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

National Bank Financial analyst Cameron Doerksen sees “encouraging” signs of improvement in sentiment around an air travel, which he sees as underlying driver of Air Canada (AC-T) shares in the near term.

“Air Canada noted that prior to the onset of Omicron, bookings in October and November had reached 65 per cent of pre-pandemic levels,” he said in a research note. “In addition, advance ticket sales were up $400-million in Q4, pointing to solid air travel demand improvement. Indeed, management’s commentary is that travel demand and yields are very encouraging for the summer, especially on the transAtlantic market. The recent announcement that travel restrictions will be eased in Canada is spurring additional demand, and we believe testing will be eliminated altogether in the coming months which should also be a catalyst for higher air travel demand.”

On Friday, the airline’s shares rose 3.3 per cent in Toronto with the premarket release of better-than-anticipated fourth-quarter 2021 financial results.

Revenue jumped 230 per cent year-over-year to $2.731-billion, topping both Mr. Doerksen’s $2.336-billion projection and the consensus estimate of $2.427-billion as capacity increased by 134 per cent. Adjusted earnings before interest, taxes, depreciation and amortization of $22-million, also easily topped forecasts (losses of $145-million and $44-million, respectively).

Ahead of Air Canada’s Investor Day event on March 30, at which the analyst expects targets for post-recovery margin, cost and cash flow as well as details on the financial benefits of its revamped Aeroplan loyalty program, Mr. Doerksen did warn a pair of headwinds could limit share price upside in the near-to-medium-term.

“Higher jet fuel costs are a significant issue with the current price now sitting at around $1.00 per litre, up 65 per cent year-over-year and the highest we have seen since 2014,” he said. “We also remain concerned over growing competition from new or rapidly expanding low fare airlines.”

Maintaining an “outperform” rating for its shares, Mr. Doerksen raised his target to $29 from $28. The average on the Street is $29.63.

Others making changes include:

* Scotia’s Konark Gupta to $31 from $29 with a “sector outperform” rating.

“Like Q3, Q4 positively surprised us as we continued to underestimate a growing desire for travel in Canadians, despite the impact of Omicron,” he said. “We were also impressed with EBITDA staying positive in Q4, considering the fuel price headwind (up 15 per cent quarter-over-quarter). Although we remain cautious on Q1 with our negative EBITDA and FCF estimates, due to incremental fuel headwind (tracking up 13 per cent quarter-over-quarter) and capex timing (front-end loaded deliveries), the booking and cargo trends could once again surprise us while outlook is certainly improving for the spring/summer, based on forward bookings. More importantly, we are focused on AC’s medium-term recovery prospects, given Canada is catching up with peers on travel policies, and the airline’s post-pandemic outlook, which could be the highlight of the investor day.”

* RBC Dominion Securities’ Walter Spracklin to $24 from $23 with a “sector perform” rating.

“Management delivered a solid Q4 beat and highlighted encouraging indications that demand will recover meaningfully as pandemic restrictions are lifted in the near term,” he said. “We point to a recent pick-up in bookings and more stable cancellation rates, both of which we expect to drive a recovery into 2023. However, despite positive indications from the call, our out-year estimates already reflect a return to pre-pandemic demand in H2/23. We therefore see upside to shares at current levels as modest, and maintain our Sector Perform rating on relative returns.”

* ATB Capital Markets’ Chris Murray to $35 from $34 with an “outperform” rating.

“While the emergence of Omicron created a headwind in late 2021 and will likely impact Q1/22, we see several positive developments beginning to take shape which we expect will translate into a significant acceleration in demand trends in 2022,” he said.

* Canaccord’s Matthew Lee to $27 from $26 with a “hold” rating

“Following the company’s Q4 results, we have increased our F22 revenue forecasts to reflect continued growth in cargo and an improving outlook on summer travel. However, our longer-term expectations are only increased modestly, as we continue to expect Pacific capacity and business demand to require multiple years to reach pre-COVID levels. While we believe that AC is well-positioned to take advantage of a recovery in travel, we opt to remain on the sidelines given that enterprise values have reached pre-pandemic levels, which may underestimate the remaining hurdles for recovery,” said Mr. Lee.

* CIBC World Markets’ Kevin Chiang to $35 from $33 with an “outperformer” rating.


After its shares dropped almost 11 per cent following Friday’s release of weaker-than-anticipated quarterly results, RBC Dominion Securities analyst Sabahat Khan now sees “an attractive entry point” for Ritchie Bros Auctioneers Inc. (RBA-N, RBA-T), raising his recommendation to “outperform” from “sector perform” with the view its operating backdrop and outlook are “better reflected” in earnings estimates.

“While the company had pointed toward an increasingly constrained supply environment at Q3/21 reporting, consensus earnings estimates heading into Q4/21 reporting reflected the expectation of year-over-year earnings growth ... In our view, consensus estimates exiting Q4/21 reporting better reflect the tight equipment supply backdrop (that is likely to impact results over the next 1–2 quarters),” he said.

The Burnaby, B.C.-based company reported revenue of US$359-million, down 6.3 per cent year-over-year and below the estimates of both Mr. Khan (US$376-million) and the Street (US$392-million) even though Gross Transaction Value topped projections. Adjusted earnings per share of 50 US cents met Mr. Khan’s forecast but fell 8 US cents below the consensus.

“We have revised our 2022 forecasts to reflect lower GTV growth through H1, higher Service Revenue (given strong recent trends and favourable outlook commentary), a higher SG&A expense (driven by investment in satellite yards and the inside sales team, return of travel/entertainment, addition of SmartEquip, and in-person auctions), and a higher interest expense ($24-million/quarter, reflecting Euro Auctions debt financing),” the analyst said. “We reflect contribution from Euro Auctions beginning in Q2/22. The pending transaction is undergoing a standard Competition and Market Authority (“CMA”) review in the U.K. and a phase 1 decision is expected by March 4, 2022. On the call, management noted that the timing of the review completion remains uncertain; however, if the review is completed by March 4, the transaction could close by the end of Q1.”

After trimming his earnings expectations for the next two fiscal years, Mr. Khan reduced his target for Richie Bros shares to US$60 from US$69, remaining above the US$59 average on the Street.

“Our upgrade is not calling for the supply side of the equation to necessarily improve by Q1 reporting; rather, we view the current valuation and setup for 2022 and 2023 as providing a favourable risk-reward opportunity. Over the next 1– 2 quarters, we expect the impact of the tight supply environment to be partially offset by higher pricing as well an increase in buyer fees charged by Ritchie Bros,” he added.

Others making changes include:

* National Bank’s Maxim Sytchev to US$55 from US$68 with a “sector perform” recommendation.

“This was a weak quarter,” he said. “We also believe investors are questioning the capital allocation returns from recent M&A as according to our annualized numbers when it comes to SmartEquip and Rouse, we come up with 8.6-times revenue valuation for likely marginally profitable businesses. Amid the tech carnage, the read-through is not ideal. Historically, RBA shares have traded at 8.4 times PREMIUM to S&P 500. Vs. own history, RBA shares are still above the median valuation trend even though we have seen a rerating since IronPlanet transaction to 27-times forward P/E. So, what to do in this oversold situation? We are not hanging our hats on a technical rebound for a reason to become more positive as equipment tightness will not disappear in Q1/22 (or Q2/22). Our ideal entry point is around US$46.00-US$47.00. We therefore remain on the sidelines.”

* Scotia’s Michael Doumet to US$56 from US$65 with a “sector outperform” rating.

“With the shares down more than 10 per cent and supply conditions/margin compression approaching trough levels, we think it makes sense to be incrementally more positive on the name,” he said. “For now, however, given all the moving parts, we would prefer to be late rather than early.”

* TD Securities’ Cherilyn Radbourne to US$56 from US$64 with a “hold” rating.


Pointing to “positive ag fundamentals and potential upside supply-risks in fertilizer markets,” RBC Dominion Securities analyst Andrew Wong continues to see a strong outlook for Nutrien Ltd. (NTR-N, NTR-T).

“While there has been some concern on affordability and potential demand destruction as fertilizer prices approach record highs, we note there is a distinction between affordability (comparing crop prices to fertilizer prices) and profitability (what a farmer earns per acre),” said Mr. Wong. “At current crop prices, we expect near-record profitability in 2022, which should support strong fertilizer demand.”

In a research note released Tuesday, he said he expects “very strong cash generation” from the Saskatoon-based fertilizer company that will push capital allocation plans “with a bias towards share buybacks and growth projects.”

“We think the quarterly report struck all the right notes, highlighting the positive ag/fert environment, announcing a large buyback program, and presenting a realistic outlook with potential upside to move up through the year,” Mr. Wong said. “We also think interim CEO Ken Seitz and the rest of the executive team presented well on the conference call, with various members stepping up to answer questions on their respective segment responsibilities.”

Reiterating an “outperform” recommendation for Nutrien shares, Mr. Wong raised his target to US$90 from US$85. The current average is US$86.16.


Expressing concern about the updated outlook for its Ada Tepe mine, National Bank Financial analyst Don DeMarco lowered Dundee Precious Metals Inc. (DPM-T) to “sector perform” from “outperform.”

According to its updated production guidance, the Toronto-based company expects the greenfield mine in southeast Bulgaria to contribute between 81,000 and 90,000 gold ounces in fiscal 2022, down from a previous target of 105,000 ounces and below its 2021 production of 133,000. He thinks its 2024 projection of 76,000 is a reminder of the project’s limited mine life.

“What would it take to get to OP? In our view, backfilling Ada Tepe’s production, which could involve a combination of mine life extensions or use of satellite deposits, and/or Timok, Loma Larga or additional M&A/greenfield development,” he said.

Mr. DeMarco cut his target for Dundee shares to $10.25 from $11. The average is $11.94.

“Benefits are not lost on us, however, as DPM boasts among the lowest AISC [all-in sustaining costs] in universe supporting FY22 FCF of $152-million (yield 13 per cent), a strong balance sheet with YE21 net cash surplus of $334-million, estimated to increase to $660-million by end of 2023,” he said. “As a reflection of this strength, DPM increased the dividend, though at a 2.4-per-cent yield is it not differentiated. We are encouraged by the potential for Loma Larga and will look to de-risking milestones, yet are cognizant of development-related inflation.”

Elsewhere, Scotia’s Trevor Turnbull cut his target to $10.50 from $11 with a “sector outperform” rating, while Canaccord’s Dalton Baretto lowered his target to $9 from $9.50 with a “buy” recommendation.

“In our opinion, Dundee remains one of our top picks in the mid-tier gold producer space with strong operating results and excellent double-digit free cash flow generation,” Mr. Turnbull said.


A group of analysts on the Street trimmed their targets for shares of Superior Plus Corp. (SPB-T) after its 2022 guidance fell below forecasts.

On Friday, the Toronto-based utility dropped over 13 per cent after releasing an adjusted EBITDA target of $410-$450-million for the year, missing the consensus estimate by almost 7 per cent.

“SPB’s Q4/21 results were in line, but 2022 guidance came in below expectations, largely due to increasing costs and the delay of Kamps beyond a Q1/22 closing,” said IA Capital Markets analyst Matthew Weekes. “While we estimate that 2022 results will be closer to the high end of guidance, we are maintaining our Hold rating as we await factors that could spur more positive momentum in SPB’s business. These include the closing of Kamps, recovery of commercial volumes in Canada, execution of cost savings and organic growth initiatives, and synergies from acquisitions, in turn driving higher cash flows and allowing SPB to grow into its expanding leverage.”

Mr. Weekes cut his target for Superior Plus to $14 from $15.50, keeping a “hold” rating. The average is currently $14.83.

Others making changes include:

* National Bank’s Patrick Kenny to $13 from $15 with an “outperform” recommendation.

“With guidance falling short of expectations, the stock has been sent to the proverbial penalty box until the company can prove that its over $600-million worth of tuck-in acquisitions announced/completed in 2021 are in fact delivering returns in line with an average synergized EBITDA multiple of 7.0-7.5 times,” said Mr. Kenny. “Although tuck-ins are absorbed into the broader Canadian & U.S. segments, we will be looking for improved disclosures/granularity going forward as well as steady performance from ‘same-store-sales’ operations, as proof the ‘Superior Way Forward’ program including another $1.3-billion of tuck-ins planned through 2026 is poised to add shareholder value.”

* RBC’s Nelson Ng to $15 from $16 with a “sector perform” rating.

“We believe the shares of SPB sold off due to a combination of elevated leverage, an equity overhang, weaker-than-expected 2022 EBITDA guidance, and a delay in the Kamps acquisition,” said Mr. Ng. “We believe the shares of SPB could be range bound until the company raises common equity to right-size the balance sheet. Given the attractive and sustainable dividend yield, we believe the shares of SPB can be appropriate for patient income investors.”

* Desjardins Securities’ David Newman to $14 from $16 with a “buy” rating.

“With the sell-off reflecting the underwhelming guidance (related to timing) and manageable leverage, we are maintaining our Buy rating on the stock.,” he said.

* BMO’s Joel Jackson to $12.50 from $13 with a “sector perform” rating.

“We appreciate SPB’s safe/ attractive dividend though believe value creation expectations from the U.S. propane acquisition strategy have been unreasonably high plus industry peer multiples have contracted,” said Mr. Jackson. “This as despite numerous asset sales and acquisitions, and operating environments, SPB seems stuck in a 15-year $11-12 per share range when ignoring transient periods above and below that range.”

* TD Securities’ Daryl Young to $16 from $17.50 with a “buy” rating.


Seeing “insufficient” returns after a “strong” share price performance thus far in 2022, Stifel analyst Robert Fitzmartyn lowered Gear Energy Ltd. (GXE-T) to “hold” from “buy” following the release of in-line fourth-quarter results.

On Feb. 16, the Calgary-based company reported adjusted funds from operations per share of 7 cents, matching the forecasts of both the analyst and the Street.

“FCF generation allowed Gear to continue to reduce its debt position which we continue to identify as turning to a positive working capital surplus this year, absent of tactical deployment in the M&A/A&D market,” said Mr. Fitzmartyn. “Capital investment in the quarter was low at $4.9-million, as Gear drilled 1-times well (0.3 times net) light oil well in Wilson Creek, Alberta which was subsequently brought into production in early 2022.”

The analyst raised his target for Gear shares to $1.60 from $1.15. The average is $1.58.

“The company reiterated its 2022 guidance at $40-million, and continues to prioritize reducing its net debt to zero before allocating free cash flow to shareholders through dividends and/or share buybacks,” he said. “We expect for these upward catalysts to be announced upon achieving its net debt target in 2Q22.”


Emphasizing its “track record of top- and bottom-line growth” and seeing “significant operating leverage as the business grows organically and through acquisitions,” Acumen Capital analyst Nick Corcoran initiated coverage of Haivision Systems Inc. (HAI-T) with a “buy” rating.

“Notably, the Company only raised $8.5-million of external capital prior to the IPO in December 2020 and has fourteen consecutive years of positive adjusted EBITDA,” he said. “More recently, revenue grew at a CAGR [compound annual growth rate] of 13.9 per cent from $55.1-million in FY/17 to $92.6-million in FY/21 and adjusted EBITDA grew at a CAGR of 41.8 per cent from $2.0-million in FY/17 to $12.3-million in FY/21. This growth is expected to continue through our forecast period through a combination of organic growth (10-15 per cent annually) and the acquisition of CineMassive (completed in August 2021).”

“Adjusted EBITDA margins have demonstrated the operating leverage in the business, improving from 5.5 per cent in FY/17 to 13.3 per cent in FY/21. Management has indicated that the Company can achieve adjusted EBITDA margins of 20 per cent with revenues of $150-million.”

Setting a target of $10.50 per share, which is 25 cents below the consensus, Mr. Corcoran said the Montreal-based provider of real-time IP video solutions’ valuation is now “at a discount to the peer group despite having the strongest gross margins and upside from acquisitions.”

“HAI trades at 5.7 times fiscal 2023 estimated EV/EBITDA and 0.9 times EV/sales, well below the peer group of 11.9 times and 0.9 times, respectively,” he said. “This is despite the Company having historical gross margins of 75 per cent (prior to the acquisition of CineMassive). In our view, the historical margin demonstrates the strength of Haivision’s products and solutions.

“With between $85-90-million of capital available ($26.8-million of cash and a recently increased credit facility of up to $60.0-million), we believe HAI has ample liquidity to execute on its acquisition pipeline. Management has previously indicated there are 1,000 companies within the video infrastructure market of which 50 would be suitable acquisition targets. Management indicated on the most recent conference call that there may be an announcement in the near term.”


In other analyst actions:

* Raymond James analyst Rahul Sarugaser cut Profound Medical Corp. (PROF-Q, PRN-T) to “outperform” from “strong buy” with a US$23 target, down from US$28 and below the US$25.93 average.

“With COVID-19-Omicron hospital capacity constraints in 4Q21, we estimate PROF continued to be limited in its deployment of TULSA devices, combined with possible shutdowns of procedures at the height of the Omicron wave (Dec.-Jan.), so we dial back our estimates and trim our overall 2022 revenue estimate,” he said.

* Raymond James’ David Novak initiated coverage of Medexus Pharmaceuticals Inc. (MDP-T) with an “outperform” rating and $5.50 target. The average is $6.40.

“Born by way of a three-way amalgamation in 2018 between Pediaphrm Inc., Medexus Inc., and Medac Pharma, Inc., Medexus Pharmaceuticals is a fully integrated, North American, specialty pharmaceutical company,” he said. “Specifically, the company acquires/in-licenses products for Canada and/or the US. The company’s key therapeutic areas of focus includes autoimmune, rare diseases, pediatric indications and allergy. After emerging from a trying year in which the company received a CRL from the FDA and faced substantial inventory loading issues, we believe MDP is now firmly back on track and shares are likely to benefit from a significant market re-rating on the back of growth acceleration and potentially positive regulatory outcomes throughout calendar 2022.”

* Touting its “substantial foothold in the world’s premier lithium brine region,” Echelon Capital’s Michael Mueller became the first analyst to initiate coverage of Vancouver-based Alpha Lithium Corp. (ALLI-X), setting a “speculative buy” rating and $1.80 target.

“Having amassed an 32,500-hectare position in the core of Argentina’s Lithium Triangle for less than $5-million of cash costs, Alpha is in an advantageous position of having claims in a region where M&A activity has significantly picked up over the past 12 months,” he said. “The region is attractive for many reasons, including comparatively low cash operating costs and a proven ability to produce lithium chemicals from these brines. We also highlight that recent transactions in Argentina have fetched prices well above $20,000/ha for advanced projects.”

* CIBC World Markets analyst Scott Fromson initiated coverage of Northwest Healthcare Properties REIT (NWH.UN-T) with an “outperformer” rating and $15.50 target, exceeding the $14.89 average.

“NWH is a global owner and asset manager of healthcare real estate – essentially an alternative assets vehicle for exposure to rising healthcare expenditures. We believe NWH is well positioned to build on its strong asset base and robust growth track record, underpinned by: 1) macro trends driving consumers towards private-pay healthcare services; 2) opportunities to grow the asset base through acquisitions, market expansion and project development; and, 3) a growing, returns-enhancing asset management platform operated in concert with NWH’s co-investment structure,” he said.

* Canaccord Genuity’s Luke Hannan reduced his AutoCanada Inc. (ACQ-T) target to $60, remaining above the $59.28 average, from $65 with a “buy” rating.

“Q4/21 earnings for the US auto dealers saw little changed from Q3/21: new car inventory remains exceptionally scarce, while GPUs remain exceptionally robust,” he said. “An incremental positive from the quarter, in our view, was the broad strength in dealerships’ parts & service volumes, indicative of a continuing recovery in miles driven. We believe this will act as a tailwind for dealerships’ service departments in general in 2022.

“Following the results, we remain of the belief that AutoCanada, like other dealership groups, is poised to deliver another year of top-line and margin growth. We leave our ACQ estimates for Q4/21 and 2022 largely unchanged.”

* CIBC’s John Zamparo cut his Cronos Group Inc. (CRON-Q, CRON-T) target to US$4.50 from US$5 with a “neutral” rating, while Stifel’s W. Andrew Carter lowered his target to US$4 from US$6.50 with a “hold” recommendation and Canaccord’s Matt Bottomley reduced his target to $4.25 from $7 with a “sell” rating. The average is US$5.79.

“Although CRON’s current cash/investments represent $3.50 per share, given increased industry headwinds and a likely longer path to profitability, we believe the company is at increased risk of utilizing a higher proportion of these reserves to fund its near-to-medium-term operating losses,” said Mr. Bottomley. “As a result, should headwinds persist, we believe its cash reserves may become a less relevant basis for underpinning the tangible portion of its valuation.”

* RBC Dominion Securities’ Pammi Bir raised his Dream Industrial REIT (DIR.UN-T) target to $19.50 from $19 with an “outperform” rating. The average is $19.63.

“Post in-line, yet strong Q4 results, we remain constructive on DIR,” he said. “Against a backdrop of robust demand, low availability, and rising rents across its target markets, we believe the portfolio remains well-positioned to post another strong year of organic growth. As well, we’re pleased to see a growing focus on value-add development initiatives amid an intensely bid acquisition market. Coupled with the significant advances in DIR’s capital structure over the last several years, we see an attractive entry with the units hovering near NAV parity.”

* BMO Nesbitt Burns’ Jenny Ma raised her Dream Office REIT (D.UN-T) target to $27.50 from $25.50 with an “outperform” rating, while Scotia’s Mario Saric raised his target by $26.50 with a “sector perform” rating. The average is $26.86.

“Notwithstanding the discount valuation, we expect uncertainty in the office outlook to persist,” she said. “However, having passed the peak of the Omicron wave, there is optimism that return-to-office efforts can resume and offices can reopen with some permanence. Dream Office’s portfolio has significant exposure to the downtown Toronto office market (82 per cent).”

* Ms. Ma also increased her Morguard REIT (MRT.UN-T) target to $5.50 from $5 with an “underperform” rating. The average is $6.22.

“The rise of the Omicron variant in late Q4/21 caused operational challenges in two Ontario enclosed mall properties, with tenants required to close or operate at reduced capacity,” she said. “Notwithstanding the pandemic-induced challenges that appear transitory in nature, our investment thesis remains unchanged as the high volume of debt maturities should be restrictive, limiting financial flexibility, along with existing operational challenges in the portfolio.”

* Canaccord Genuity analyst Robert Young cut his Dye & Durham Ltd. (DND-T) target to $65 from $75, maintaining a “buy” rating. The average is $60.80.

“We recently hosted Dye & Durham management for a series of virtual marketing meetings. The dominant topic of discussion was the path to close on the acquisition of Link Group in Q3, which remains on track. Dye & Durham stock has sold off by 31 per cent since the Link Group acquisition announcement and continues to trade at a discount to peers. We believe that a successful close of Link offers upside while the company’s FCF profile, sticky revenue stream and geographic diversification are strengths in a market where investors seem to be biased against software with weak profitability,” said Mr. Young.

* After a “catalyst-rich” fourth quarter of 2021, National Bank Financial’s Matt Kornack raised his target for European Residential Real Estate Investment Trust (ERE.UN-T) to $5.60 from $5 with an “outperform” rating, while Desjardins Securiites’ Kyle Stanley increased his target to $6 from $5.50 with a “buy” rating and RBC’s Jimmy Shan bumped his target to $6 from $5.75 with an “outperform” rating. The average is $5.50.

“We were hard-pressed to see what catalyst could get this stock moving in light of relative trading vs. operational performance during the pandemic. ERES was the most resilient name in our apartment coverage universe but never attracted investor interest. Q4 provided catalysts in spades to change this dynamic and overall trajectory,” Mr. Kornack said. “Management delivered rent growth at the top of their 3-4-per-cent range, despite rent control and pandemic-related impediments, improved occupancy and grew distributions by 9 per cent (while maintaining a conservative payout ratio). Further, rent controls eased in 2022 and the abolition of landlord levies is a potential medium-term margin improvement story. ERES has a structural advantage over Canadian peers owing to its net lease attributes (tenants cover utilities) and modest common areas limiting its exposure to cost inflation. Needless to say, Q4 has reinvigorated our outlook on the name.”

* National Bank’s Mike Parkin trimmed his target for shares of Kinross Gold Corp. (K-T, KGC-N) to $11.50 from $12.50 with an “outperform” rating, while BoA’s Michael Jalonen cut his price objective to US$8.50 from US$8.85 with a “buy” recommendation. The average is $11.88.

“Kinross continues to boast a catalyst-rich schedule along with the potential for significant production growth and FCF generation through 2023 and continues to trade at a significant discount to peers, therefore we are maintaining Kinross as a Top Pick,” Mr. Parkin said.

* RBC’s Paul Quinn increased his target for Vancouver-based Mercer International Inc. (MERC-Q) target to US$16 from US$15, keeping an “outperform” rating, while TD Securities’ Sean Steuart raised his target to US$15 from US$12.50 with a “hold” rating.. The average is US$14.70.

“Mercer International Inc. reported Q4 results that were in line with our expectations after adjusting for insurance proceeds that came in earlier than our forecast,” Mr. Quinn said. “On the call, management was heavily focused on the company’s perceived trading discount vs. peers. In our view, share repurchases would be an effective way to capitalize on the disconnect while also signaling to investors that the Board also views the shares as undervalued. We still see value at Mercer.”

* Scotia’s Mark Neville reduced his target for shares of NFI Group Inc. (NFI-T) to $28, above the $26.56 average, from $31 with a “sector outperform” rating.

“While we have reasons to be encouraged – i.e., increased bid activity, the large number of recent order announcements, improvements in US public transit ridership, strong government support for EVs, progress made on ‘NFI Forward’ initiatives, etc. – we are moderating our near-term assumptions as supply chain issues remain a challenge – and are likely to be so through 2022,” he said.

“Importantly, NFI’s recent financing provides the company with additional time and flexibility – i.e., we still expect NFI to remain well within its covenants; liquidity is also strong, which should help support the dividend – ahead of the anticipated recovery, which should see profitability improve materially.”

* RBC’s Pammi Bir raised his SmartCentres REIT (SRU.UN-T) target to $35, exceeding the $33.63 average, from $34 with an “outperform” rating.

“A few puts & takes with Q4 results, but our constructive view is intact,” he said. “Although recurring NOI was below our forecast, the recovery in fundamentals is firmly underway, as occupancy inches up toward pre-COVID levels & bad debts fade. SRU’s value-creation initiatives also took a big step forward, with substantial fair value gains recognized in the mixed-use development program, with further gains likely ahead. Importantly, as project deliveries ramp up, we expect the earnings growth trajectory to accelerate. In short, we see good value on offer.”

* National Bank’s Adam Shine raised his target for TVA Group Inc. (TVA.B-T) to $3.50, matching the consensus, from $3.25 with a “sector perform” recommendation.

* National Bank’s Zachary Evershed bumped up his Uni-Select Inc. (UNS-T) to $31 from $27.50 with an “outperform” rating. Others making changes include: Desjardins Securities’ Benoit Poirier to $35 from $28 with a “buy” rating, TD Securities’ Daryl Young to $31 from $30 with a “buy” rating and BMO’s Jonathan Lamers to $35 from $30 with an “outperform” rating. The average is $31.17.

“We were impressed once again with UNS’s results, which confirmed the potential for value creation under the new management team. We are encouraged by management’s operational excellence and the improved leverage ratio, which opens the door for strategic acquisition opportunities. We believe the best is still to come as we see many opportunities to grow revenue and improve margins,” said Mr. Poirier.

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