemic.

In a research report previewing fourth-quarter earnings season in the sector, which commences later this week, he did warn that the pandemic could have a “noticeable” effect on the ranges of 2022 guidance announced in the sector. That led him to reduce his target prices for companies in his coverage universe after he increased his risk-free rate assumption to “reflect the current rate environment.”

“We are expecting a healthy wireless market once again this quarter, but growth in wireless net additions could start decelerating,” said Mr. Dubreuil. “We believe that inventory constraints have helped keep promotional activity for devices in check, which should support wireless profitability. We do not expect significant changes in wireline trends in 4Q, but we did reduce our wireline estimates for 2022 to better reflect the return of certain costs amid the reopening.”

“We expect BCE, RCI and T to unveil 2022 guidance when they report 4Q results. We expect 2022 adjusted EBITDA growth of 4.8 per cent for BCE, 9.2 per cent for RCI and 9.8 per cent for T. We believe the difference between BCE and RCI/T is not only due to the reopening, but we also forecast faster growth for RCI and T in 2023.”

The analyst made these target price adjustments:

* BCE Inc. (BCE-T, “hold”) to $66.50 from $67. The average on the Street is $65.72.

Analyst: “BCE topped the industry in terms of 2021 share price performance among Canadian telecoms despite the rising interest rate environment (we estimate that BCE has higher exposure to interest rates than its peers). We tweaked our estimates as we anticipate a decent quarter for the largest company under our coverage. While BCE is a high-quality name, its elevated valuation, our view that capex requirements are higher than consensus expectations and a lack of medium-term catalysts keep us on the sidelines at this time.”

* Cogeco Communications Inc. (CCA-T, “hold”) to $116 from $119. Average: $128.40.

Analyst: “Multiples for U.S. cable companies significantly deteriorated during the last few months of 2021 — the sector’s NTM [next 12-month] EV/EBITDA declined to 9.5 times from 11.6 times at the beginning of September. We believe this was due to both the year-over-year decline in the number of broadband net additions that were recently reported as well as the outlook for a significant increase in the quality of services offered as a result of competition over technology such as FTTP and FWA. We believe these factors have affected CCA’s valuation, but could also make it easier for the company to realize M&A at reasonable multiples. However, we do not believe a transaction is imminent given the recent closing of the large WOW acquisition. We have generally reduced our estimates for CCA to reflect our view that 2022 will largely focus on the integration of WOW and the deployment of networks, which may not translate into a large increase in subscribers in the near term, aside from those onboarded from the WOW acquisition.”

* Quebecor Inc. (QBR.B-T, “buy”) to $37.50 from $38. Average: $37.88.

Analyst: “We believe the company’s results are taking a back seat as investors continue to monitor QBR’s potential expansion outside of Québec. That said, we do not expect much incremental commentary on the situation as the market is aware that QBR is interested in acquiring SJR’s wireless assets and we do not anticipate negotiation milestones will be made public before the closing of the RCI/SJR transaction is announced. As opposed to its large-cap peers, QBR does not typically publish annual guidance except for capex, which was already communicated last quarter and was lower than we previously anticipated.”

* Rogers Communications Inc. (RCI.B-T, “hold”) to $68 from $70. Average: $69.80.

Analyst: “RCI’s share price has rebounded since mid-December as we believe some investors are positioning for an approval of the SJR/RCI transaction. We expect the transaction will be approved in 1H22 (90-per-cent chance in our view) and should deliver upside for RCI shareholders. However, we also believe the surge in COVID-19 cases creates downside risk related to 2022 guidance, which we expect the company to release on January 27. We also highlight that it is possible RCI reverses some or all of a $90-million bad debt provision related to the pandemic at some point in the coming quarters.”

He maintained these targets:

* Shaw Communications Inc. (SJR.B-T, “buy”) at $40.50. Average: $40.25.

* Telus Corp. (T-T, “buy”) at $33. Average: $31.75.

Analyst: “T delivered the second best share price performance within our coverage universe in 2021 (trailing only BCE) and is our best idea for 2022. Management stated in November that it expects 4Q EBITDA growth to be similar to the 7.1 per cent reported in 3Q. While it is unlikely that the Omicron surge was expected at the time of that forecast, the implementation of pandemic-related restrictions came only during the last two weeks of 4Q and, therefore, we believe T will be able to hit its expected growth target. Our EBITDA growth forecast stands at 7.0 per cent, lower than consensus of 7.8 per cent. Note that we have adjusted our estimates for the sale of the company’s Financial Solutions business to Dye & Durham (DND-T, not rated) for $500-million.”


Stifel analyst Maggie MacDougall sees a “value trading shaping up” for shares of Badger Infrastructure Solutions Ltd. (BDGI-T).

Seeing a “big infrastructure spending plan that will be baked into 2023, and considering that stocks are forward-looking,” she raised her rating for the Calgary-based company, formerly Badger Daylighting Ltd., to “buy” from “hold” on Tuesday, suggesting the fourth quarter of 2021 could represent an “operational trough.”

“The weather in Q4 was average, and pent-up demand combined with slightly improving non-residential construction stats bode well for a return to 2019 level revenue at BDGI to end the year,” said Ms. MacDougall. “However, Omicron is a challenge, with employees likely falling ill and requiring more overtime for those not quarantined and creative solutions to keep operations rolling. Thus, we are adjusting our Q4 sales forecast up to $154.0-million from $139.1-million, and our adj. EBITDA forecast down to $27.7-million from $30.8-million, to capture these dynamics.

“That said, we think the new COO will have had time to begin to make his mark. Mr. Rob Blackadar joined BDGI in July last year, and we think six months in he likely has his strategic plan carved out and may have even begun making some changes. We expect BDGI to employ an active, targeted sales strategy for the first time in its history, with any remaining changes to the business and operations likely to be costed and announced alongside Q4 results to allow the company to move ahead in 2022 with a clean slate.”

She maintained a $34.50 target for Badger shares, falling below the $38.21 average on the Street.

“We sense a value trade shaping up here if BDGI hits its 28-29-per-cent long term margin target in Q3 or Q4 2022, with the implication to 2023 profitability on growing revenue quite positive for fundamental value,” the analyst said.


National Bank Financial analyst Rupert Merer thinks the shift toward green energy is “unstoppable” and sees “room for upside” in 2022, expecting an improved performance with stocks sitting at 52-week lows.

“Until recently, leadership in the energy transition has come from a few pioneers,” he said in a research report released Tuesday. “However, with a growing move towards decarbonization, participation in the transition has expanded. In 2022, this trend should continue and could support new partnerships and investment opportunities for energy transition focused stocks, and market consolidation. After a strong ‘20, stocks in our coverage were down 20 per cent on average in ‘21, with rising yields and a move out of green and growth stocks. Weakness has continued, with much of our coverage trading near 52-week lows. Here, we review some themes which should impact our universe in ‘22. With momentum behind the energy transition, the sector has good visibility on growth for decades, but could see headwinds from rising yields and continued impacts from the pandemic in the near-term.”

Mr. Merer emphasized the transition “belongs to everyone and will continue to accelerate,” however, after revising his valuations to account for recent underperformance, he trimmed his target for a series of stocks in his coverage universe.

His changes include:

* Anaergia Inc. (ANRG-T, “sector perform”) to $22 from $25. The average on the Street is $31.

“We expect 2022 to be an active year on the construction front for ANRG, leading to its Capital Sales segment having a good year as ANRG is in the process of completing current BOO projects and building new BOO RNG facilities around the world,” he said. “Indeed, given ANRG’s BOO segment construction activities are the main driver of revenues in its Capital Sales segment, we believe a busy year on the BOO construction front could drive good results from equipment sales. On the other hand, we expect BOO operational headwinds to persist in 2022 as RBF isn’t expected to be fully ramped up before the end of 2022 and while VVWRA should be commissioned early this year, it will likely face the same feedstock volume issues as RBF.”

* Ballard Power Systems Inc. (BLDP-Q/BLDP-T, “outperform”) to US$20 from US$26. Average: US$22.24.

“With a cash balance of approximately $1.2-billion, BLDP has a strong balance sheet that can be used to advance product development or M&A transactions in 2022,” he said. “With the growth in the EV markets, we believe that BLDP should also see further partnership development and follow-on orders. We will look for progress towards its 70-per-cent cost reduction target by 2024E, in support of a larger roll-out of hydrogen vehicle platforms in that year. BLDP is active in development with partners MAHLE and Linamar, among others, which could provide some development catalysts in 2022E. With its recent Arcola Energy acquisition, BLDP is positioned to provide its existing and new OEM customers stronger support for the integration of its fuel cell engines into their vehicle platforms, including powertrain integration, vehicle integration and application engineering.”

* Lion Electric Co. (LEV-N/LEV-T, “outperform”) to US$14 from US$17. Average: US$18.18.

“2022 should be a very active year for LEV, notably with the launch of eight new vehicle models and the start of operation at its 20,000 vehicle per yearr manufacturing facility in Illinois, which they just officially took possession, and its new battery facility and R&D center in Mirabel, both planned for H2′22,” he said. “However, our focus for the first half of 2022 will be on the enduring supply chain issues that characterized the second half of 2021. As it works through its supply issues, will look for the ramping-up of its production capacity in Saint-Jérôme and in Illinois as it looks to deliver half of the vehicles in its order book by the end of the year. We believe that recently announced government incentives in both the U.S. and Canada should encourage companies to convert their fleets to electric and could support new orders for LEV. Moreover, while most recent incentives should drive more electric school bus orders in the near-term, we expect electric truck orders to represent a growing share of LEV’s order book as the truck market is 10 times larger.”

* Loop Energy Inc. (LPEN-T, “outperform”) to $9 from $12. Average: $9.70.

“We expect 2022 to be a transition year for LPEN as it paces forward through its commercial phase with a 24-month product backlog of more than $45 million,” he said. “This year, LPEN will look to increase its geographic reach, manufacturing and test capability in Canada and China, and expand its product offerings. Its Shanghai facility should be fully commissioned by the end of Q1′22 to supply to the Chinese market. On product development, LPEN is focused on the design of its next-generation 120 kW single row stack for use in the 250 kW Class 8 and heavy-duty truck markets and targets for the 120-kW fuel cell module to be available for customers in 2022. We will look for progress with its existing JV partners and the potential for new partners. LPEN could see a follow-on order for its most developed partnership, with up to 300 fuel cells orders for buses in Nanjing, and potentially more after that, as Nanjing has a fleet of 7,000 municipal buses.”

* Next Hydrogen Solutions Inc. (NXH-X, “sector perform”) to $6 from $7. Average: $8.

“We expect 2022 to be a development year for NXH, setting the stage for commercialization of its product line in 2023. In 2022, NXH will continue investing in the build-out of its new facility, in design improvements of its 1.8 MW NXH-300 unit and in the development of new products, including its NH-100 unit. In the upcoming year, NXH is targeting to commission and operate five demonstration units at partner sites, including an NH-60 and an NH-300 for Canadian Tire Corp. and NH-300 units for Hyundai and Kia,” he said.

* Xebec Adsorption Inc. (XBC-T, “sector perform”) to $4 from $4.50. Average: $4.54.

“The RNG market continues to look attractive for new developments, given attractive subsidies for RNG production in the U.S., Canada and Europe,” he said. “With roughly $52-million in cash at the end of Q3′21, we believe that XBC will continue to target the roll up of compressed gas service companies and component manufacturers. XBC targets roughly 30 acquisitions by 2030. In the near term, the acquisition of air compressor manufacturing and service companies should provide some stability to revenues and earnings, although these segments could be lower growth than the RNG and hydrogen business units. We will look for progress in the commercialization of its BGX Biostream product and look for improvement in margins as it gains scale and experience in production.”

* 5N Plus Inc. (VNP-T, “outperform”) to $4.75 from $4.25. Average: $4.45.

“VNP is well positioned for growth in a few markets, although much of the growth could come beyond 2022. VNP trades at a discount to its peers in specialty materials and could close the gap with some evidence of traction in its growth markets,” he said.


In a research report looking at 2022 for power and utility companies, CIBC World Markets analyst Mark Jarvi said he’s “more positive on renewable stocks at current levels.”

“Renewables’ performance remains decoupled from regulated utility stocks, and they have been pulled down by a rebasing of secular growth stocks while fund flows have gone against them. However, these are still good businesses with solid industry and company-specific growth profiles,” he said. “While sentiment may take time to turn more positive, we see current valuation levels as more attractive and see the prospects for better results and more positive catalysts in 2022. BLX is our top renewable pick. For utilities, P/E multiples are modestly elevated— performance in 2022 will likely be influenced by bond yield changes (correlations have recoupled) and we see average year-over-year EPS growth of 4 per cent.”

Mr. Jarvi raised his ratings for Innergex Renewable Energy Inc. (INE-T) and Brookfield Renewable Partners LP (BEP.UN-T, BEP-N) to “outperformer” from “neutral.”

His Innergex target slid to $21 from $22.50, below the $23.93 average on the Street. His Brookfield target fell to US$40 from US$42, also missing the consensus ($43.73)

“BEP’s current trading multiple premium seems more rational and we like its positioning as we remain positive on renewable growth and see the current/growing dividend as relatively attractive while we wait for sector flows to reverse. For INE, it’s arguably more a trading call. We believe it can bounce back after a woeful 2021—it has the ability to drive positive estimate revisions via M&A and see the current share price offering no value for its organic growth,” he said.

Mr. Jarvi’s other target price adjustments include:

  • Emera Inc. (EMA-T, “neutral”) to $64 from $60. Average: $62.10.
  • Fortis Inc. (FTS-T, “hold”) to $61 from $58. Average: $58.97.
  • Hydro One Ltd. (H-T, “outperformer”) to $35 from $34. Average: $33.12.
  • Northland Power Inc. (NPI-T, “outperformer”) to $43 from $45. Average: $47.83.
  • TransAlta Corp. (TA-T, “outperformer”) to $17 from $16.50. Average: $16.41.
  • TransAlta Renewables Inc. (RNW-T, “neutral”) to $20 from $20.50. Average: $19.69.


CIBC’s Robert Catellier updated his valuations for energy infrastructure companies in a research report released Tuesday.

“After a volatile 2020, 2021 was more constructive for Pipelines and Midstream companies as commodity prices increased and ESG issues were viewed from a more balanced perspective,” he said. “While rising interest rates create a headwind, we still see the opportunity for positive returns, although perhaps are more reliant on dividends and less so on capital gains than in recent years.

“Fundamentals remain quite strong, with volumes recovering to pre-pandemic levels, and OPEC+ demonstrating market discipline. Commodity prices are also high, and inventory levels are still below levels one year ago and generally below five-year ranges. While drilling activity is higher than 2020 and 2019 levels, it is still relatively modest compared to the commodity price fundamentals as producers have shown capital discipline to shore up balance sheets and return capital to shareholders.”

His target changes include:

  • AltaGas Ltd. (ALA-T, “outperformer”) to $34 from $30. The average on the Street is $30.50.
  • Enbridge Inc. (ENB-T, “outperformer”) to $57 from $55. Average: $55.45.
  • Keyera Corp. (KEY-T, “neutral”) to $34 from $33. Average: $34.25.
  • TC Energy Corp. (TRP-T, “outperformer”) to $69 from $72. Average: $67.21.
  • Tidewater Midstream and Infrastructure Ltd. (TWM-T, “outperformer”) to $2 from $1.75. Average: $1.90.

“Our preferred names include ALA and ENB as they have stronger dividend growth than the peer group, with ALA having further multiple expansion opportunity from deleveraging, while ENB has the capacity to supplement shareholder returns with share repurchases,” he said.


Desjardins Securities analyst Gary Ho sees a “tremendous growth runway ahead” for PowerBand Solutions Inc. (PBX-X).

Touting the potential stemming from the “massive” U.S, auto and auto financing industries and expecting it to benefit from a “first-mover advantage and several notable barriers to entry,” he initiated coverage of Burlington, Ont.-based fintech provider with a “buy” recommendation on Tuesday.

“We are positive on the PBX story for several reasons. (1) Meaningful value proposition for dealer customers in an untapped used vehicle leasing market; DF [Drivrz Financial] products appeal to dealerships while providing greater profit potential; (2) market adoption, greater customer awareness and scalability benefits should drive meaningful near-term growth; (3) considerable market opportunity — at a mere 2-per-cent market share, PBX could become a $2-billion enterprise value company; (4) benefits from first-mover advantage and several notable barriers to entry; and (5) no inventory or credit risk exposure,” he said.

“Potential catalysts to watch for (1) Launch of DL and DX should enhance growth in 2022 and beyond; (2) improving vehicle inventory and dealer adoption should result in a ramp-up in lease originations; and (3) potential uplisting or senior U.S. listing should broaden investor base over time.”

Mr. Ho, currently the lone analyst covering the stock, set a target of $1.60 per share. It closed at 72 cents on Monday.

“Our investment thesis is predicated on: (1) increasing dealer adoption and better inventory situation should result in an acceleration of originations; (2) limited competition in an untapped used leasing market presents a massive growth opportunity; and (3) an asset-light model with zero inventory or credit risk exposure,” he said.


In other analyst actions:

* In response to the premarket release of its 2021 production guidance and five-year outlook, Scotia Capital analyst Orest Wowkodaw trimmed his target for shares of Ero Copper Corp. (ERO-T) to $22 from $27 with a “sector perform” rating. The current average on the Street is $28.23.

“Although the planned production was largely in line, markedly higher opex and capex negatively impacted our near- to medium-term outlook for the company (our updated corporate 8% NAVPS of $15.86 declined by 18 per cent),” he said. “Overall, while we support the company’s strategy to reinvest in its flagship [Mineração Caraíba S/A] asset given the large resource base and exploration upside, we view the update as negative for the shares given our markedly lower valuation.”

* Touting “appealing” industry characteristics, “strong” growth prospects and “solid” business economics and competitive positioning, Stifel analyst Martin Landry initiated coverage of Pet Valu Holdings Ltd. (PET-T) with a “buy” rating and $42 target. The average on the Street is $39.17.

“Pet Valu sells pet food and pet products across a network of 622 stores in Canada,” he said. “The company has an impressive track record with an EBITDA CAGR [compound annual growth rate] of 18 per cent over the last 12 years and according to our long-term scenarios, Pet Valu could double its EPS over the coming four years providing investors appealing growth prospects. The Canadian pet industry is appealing due to (1) rising spending on pets, (2) pricing power due to customer stickiness, and (3) recession-resistant characteristics. There is a scarcity of publicly traded Canadian companies with exposure to the pet industry making PET a stand out.”

* Piper Sandler analyst Gregory Tuttle raised Lithium Americas Corp. (LAC-N, LAC-T) to “overweight” from “neutral” with a US$41 from US$32. The average on the Street is US$38.20.

* Mr. Tuttle cut his target for Mississauga-based Li-Cycle Holdings Corp. (LICY-N, “overweight”) to US$15 from US$18 and Vancouver’s TMC the metals company Inc. (TMC-Q, “neutral”) to US$2.50 from US$3. The averages on the Street are US$14.67 and US$9.17, respectively.

* Deutsche Bank analyst Abhinandan Agarwal cut Lundin Mining Corp. (LUN-T) to “hold” from “buy.”

* Ahead of the release of its first-quarter results on Jan. 18, Canaccord Genuity analyst Luke Hannan trimmed his Goodfood Market Corp. (FOOD-T) target to $4 from $6, below the $6.58 average, with a “hold” rating.

“While a lack of meaningful competition could help the company enjoy near-term success from the rollout of its on-demand business, we anticipate investors will be unlikely to reward the stock with a higher multiple until (1) demand headwinds abate and (2) the growth profile of its on-demand business is clearly shown in its financial results,” he said.

* Following Monday’s second-quarter earnings release, a series of analysts cut their target for shares of Tilray Brands Inc. (TLRY-Q, TLRY-T). They include: Canaccord’s Matt Bottomley to US$9 from US$12 with a “hold” rating; CIBC’s John Zamparo to US$7.50 from US$8 with a “neutral” rating and MKM Partners’ William Kirk to US$8 from US$10 with a “neutral” rating. Conversely, Stifel’s W. Andrew Carter raised his target to US$6.50 from US$6 with a “hold” rating and Alliance Global Partners’ Aaron Grey bumped his target to US$8 from US$7 with a “neutral” rating.

“Tilray ... reported FQ2/22 financial results (ended Nov/2021) that came in below top-line consensus expectations in what continues to be a highly saturated industry landscape,” Mr. Bottomley said. “Although the quarter fell short of our revenue forecasts, we note that Tilray was still able to make incremental progress in its adj. EBITDA profile as it crystalizes synergies following Aphria’s reverse acquisition of the company.”

* RBC Dominion Securities analyst Wayne Lam initiated coverage of Osisko Development Corp. (ODV-X) with an “outperform” rating and target price of $8. The average on the Street is $10.20.

“In our view, ODV is primed for production growth driven by near-term output from San Antonio and longer-term production from its flagship Cariboo mine. We view ODV as a potential M&A target given low emissions production within a Tier I jurisdiction with district scale exploration upside, and note multiple catalysts ahead in the lead up to targeted construction in H2/22,” he said.

* Mr. Lam also initiated coverage of Artemis Gold Inc. (ARTG-X) with an “outperform” rating and $10 target. The average is $13.09.

“In our view, the company is well positioned to embark on construction of Canada’s next large-scale gold project with potential M&A upside given recent emphasis on sizeable assets in Tier I jurisdictions. We anticipate a potential re-rating towards our price target as the project advances toward construction in mid-2022,” he said.

* Following its acquisition of Wisconsin-based Paragon Development Systems Inc., Scotia Capital analyst Divya Goyal raised her Converge Technology Solutions Corp. (CTS-T) to $14, exceeding the $13.73 average, from $13 with a “sector outperform” rating, while Desjardins Securities’ Kevin Krishnaratne bumped his target to $14.25 from $13.75 with a “buy” rating.

“We see upside on cross-selling opportunities in time and believe even more M&A in the coming months should serve as a catalyst. CTS is one of our top picks for 2022,” said Mr. Krishnaratne.

* CIBC World Markets analyst Jacob Bout increased his target for Nutrien Ltd. (NTR-N/NTR-T, “outperformer”) to US$86 from US$80. The average on the Street is US$80.88.

* Mr. Bout also lowered his Methanex Corp. (MEOH-Q/MX-T, “neutral”) target to US$52 from US$55, Ag Growth International Inc. (AFN-T, “outperformer”) target to $47 from $45 and Farmers Edge Inc. (FDGE-T) to $3.50 from $5. The averages are US$46.80, $51.67 and $4.82, respectively.

* BMO Nesbitt Burns analyst Stephen MacLeod raised his target for CCL Industries Inc. (CCL.B-T) by $1 to $83 with an “outperform” rating. The average is $81.

“Tuck-in acquisition activity has accelerated over the past month, with CCL having announced or closed five tuck-in acquisitions following a pause in activity through the pandemic,” he said. “We view increased acquisition activity as a potential catalyst for the stock. Complementing this, the demand outlook is generally positive and the outlook for 2022 is constructive, driven at least partially by industry tailwinds that should support organic growth through 2022 and beyond. We view CCL as a best-in-class packaging company and view the year-to-date weakness (down 4 per cent) as an attractive buying opportunity.”

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