Inside the Market’s roundup of some of today’s key analyst actions
A pair of equity analysts on the Street downgraded Premium Brands Holdings Corp. (PBH-T) on Tuesday, seeing diminishing growth possibilities for investors following a strong share performance thus far in 2023.
“Given PBH’s shares are up 33 per cent year-to-date and near our target price, we see limited upside near-term,” said Stifel’s Martin Landry, who moved his recommendation to “hold” from “buy” previously.
“In our view, the stock is fully valued at current levels trading at 20 times forward earnings, in line with historical average. We would revisit our stance on a lower valuation or a sizable debt reduction through asset monetization.”
National Bank’s Vishal Shreedhar dropped his recommendation to “sector perform” from “outperform,” noting the Vancouver-based specialty food company’s gains this year are the highest in his coverage universe.
“Over the medium term, we continue to believe that PBH’s outlook will be supported by solid organic growth and pending EBITDA margin expansion (to 9.1 per cent in 2023 from 8.4 per cent in 2022); 2027 EBITDA margin target is 10 per cent,” he said.
Shares of Premium Brands actually fell 3.1 per cent on Monday following the premarket release of largely in-line second-quarter financial results and a reiteration of its full-year guidance. Revenue rose 7.3 per cent year-over-year to $1.631-billion, falling just short of the Street’s expectation of $1.655-billion, while adjusted diluted earnings per share fell 8 per cent to $1.26, beating the consensus by a penny.
“Premium Brands reported slightly better than expected Q2/23 results driven by higher than expected profitability due to selling price increases and lower cost inflation,” said Mr. Landry. “Adjusted EBITDA margins came-in at 9.3 per cent, up 75 basis points year-over-year and the highest level of the last five years. This strong margin did not flow through to the bottom line due to high interest expenses of $37.6 million, up 140 per cent year-over-year, which brought Adjusted EPS down 8 per cent year-over-year to $1.27.”
“PBH’s two segments performed very differently during Q2/23. Revenues declined in the Premium Food Distribution segment (a first in years) on selling price deflation and customer trade downs to discount grocery chains where PBH is less present. Revenues in the Specialty Food segment increased 14 per cent year-over-year, higher than our expectations of 10 per cent, on strong organic volume growth of 8.1 perf cent. PBH’s financial leverage remains high at 5 times TTM [trailing 12-month] EBITDA (including leases), leaving limited flexibility and reducing cash flows given the debt bears variable rates. Despite a pause on acquisitions, PBH’s leverage has not decreased in the last year and with M&A re-accelerating, leverage is likely to remain elevated.”
Making minor adjustments to his forecast, “reflecting the better profitability than expected in the Specialty Food segment offset by a decrease in margin expectations for the Distribution Segment,” Mr. Landry maintained a target price of $111 from Premium Brands shares, seeing them as “fairly valued.” The average target on the Street is $121.67, according to Refinitiv data.
“Moving to the sidelines,” Mr. Shreedhar kept a target of $121.
Elsewhere, analysts making target adjustments include:
* Desjardins Securities’ Chris Li to $124 from $110 with a “buy” rating.
“2Q results were solid, with strong volume and margin growth at Specialty Foods, with more to come,” said Mr. Li. “This was partly offset by macro-driven softness at PFD. While the shares will likely be range-bound in the near term given the strong year-to-date return (up 33 per cent, highest in our consumer coverage) and macro uncertainty, we remain constructive over the longer term, supported by PBH’s attractive organic growth, margin expansion and debt leverage reduction.”
* BMO’s Stephen MacLeod to $124 from $117 with an “outperform” rating.
“Premium Brands reported in-line Q2/23 results and reiterated 2023E guidance. Organic volume growth was within the 4-6-per-cent range, driven by Specialty Foods reflecting capacity expansion projects and new initiatives across protein, sandwich, and bakery ($1.5-billion invested last five years),” said Mr. MacLeod. “These factors, combined with the delayed pass-through of selling price increases and easing cost pressures, are expected to drive incremental y/y margin improvement through 2023E; also support accelerating the top line into 2024E. Acquisition pipeline remains robust.”
* RBC’s Sabahat Khan to $110 from $104 with a “sector perform” rating.
“While management indicated there should be some sequential improvement in results through H2 (our full-year forecasts have moved modestly higher), some challenges are expected to continue (e.g., reduced featuring of premium beef/seafood products in PFD, as well as demand pressure on premium seafood as consumers shift to the discount channel),” said Mr. Khan. “While the commodity pressures noted over the last 1-2 years are moderating (which should also improve Working Capital), we remain cautious on the full-year Adjusted EBITDA margin outlook (our forecast is below the low-end of the full-year guidance range).”
* CIBC’s John Zamparo to $110 from $114 with a “neutral” rating.
“Overall we consider PBH well positioned to grow EBITDA in 2024 from some normalization in conditions paired with capacity increases. However, we see consumer trade-down as an ongoing risk. Furthermore, we still expect some volatility in operations, and leverage limits the company’s ability to grow through M&A, which we believe is necessary to achieve the 2027 goals,” said Mr. Zamparo.
Raymond James analyst Stephen Boland thinks ECN Capital Corp.’s (ECN-T) second-quarter results were weak due to “industry and company-specific lapses,” however he believes the company is in “a stronger position” following the completion of its strategic review, prompting him to raise his rating for its shares to “outperform” from “market perform” previously.
After the bell on Monday, the Toronto-based firm announced a series of announcements alongside its quarterly report, including a plan to change its name to Triad Financial Services and collapse its parent company structure.
It has also into a strategic relationship with Skyline Champion Corp. (SKY-N), which will acquire a 19.9-per-cent ownership of ECN through a combination of equity and preferred shares for $185-million. The two will form a captive finance company that will be 51-per-cent owned by Skyline and 49-per-cent owned by Triad Financial.
Other announcements include an increased funding commitment from Blackstone to $1.1-billion and a further review of its RV/Marine business, which Mr. Boland expects to be sold.
“Although operationally this was a weaker quarter, we believe that ECN has dealt with the process issues and the interest rate exposure,” he said. “Second, new management has been put in place. More importantly, ECN now has two material strategic partners. Over time, SKY could provide a material amount of new originations. Secondly, Blackstone has demonstrated their commitment to ECN with an expanded funding facility. While more details will emerge over the next several months, these are positive signals regarding the operations of Triad. We believe the stock has drifted with this ongoing review.”
Mr. Boland raised his target by $1 to $4. The average is $3.21.
After the sale of the majority of its remaining pipe coating division to Tenaris S.A. (TS-N) brought in higher-than-expected proceeds of US$160-million, BMO’s John Gibson upgraded Mattr Infratech (MATR-T) to “outperform” from “market perform” previously.
“In our view, the sales proceeds are better than expected,” he said. “Additionally, MATR is just kicking off its $500 million Southeast Gateway project, with Q3/23 expected to represent the first full quarter of coating operations. Pending the sale closes around year-end, we expect the company should be sitting in a net cash position of more than $200 million, leaving it with significant flexibility to pursue additional organic and inorganic growth opportunities moving forward.”
In justifying his rating change, Mr. Gibson also emphasized its proforma businesses “continue show organic growth and margin improvement.”
“MATR’s remaining businesses include 1) Composite Technologies; and 2) Connection Technologies. Note that both of these segments have moved EBITDA margins into the low-20% range of late, and we expect further margin expansion as MATR reworks its manufacturing footprint in 2024/2025,” he said.
“After removing the PPS contribution, our 2024 EBITDA estimate moves to $198 million ($333 million prior). The biggest change in our valuation relates to better-than-expected proceeds from the PPG sale, particularly given the company will be able to retain ~six months of full pipe coating work from Southeast Gateway.”
He raised his target for Matr shares to $26 from $23. The average on the Street is $22.78.
National Bank Financial analyst Rupert Merer thinks Boralex Inc.’s (BLX-T) in-line results should be considered a “win” in a “messy” second quarter for the sector.
Shares of the Montreal-based renewable power producer jumped 6.2 per cent on Monday after it reported a profit attributable to shareholders of 19 cents per diluted share, up 10 cents during the same period ago, as revenue from energy sales and feed-in premiums saw notable gains.
“BLX reported proportionate generation of 1,861 GWh, slightly above our 1,816 GWh, driven by better wind generation of 1,484 GWh (NBF 1,422 GWh),” he said. “Proportionate revenue came in at $237-million versus our $249-million and prop. Adj. EBITDA came in at $143-million, directly in line with NBF (cons. $138-million). To start Q3, production out of France looks to be stronger than ever for the first half of Q3E, which should set BLX up well to deliver strong results if the weather continues.”
Mr. Merer now expects Boralex to enjoy organic growth from its core markets and sees funding flexibility moving forward.
”During the quarter, BLX won 420 MW of contracts in RFPs, including 380 MW of storage in Ontario and two wind projects in France totaling 40 MW. BLX added 369 MW (80 MW wind, 149 MW solar, 140 MW storage) to its development pipeline, further diversifying its future growth. Its total pipeline sits at 6.2 GW, which should see continued growth with RFPs,” he said. “With a 1.5 GW RFP in Quebec, second storage RFP in Ontario, 2.4 GW spread across 3 tenders (1.9 GW onshore wind) in France, and the UK launching RFPs for wind and solar. BLX noted the most recent French tender had an inflation-indexed €85/MWh price, and expects the pricing environment to remain strong, as does the demand for corporate PPAs. In New York, BLX expects to hear the status of its inflation adjustment request from the PSC following its October session.”
“BLX finished the quarter with over $300-million in available liquidity, leaving it well positioned to fund its organic growth for the next year without dilution. It could look to increase leverage at the corporate or project level, or engage in asset-recycling, in addition to its internally generated equity. BLX is also engaging in cost-cutting initiatives to boost cash flow, recently internalizing the O&M of 6 U.S. solar facilities representing 200 MW. BLX is taking a disciplined approach to M&A in what it views as a buyers market that is just outside the company’s strike zone currently.”
Citing “heightened volatility across the IPP sector,” he trimmed his target for Boralex shares by $1 to $43, maintaining an “outperform” recommendation. The average on the Street is $45.31.
Elsewhere, others making changes include:
* Scotia’s Justin Strong to $48 from $54 with a “sector outperform” rating.
“Shares rose to as high as 10 per cent on the day before giving about half of it back and ending essentially flat over the last two trading days. Despite this, we have taken the opportunity to revisit our target price to better align our build-up multiples with where we see its assets being valued by the market,” said Mr. Strong.
* iA Capital Markets’ Naji Baydoun to $46 from $48 with a “buy” rating.
“Overall, we continue to like BLX’s (1) highly contracted operations (approximately 90per cent contracted, 11-year weighted average contract term), (2) solid FCF/share growth (6-8 per cent per year, CAGR [compound annual growth rate] 2022-27), (3) potential upside from the Company’s development pipeline (more than 5.0GW of prospects), (4) stable dividend (2-per-cent yield, 30-50-per-cent long-term FCF payout), and (5) potential upside from M&A (excluded from estimates/valuation),” said Mr. Baydoun. “The recent pullback in the share price has created an attractive accumulation opportunity in the shares, particularly as BLX continues to execute well on its growth strategy and maintain targeted returns on projects. We are adjusting our price target to reflect lower financial estimates due to higher corporate and financing costs.”
* BMO’s Ben Pham to $43 from $45 with an “outperform” rating.
“BLX’s Q2/23 results highlighted generally in-line results as well as a big step-up in the secured growth pipeline (up 56 per cent) driven by recent storage wins in Ontario,” he said. “In turn, the market rewarded BLX with 6-per-cent rally (as high as 12 per cent on the day) on what we believe is improved confidence in delivering to 2025 guidance and also perhaps some reversion from 600 basis points underperformance over last month. With growth rising and attractive valuation (approximately 11 times EBITDA vs. 13 times peer average), we maintain our Outperform rating.”
* CIBC’s Mark Jarvi to $44 from $45 with an “outperformer” rating.
“Despite strong execution, upward movement in project returns and a stronger-than-average balance sheet (owing to proactive measures), BLX has been unable to avoid the downward pressure on renewable energy stocks. Ultimately, we believe that once the overly bearish sentiment on the sector eases, investors will be rewarded for owning BLX. We continue to see good growth opportunities across all its key markets and BLX remains a preferred name in the sector,” said Mr. Jarvi.
While Cargojet Inc. (CJT-T) displayed “solid cost control in a softer market” during its second quarter, National Bank Financial analyst Cameron Doerksen maintained a neutral stance on its shares.
“Although the current share price offers upside to our target, with the broader air freight market indicators still mostly negative and investor sentiment around air cargo-related stocks likely to remain challenging, we do not see a catalyst for the share price to move materially higher in the short-term,” he said.
On Monday, the Mississauga-based company reported total revenue of $210-million, down 15 per cent year-over-year due largely to fuel surchages and lower than both Mr. Doerksen’s $220-million estimate and the consensus forecast of $230-million. Reported adjusted earnings per share of 91 cents also missed expectations ($1.03 and 95 cents, respectively).
“The adjusted EBITDA margin improved to 35.4 per cent from 32.9 per cent a year ago (and above our 33.5-per-cent forecast),” said Mr. Doerksen. “This is a testament to management’s focus on cost controls, which have included the consolidation of some flights on the domestic network and the scrutiny of numerous costs that the company has incurred over the past several years to support the pandemic-driven growth in volumes. Importantly, management believes that these cost reductions are largely permanent, so margins will benefit as volume growth eventually returns.”
While emphasizing the company’s “muted” outlook for the second half of 2023, the analyst made modest increases to his earnings and revenue forecast through 2024, leading him to bump his target for Cargojet shares to $119 from $117 with a “sector perform” recommendation (unchanged). The average target is $144.33.
“We remain positive on Cargojet’s longer-term growth prospects as we do expect a resumption in secular growth in e-commerce volumes once the market fully re-sets from the unsustainable growth seen during the pandemic years,” said Mr. Doerksen. “We also expect Cargojet will continue to add contracted ACMI aircraft with DHL, which supports revenue growth in 2024 and beyond. Short-term demand trends for the air cargo industry are more challenging, but as was the case in Q2, we expect Cargojet to protect margins through cost controls and through the consolidation of flights within its domestic network.
“Valuation is also reasonable, with the stock currently trading at 7.7 times current year EV/EBITDA on our forecast, which is below the historical forward average for the stock at 11.4 times (which was skewed higher by lofty valuations during the pandemic period). However, current valuation is consistent with the air freight peer group average at 7.4 times forward EV/EBITDA, below UPS at 10.9 times, but more in line with FedEx at 7.7 times and well ahead of Air Transport Services Group (which has some similarities to CJT) at 4.4 times.”
Elsewhere, others making changes include:
* RBC’s Walter Spracklin to $197 from $202 with an “outperform” rating.
“CJT reported an inline Q2, but delivered on strong margins. While volume was impacted by macro, it comes largely as expected given commentary from other transports during Q2 reporting,” said Mr. Spracklin. “Focus therefore was on costs and here results were strong. Margin came in better both year-over-year and quarter-over-quarter, and 430bps ahead of our expectations, reflecting that in prior periods higher volumes were stretching CJT’s resources; and therefore encouraging that margins are sustainable in a normalized environment. Furthermore, this suggests CJT is well positioned to drive meaningful operating leverage when macro conditions inflect.”
* CIBC’s Kevin Chiang to $154 from $164 with an “outperformer” rating.
“CJT’s Q2 results reaffirm our view that its current quarterly EBITDA run rate in the low- to mid-$70-million range is a good floor. While demand trends are still soft in the domestic segment, trends look to have stabilized. The focus on the Q2 call though was CJT’s ability to manage costs and maintaining capex flexibility. The company’s cost-cutting initiatives also point to CJT benefitting from a higher level of earnings resiliency than it is given credit for. We continue to see CJT trading at trough-like multiples on trough-like earnings, which we would argue is a good risk/reward set-up for the stock. We have lowered our estimates over our forecast period as we build in increased conservatism given the lack of visibility on the freight cycle recovery and to account for adjustments to CJT’s fleet plans,” said Mr. Chiang.
While he called its Fruta del Norte mine in Ecuador a “high-quality asset backed by strong execution,” RBC Dominion Securities analyst Wayne Lam initiated coverage of Lundin Gold Inc. (LUG-T) with a “sector perform” rating, expressing “cautious on valuation given increased premium multiple vs peers.”
“Lundin Gold is a large-scale, low-cost producer backed by production from the high-grade Fruta del Norte (FDN) mine in Ecuador, which sits amongst the top mines globally by reserve grade,” he said. “Since first gold in late 2019, the mine has produced nearly 1.3 Moz at 10.6 g/t, with replacement of depletion since start-up demonstrated earlier this year. The current underground reserve of 5.0 Moz at 8.7 g/t Au is significantly greater than the average deposit on both size and grade, which has driven robust free cash flow generation as operations have outperformed expectations, with potential for further throughput expansion ahead.”
“We view Fruta del Norte as a world-class asset but believe the market has priced in a significant quality premium to peers and await additional results from nearmine/regional exploration, which could drive a future re-rating beyond our current estimates.”
Mr. Lam set a $19 target. The average target is $20.43.
In other analyst actions:
* RBC’s Andrew Wong raised his Ag Growth International Inc. (AFN-T) target to $75 from $70, keeping an “outperform” rating. The average is $77.05.
“We are upbeat on Ag Growth heading into H2/23 as the company continues to execute on operational improvement initiatives, lifting the expected margin profile and driving organic growth while also benefiting from favourable ag tailwinds. We continue to view shares as undervalued and see potential for a rerate, driven by revenue growth, margin expansion, improved cash flow, and deleveraging,” said Mr. Wong.
“We have reduced our target ...after lowering our target multiple in light of moderating organic growth in 2H23,” said Mr. Stanley. “Despite some near-term supply headwinds impacting fundamentals across the Sun Belt, we expect BSR to generate 7-per-cent annualized FFOPU [funds from operations per unit] growth through 2025 while trading at a 1.5 turn lower FFO multiple and deep NAV discount (35 per cent) vs U.S. Sun Belt peers (21-per-cent NAV discount).”
* Scotia Capital’s Orest Wowkodaw raised his Cameco Corp. (CCO-T) target to $54 from $48 with a “sector outperform” rating. The average is $50.14.
“Overall, TECK and CCO are our top picks, while FM and CS remain our other preferred picks for Cu exposure; we also recommend CIA, ERO, FCX, HBM, and IVN. Among the developers, we recommend IE. Among the royalties, we prefer ECOR. Our Sector Outperform-rated equities currently have an attractive 12-month average implied return of 26 per cent,” he said.
* Barclays’ J. David Anderson increased his Computer Modelling Group Ltd. (CMG-T) target by $1 to $7 with an “underweight” recommendation. The average is $8.30.
“Both Pason and CMG reported 2Q last week, with the former posting revenue per industry day at near-record levels, and the latter with EBITDA well above expectations (with 22 per cent of software sales from energy transition), a sign that operators are continuing to spend on drilling data (PSI) and reservoir modeling (CMG),” said Mr. Anderson.
* RBC’s Pammi Bir cut his target for Crombie REIT (CRR.UN-T) to $17 from $18, remaining above the $16.89 average, with a “sector perform” rating.
“On the whole, our stable outlook for Crombie is unchanged post largely in-line results,” said Mr. Bir. “Operationally, we expect its defensive, grocery anchored portfolio to continue putting up low-single-digit-% organic NOI growth. Still, we trimmed our earnings outlook on development related drag and higher rates. We note the units have significantly lagged (down 14 per cent) the REIT sector (down 3 per cent) since mid-May. While moderating growth and macro headwinds might explain some of the weakness, we think the current implied cap may appeal to long-term capital.”
* CIBC’s Scott Fletcher moved his DRI Healthcare Trust (DHT.UN-T) target to $20, above the $18.51 average, from $17 with an “outperformer” rating.
* Credit Suisse’s Andrew Kuske cut his Enbridge Inc. (ENB-T) target to $52 from $54 with a “neutral” rating. The average is $57.28.
“Enbridge Inc. (ENB) reported results on August 4th that generally beat expectations with an underlying strength and resiliency across the franchise,” he said. “Unlike a few other energy infrastructure companies, ENB tends to face far fewer existential issues and is focused on core network growth across the franchise. Very simply, the large scale of ENB’s network provides relatively low-risk compounding po”tential – albeit a widening divide exists in the growth rates of the two major businesses lines (i.e. Liquids and Natural Gas related activities). Moreover, ENB avoided much of the near-term volumetric issues mostly faced by Western Canadian exposed regional names given wildfire impacts. From our view, that relatively clean and low-risk print is positive, however, the growth-risk-valuation trinity is a natural debate versus both major peer groups (Canadian Infrastructure and the broader North American Energy Infrastructure names).”
“ENB is well positioned with a somewhat dichotomous business with one half facing better growth prospects and the other half less growth potential, in our view. The size and scale of the asset base across North America are helpful factors for network benefits with relatively low-risk and high returning prospects with duration.”
* Scotia Capital’s Kevin Krishnaratne lowered his Enthusiast Gaming Holdings Inc. (EGLX-T) target to $3, below the $3.34 average, from $3.25 with a “sector outperform” rating.
“Enthusiast Gaming continues to focus on improving its revenue mix towards higher margin businesses with a view to turn Adj. EBITDA profitable exiting Q4 and into 2024,” he said. “Following Q2 results that looked similar to those posted in Q1, we look forward to an uptick in trends in Q3 (NFL TNG should drive a q/q increase in Brand Solutions revenue) and a more meaningful jump in revenue in Q4 on seasonality. We model Adj. EBITDA profitability being reached in Q4. Pursuant to changes to our forecast that now call for a lower pace of Brand Solutions revenue for the year on conservatism (still a pronounced jump in 2H vs. 1H, but there could be more upside), our target moves to $3.00.”
* BMO’s Michael Markidis cut his Granite REIT (GRT.UN-T) target to $91 from $98, maintaining an “outperform” rating. The average is $95.50.
“We believe the adjustment appropriately reflects (1) the FFOPU shortfall and (2) our more conservative assumptions with respect to the lease-up of recently developed/acquired space. Our revised FFOPU [funds from operations per unit] for 2023 sits at the lower end of GRT’s guidance range ($4.90-5.05) yet still implies 11-per-cent year-over-year growth. Leasing announcements in the back half of this year could drive upside to our outlook (up 6 per cent year-over-year) for 2024,” said Mr. Markidis.
* CIBC’s Nik Priebe increased his target for Guardian Capital Group Ltd. (GCG-T, GCG.A-T) shares to $51 from $49 with an “outperformer” rating, while Scotia’s Phil Hardie cut his target for its A-class shares to $56 from $58 with a “sector outperform” rating.
“Second-quarter operating earnings fell short of expectations; however, we believe the results demonstrate management’s commitment to invest and deploy excess capital to accelerate its growth strategy and create shareholder value. Guardian deployed capital through 1) buying back shares, 2) increasing its ownership stake in an existing U.S. subsidiary, and 3) ‘seeding’ newer investment strategies to help accelerate organic growth opportunities,” said Mr. Hardie. “The amount of capital deployed was relatively measured but likely indicative of management’s intention to balance priorities to invest in organic and inorganic growth opportunities to expand the business and return excess capital to shareholders. Significant embedded optionality makes Guardian Capital an attractive core holding for value-oriented investors, in our view. Guardian’s sizable corporate investment portfolio provides a high degree of optionality for value creation that includes levers ranging from M&A strategies to share buybacks, which could potentially double the share price over the next few years.”
* RBC’s Jimmy Shan lowered his Nexus Industrial REIT (NXR.UN-T) target to $10.50 from $11 with a “sector perform” rating. Other changes include: Echelon Partners’ David Chrystal to $11.50 from $12 with a “buy” rating, Scotia Capital’s Himanshu Gupta to $11 from $11.50 with a “sector outperform” rating, Desjardins Securities’ Kyle Stanley to $11 from $12 with a “buy” rating and iA Capital Markets’ Gaurav Mathur to $13 from $14 with a “strong buy” rating. The average is $11.43.
“The REIT has a long growth runway with rental rate increases that are much higher than its publicly listed peer set in the Canadian industrial sector,” said Mr. Mathur. “At current levels, the Stock Provides an Opportunity to Generate Alpha. From a valuation perspective, we have trimmed our NOI, FFO/unit, and AFFO/unit estimates which incorporate the slowdown in acquisitions and focus on debt repayments.”
* Scotia’s Justin Strong cut his Northland Power Inc. (NPI-T) target to $35 from $37.50 with a “sector outperform” rating. The average is $37.17.
* Raymond James’ Steven Li dropped his Optiva Inc. (OPT-T) target to $8 from $20 with a “market perform” rating. The average is $21.
“Weak 2Q on additional customer exits and license lumpiness. Bookings were sluggish quarter-over-quarter and year-over-year. We have adjusted our model and target lower,” he said.
* Scotia’s Himanshu Gupta trimmed his PRO REIT (PRV.UN-T) target to $7 from $7.25, remaining above the $6.46 average, with a “sector perform” rating.
* Scotia’s Mario Saric trimmed his SmartCentres REIT (SRU.UN-T) target to $30 from $30.50 with a “sector peform” rating. The average is $28.94.
* CIBC’s Hamir Patel raised his Stella-Jones Inc. (SJ-T) target to $72 from $69 with a “neutral” rating. The average is $77.
“With the shares trading close to their all-time highs, we recently reduced our rating on StellaJones to Neutral,” he said. “While SJ may benefit from potential for a near-term tuck-in acquisition in ties, the story is looking increasingly catalyst-lite in our view, with estimates already reflecting robust pole demand growth through 2024, and limited prospects for material earnings growth in ties and res lumber from current levels. We estimate remaining M&A prospects in poles/ties have revenues only totaling US$150-million (approximately 6 per cent of 2023 sales), a pipeline that will likely be spread over the next few years.”
* Jefferies’ Owen Bennett bumped his Terrascend Corp. (TSND-T) target to $5.40 from $5.20, above the $3.12 average, with a “buy” rating.