Tuesday’s analyst upgrades and downgrades

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

National Bank Financial analyst Dan Payne is “hitting a pause” on Canadian oilfield services providers expecting a “lull” to earnings through at least the fourth quarter of the current fiscal year.

That led to him to lower his recommendation for four of the five sector participants in his coverage universe to neutral-equivalent “sector perform” recommendations on Tuesday from “outperform” previously.

“As we have previously referenced, we continue to await a stabilization of OFS activity levels to spur the next phase of the cycle, but given the constrained commodity backdrop and observations through reporting (both upstream & services), the wait remains,” said Mr. Payne. “While the macro backdrop remains relatively firm, but rangebound, with commodity prices stable in and around US$76 per barrel (2024 estimated strip) or down 3 per cent year-over-year and US$3.30 per one thousand cubic feet (2024e strip) or up 20 per cent year-over-year, upstream activity remains restrained, as the correlation of activity to commodity has decoupled, and budgets are oriented towards sustainable returns (approximately 80 per cent of upstream fixed to a return of capital orientation) with general impediments of capacity (i.e. access to labor & equipment).”

“While fourth quarter upstream budgets were nudged slightly higher by a factor of 5-10 per cent, which to a degree is a reflection of level-loading from Q3 to Q4 with only select examples of typical seasonal accelerations, in general, spending is projected down sequentially through Q4/24 by a factor of negative 10 per cent (with the typical slow-down in to the holiday season).”

Mr. Payne also emphasized quarter-to-date rig counts “continue to trough” and sees little evidence of a near-term re-inflection of spending. Accordingly, he thinks equipment utilization is “hovering around balance, with pricing & margins largely supported through quality of offerings and significance of cost synergies, but not enough to backfill for the lag to activity.”

That led to a “uniformly & tactically downshifting” in his stance until see his “visibility for a re-inflection to value is better supported, but which does not likely come until at least the new-year.”

“Looking back, as our coverage has contended with retrenching activity and earnings trends year-to-date, equity performance has been uneven (up 14 per cent since June 30th; down 33 per cent to up 39-per-cent range), while multiples have similarly trended (up 13 per cent since June 30th; down 5 per cent to up 30-per-cent range),” Mr. Payne said. “With that, multiples still trade at a 30-per-cent discount to historical, and the value opportunity for the longterm is by no means out of hand, but will require continued validation of a resilience & quality of earnings (i.e. ‘flat’ not ‘down) to support the continued re-rate (a veritable juxtaposition of the short-term vs. the long-term narrative).”

“That said, and as an emerging risk that could erode the value opportunity for the sector is, given the general underinvestment in equipment through this cycle, paired against the inflationary backdrop (maintenance cost inflation noted as high as 60-70 per cent vs. historical), is there an impending and high-cost refurbishment cycle to come?”

With his rating adjustments, Mr. Payne maintained his target prices for the companies in his coverage universe. They are:

• CES Energy Solutions Corp. (CEU-T) with a $4.75 target. The average on the Street is $4.94.
• Precision Drilling Corp. (PD-T) with a $135 target. Average: $133.07.
• Pason Systems Inc. (PSI-T) with a $20 target. Average: $17.07.
• Trican Well Service Ltd. (TCW-T) with a $6.75 target. Average: $6.

Mr. Payne already had a “sector perform” rating on Enerflex Ltd. (EFX-T) with a $10 target. The average target for those shares is $10.94.

“While our ratings have been neutralized, our pecking order remains unchanged, with a bias towards best oriented offerings (jurisdiction, entrenchment & quality of offering) that can provide the best insulation of returns, and which is almost universally exemplified across our high-quality coverage universe (few actual critiques to note),” he concluded. “We are rated Sector Perform across our universe, with our bias sitting as; PSI (bulletproof; with revenue expanding through anemic activity), TCW (best in class; with high-quality supporting entrenchment in a solid market), CEU (high-quality; where market share and optimization continues to bias returns), PD (insulated; with defensibility through diversification of exposures), EFX (re-setting; where recent results have begun to re-establish the foundation).”

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The outlook for credit is keeping Canadian bank stocks “in check” ahead of next week’s start of fourth-quarter earnings season in the sector, according to National Bank analyst Gabriel Dechaine.

“Despite the recent rally in bank stocks tied to the ‘peak rates’ theme, the group is still underperforming the S&P/TSX since the start of the year and since Q3/23 reporting season ended,” he said. “Negative EPS revisions have been the primary performance factor, with 2024E consensus EPS having been cut by 10 per cent since the start of the year. With the NIM outlook more stable and banks taking concrete actions to curb expense growth, the main source of forecast uncertainty is credit quality. On that front, 2024 consensus forecasts reflect a 37 bps loan loss ratio, which is in line with the historical average. Assuming a “modest” recessionary level of losses (i.e., 60 bps) would translate into EPS downside of nearly 15 per cent.

“Until investors gain confidence that a recession (modest or severe) can be avoided, the sector will remain valuation-constrained. Heading into the quarter, we are most cautious on TD and LB. TD has outperformed peers by 500 basis points since the end of Q3/23 reporting season, which we attribute largely to an active buyback program. However, we believe the bank could disappoint on NIM in the Canadian bank (as discussed in our OSFI report) and potentially NIX performance. Turning to LB, we noted that its demand deposit base fell by over 3 per cent through the first two months of fiscal Q4/23. Deposit outflow risk was one of the main drivers of our downgrade to Underperform [on Oct. 16].”

In a research report released Tuesday, Mr. Dechaine reduced his fourth-quarter and full-year 2024 financial estimates, expecting banks to “bolster their performing allowances in light of a deteriorating macro environment.”

“As we get nearer the 2025/2026 Canadian mortgage refinancing period, we believe upward pressure on bank performing provisions will intensify,” he said. “This year, banks have added $2.4-billion to performing provisions (5 basis points increase in Perf. ACL). Our Q4/23 estimates have been updated to assume a slightly sharper increase to these provisions.”

That led him to make three target price adjustments for stocks in the sector:

• Bank of Montreal (BMO-T, “sector perform”) to $120 from $123. The average on the Street is $127.57.
• Bank of Nova Scotia (BNS-T, “sector perform”) to $65 from $66. Average: $67.16.
• Royal Bank of Canada (RY-T, “outperform”) to $135 from $136. Average: $134.35.

He maintained his targets for these stocks:

• Canadian Imperial Bank of Commerce (CM-T, “sector perform”) at $62. Average: $60.45.
• Canadian Western Bank (CWB-T, “outperform”) at $33. Average: $32.64.
• Laurentian Bank of Canada (LB-T, “underperform”) at $27 (a low on the Street). Average: $33.55.
• Toronto-Dominion Bank (TD-T, “sector perform”) at $90. Average: $91.85.

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In his quarterly earnings preview titled As We Head Into Winter, Is It Really Spring for Canadian Bank Stocks?, Scotia Capital analyst Meny Grauman said his base case is no longer a “a soft landing scenario but a ‘higher for longer’ rate environment that will increasingly strain consumer finances.”

“Given the underperformance of Canadian banks so far this year, it is only natural to look for value in a sector that has historically always rewarded value buyers,” he said. “For our part, we do see upside to shares in a Goldilocks scenario where rates fall slowly but materially in response to easing of inflation pressures rather than a deep recession. This past week, that best-case scenario looked more likely as October U.S. CPI came in well below expectations and a host of economic indicators showed signs of a gradually slowing economy. But while it may look like springtime for bank stocks, we remain skeptical on that ideal outcome given the persistence of inflation over time. Despite a good week for the shares, we are not yet ready to declare victory on this front, especially in Canada where wage growth remains elevated and strong immigration flows and a tight housing market make a soft landing particularly tricky.”

Mr. Grauman is forecasting core cash earnings per share for the sector of $2.07 for the fourth quarter, which is a drop of 3 per cent sequentially and 7 per cent from the same period a year ago. He attributed the decline to a normalization in loan loss provisions.

“We are sticking to our sector call favouring lifecos over banks, despite the fact that lifeco outperformance looks stretched by historical measures and bank stocks begin to reverse recent losses,” he said. “As we saw during this past lifeco earnings season, the outlook for lifeco EPS growth continues to be well within their medium-term target ranges, boosted by higher long rates and strong excess capital generation driving buybacks and M&A optionality. Contrast that with our bank forecasts which call for an extended period of core EPS growth (and core ROEs) below the banks’ medium-term targets (and historical averages for that matter as well).

“Heading into the quarter we forecast some upward pressure on expenses from severance charges and typical elevated year-end spending. In normal times this should set the stocks up well for F2024, but we remain skeptical on the ability of banks to deliver material positive operating leverage next year and into F2025 given the slowing revenue environment and ongoing pressure on expenses from inflation and ongoing tech and regulatory spending needs.”

Mr. Grauman lowered his recommendation for National Bank of Canada (NA-T) to “sector perform” from “sector outperform” previously, citing continuing headwinds emerging from Cambodia-based ABA Bank and “a broader deceleration in overall earnings growth at what remains the bank with the leading ROE [return on equity] of the group.”

His target for National Bank shares to $97 from $105. The average on the Street is $101.22.

The analyst’s other target adjustments are:

• Bank of Montreal (BMO-T, “sector outperform”) to $135 from $143. The average on the Street is $127.57.
• Canadian Imperial Bank of Commerce (CM-T, “sector perform”) to $57 from $62. Average: $60.45.
• Canadian Western Bank (CWB-T, “sector perform”) at $31 from $32. Average: $32.64.
• EQB Inc. (EQB-T, “sector outperform”) to $99 from $100. Average: $95.75.
• Laurentian Bank of Canada (LB-T, “sector perform”) to $29 from $38. Average: $33.55.
• Royal Bank of Canada (RY-T, “outperform”) to $135 from $136. Average: $134.35.

Mr. Grauman maintained his $101 target for shares of Toronto-Dominion Bank (TD-T, “sector perform”). Average: $91.85.

“Heading into reporting we like the setup for BMO where we expect upside to synergy targets from Bank of the West,” he said. “We also like the setup for CM (looking past some likely severance charges), as well as for EQB and CWB among the smaller banks. Contrast that with a more cautious outlook for TD given the risk of a large charge tied to AML issue in the U.S. (we estimate something in the range of $1-billion), and NA where challenges at ABA remain front and centre, and an improvement in Financial Markets results may be underwhelming even after very weak Q.”

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In his small buy-side survey on sentiment surrounding BRP Inc. (DOO-T) ahead of the Nov. 30 release of its third-quarter fiscal 2024 financial result, Stifel analyst Martin Landry found the majority of investors are “on the sidelines irrelevant of valuation.”

“For deep consumer cyclical companies such as BRP, sometimes valuation parameters do not matter when investors believe we are at peak earnings,” he said. “We conducted a small survey with buy-side investors and 70 per cent of the respondents believe we are at the peak of BRP’s earnings cycle. In our view, this category of investors is the least likely to revisit BRP in the near-term and not focused on valuation. However, 30 per cent of respondents are more valuation focused and waiting for a better entry point. In our view, this latter category provides support to BRP’s shares and could be the first category of investors to revisit BRP.”

Accordingly, Mr. Landry thinks the current risk/reward proposition “interesting” for investors with a long-term view and recommends investors beginning building positions in the Valcourt, Que.-based recreational vehicle manufacturer.

“BRP’s valuation contracted significantly from its high in July 2020,” he said. “BRP trades at 8 times our FY25 EPS estimate, which is below the average forward P/E of 13 times since it became public. We see limited downside risk from current valuation levels and believe that over time the company’s valuation multiple will return to historical levels, providing investors with a strong tailwind.”

For the quarter, Mr. Landry is expecting revenue to slide 4 per cent year-over-year due to a “difficult” comparable to a period that saw significant inventory replenishment. He expects gross margins to expand by 0.8 per cent “driven by lower supply chain turbulence costs and a positive product mix as premium vehicles continue to outperform value models.” Overall, he’s projecting earnings per share of $2.99, down 18 per cent from fiscal 2023 and 12 cents below the consensus on the Street but up 128 per cent on a two-year stack basis.

“While Q3FY24 results are important, we expect investors will rapidly focus on calendar 2024,” he said. “Hence, management’s initial thoughts and color on next year could be key to BRP’s share performance for the coming months. In our view, key focus points for CY24 include: 1. Inventory levels. It will be important to monitor how BRP will manage the pockets of demand weaknesses and how flexible management can be with the pace of production; 2. Outlook for 3WVs. Demand in the motorcycle industry has been soft recently, which is likely to have spilled over to three-wheel vehicles such as the Can-Am Ryker and Spyder; 3. Promotional environment. The promotional activity appears to have accelerated. In addition, floor plan financing costs are rising and may weight on margins next year; 4. Marine segment disappointed with a 60-cent-per-share headwind to EPS guidance in CY23. We expect the CY23 production delays to turn into a 60-cent-per-share tailwind for CY24; 5. New electric motorcycles timing and potential impact on 2024 financial results.”

The analyst reiterated his “buy” rating and $150 target for BRP shares. The average is $136.11.

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Touting the “strong” returns from its large-scale Boardwalk project in Alberta and upside from its earlier-stage assets, Raymond James analyst David Quezada initiated coverage of Lithiumbank Resources Corp. (LBNK-X) with an “outperform” recommendation on Tuesday.

“With an expected return of 22 per cent in the Boardwalk PEA [preliminary economic assessment], we see material upside based on a variety of achievable enhancements bringing returns to as much as 30 per cent,” he said. “Further, we believe the valuation differential between LBNK and DLE peers illustrates upside in the name as resources are increasingly defined. We see near-term catalysts including the PEA at Park Place, updated PEA and brine testing at a large-scale pilot plant at Boardwalk.”

Mr. Quezada thinks the Calgary-based company is a potential takeout candidate, pointing to its “large, deliverable, resource with sustainability benefits in a secure jurisdiction.

“A forecasted shortfall in global lithium supply is driving both lithium industry players and those in the EV value chain to look to secure supply,” he said. “This has resulted in multiple transactions in the sector, some of which we believe are relevant to LBNK. In light of the company’s large land package, low-risk jurisdiction, and potentially significant resource, we consider LBNK to be highly attractive to potential suitors. While the unconventional Direct Lithium Extraction (DLE) technology LBNK will employ is admittedly less known, we see this being de-risked over time via LBNK’s pilot plant testing and projects being advanced by peers.”

Seeing “robust” economics coming from enhancements to its Boardwalk property and valuation upside to peers, he set a target of $3, exceeding the $2.75 average.

“Among the public competitors targeting DLE projects, we believe the most relevant is E3 Lithium (ETL-X), as it is also located in Alberta in the Leduc formation with many similarities in terms of land base and geology,” he said. “While E3′s stated resource is ostensibly larger than LBNK’s, we note the imminent resource estimate at Park Place and the company’s Saskatchewan properties should close this gap. While E3 has also been de-risked to a greater extent, there exists a wide gap between E3′s market cap of $264-million and LBNK’s of just $34-million representing a barometer for the upside in LithiumBank as its projects advance.”

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After “strong” third-quarter results and recent valuation pullback, U.S. cannabis multi-state operators now possess the “perfect backdrop” to take advantage of potential federal legislative changes south of the border, according to Eight Capital analyst Ty Collin.

“Cannabis is a popular political issue, and so we see strong incentives for the Biden administration to advance the Rescheduling process quickly, before election campaigning kicks into high gear in the New Year,” he said. “MSO shares have retreated from their original rally, creating an opportunity to buy this transformational and potentially near-term catalyst at valuations not far from historical troughs.”

“We continue to expect that the DEA will affirm HHS/FDA’s recommendation to move cannabis to Schedule III of the Controlled Substances Act, and we believe a decision could be forthcoming any week now considering the political circumstances (note that the Iowa caucuses are on January 15). After large-cap MSO valuations ran up to nearly 10 times NTM [next 12-month] EBITDA following the original news from HHS/FDA, the sector has since rated back down to 7.7 times, largely due to the recent turmoil in Congress and the perceived implications for cannabis banking reform. We think this provides investors who missed out on the initial Rescheduling rally with an opportunity to gain exposure to the much more significant catalyst of the DEA finalizing that recommendation and officially beginning the process of Rescheduling cannabis. As a reminder, we view a move to Schedule III as a transformational industry catalyst that would a) eliminate onerous 280E taxation for cannabis companies, b) simplify the pathway for future cannabis reforms like SAFER Banking, and c) represent a major legitimizing event for the industry that could encourage participation from new investors, strategic players, and financial institutions.”

Even without those changes, Mr. Collin said the recently completed earnings season displayed “stability and profitability” across his coverage universe, emphasizing cash flow gains are emerging.

“The majority of MSOs in our coverage either beat or fell in-line with consensus expectation,” he said. “Sales growth was largely modest/flat, but earnings generally improved and outperformed expectations as companies honed their focus on production efficiency, cost management, and prioritizing vertical sales. While consumer wallet pressures and competition continue to weigh on pricing, there are signs that this is finally starting to be offset by lower supply in certain markets as competitors dial back output or consolidate capacity. Next to a federal event like Rescheduling, we believe that earnings stability is one of the most important catalysts for bringing new investors into the cannabis sector, and we see Q3 results as a positive indication that this is materializing.”

“Many companies began the year with ambitious plans for improving cash flow, and in Q3 the results were on full display. GTII reported operating cash flow of $61-million and free cash flow of $7-million. VRNO reported free cash flow of $27-million and increased its FY free cash flow guidance from $65-$75-million to $72-$76-million. TRUL reported $93-million of operating cash flow and $87-million of free cash flow, driven by inventory reductions, cost efficiencies, and lower tax payments. CURA reported operating cash flow of $47-million and free cash flow of $33-million, helped by an $18-million reduction in inventories. AAWH and JUSH both reported their first-ever quarters of positive free cash flow. Cash flow generation is a critical success factor for MSOs given the high cost and limited availability of external capital. We continue to believe that companies generating material cash flows will be better positioned to invest in growth and will also have optionality to return value to investors through share buybacks and debt reduce.”

The analyst named a trio of top picks for the sector. They are:

• Verano Holdings Corp. (VRNO-NE) with a “buy” rating and $14 target. Average: US$8.10.
• Green Thumb Industries Inc. (GTII-CN) with a “buy” rating and $25 target. Average: $23.85.
• Curaleaf Holdings Inc. (CURA-CN) with a “buy” rating and $10 target. Average: $8.51.

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Stifel analyst Daryl Young initiated coverage of six “special situations” companies in a research report released Tuesday.

“This group of companies operate in separate and distinct industries but are loosely related given a shared focus on ‘growth-by-acquisition’ strategies,” he said. “The record rise in interest rates has turned the consolidation landscape on its head. We believe strategies solely exploiting cost of capital are no longer viable; synergies, organic growth, and “buying well” are once again the key M&A value drivers. Our top picks include FSV, CIGI and SPB, the first two reflecting top quartile returns/growth metrics, healthy balance sheets and resilient cash flows, and the latter a turn-around story at an attractive price.”

Mr. Young began coverage of these stocks:

* Boyd Group Services Inc. (BYD-T) with a “buy” rating and $295 target. The average on the Street is $282.38.

* Firstservice Corp. (FSV-N/FSV-T) with a “buy” rating and US$175 target. Average: US$159.98.

Analyst: “On the one hand, we like FirstService and Boyd, paying a premium valuation for premium track records. Both of these companies operate in recession resistant end markets and have the ability to self-fund their aggressive growth trajectories, irrespective of the current macro uncertainties. Furthermore, we believe both companies are poised for opportunistic M&A as the higher interest rate environment may finally level the playing field against private equity, which has been the dominant buyer in their respective markets in recent years.”

* CCL Industries Inc. (CCL.B-T) with a “hold” rating and $65 target. Average: $74.

Analyst: “: CCL Industries is a world class operator with a very strong capital allocation track record. However, it has in some ways become a victim of its own success, requiring increasing number and size of acquisitions to maintain its historical growth trajectory (resultantly, growth has been slowing in recent years). Additionally, its success in its core labelling operations has attracted significant private equity competition which has bid-up valuations for larger platform assets and forced it to look to adjacent verticals for M&A. Although we have a high-degree of confidence that management will execute an accretive transaction at some point, it’s not clear exactly what or when that will be and as such we are inclined to take a wait-and-see approach. CCL has an enviable balance sheet and is driving attractive returns through its steady stream of tuck-under acquisitions and opportunistic share buybacks. However, the shares are trading broadly in line with the imperfect peer group of packaging related comps and at a FCF yield of 6 per cent (2024 estimate), which we view as reasonable in the context of the current high interest rate environment.”

* Colliers International Group Inc. (CIGI-N/CIGI-T) with a “buy” rating and US$130 target. Average: US$117.17.

Analyst: “: Colliers remains one of our highest conviction long-term buy and hold ideas, underpinned by a best-in-class management team that has a repeatable formula for compounding value. However, the short-term results remain very challenging to predict, with the volatile interest rate environment continuing to delay a recovery of transaction services revenues and stalling investment management fund raising. Estimates have been re-set for 2023 and 2024, and CIGI’s more resilient and recurring revenue streams now account for over 70 per cent of the EBITDA mix (O&A and investment management). Additionally, at current trading valuation, we believe that the stock is largely discounting the cyclical risks, meaning investors are acquiring a relatively defensive professional services platform and asset manager, with a free option on a recovery in commercial real estate brokerage activity.”

* NFI Group Inc. (NFI-T) with a “hold” rating and $15 target. Average: $15.69.

Analyst: “From a macro perspective the outlook for NFI is very encouraging given record levels of government funding available for North American transit agencies to support fleet replacement and conversion to zero emission buses (“ZEBs”). Additionally, the competitive environment has markedly improved from 2019 when there was a looming fear of overcapacity with several new entrants to the North American market, versus today where the U.S. market has effectively been rationalized to a duopoly. However, we remain somewhat cautious on NFI’s near-term results as it remains in recovery and ramp-up phase and supply chains are still not 100 per cent healthy. In our view, significant forecast uncertainty remains related to 2024 guidance and we are inclined to take a wait-and-see approach to sustained improvement in operating results given that the shares have already re-set higher following NFI’s balance sheet restructuring.”

* Superior Plus Corp. (SPB-T) with a “buy” rating and $13 target. Average: $13.25.

Analyst: “Superior Plus also falls into the valuation bucket for us, partly due to its elevated leverage, but more so given its challenging execution track-record and lack-luster 10-year growth/returns profile. However, we are optimistic that its performance will improve from here given its transformative moves to create a pure-play energy distribution platform, underpinned by the Certarus growth engine, and with an all new C-suit in place. In our view, the business has been simplified, which should bring to light areas for improvement in execution. We don’t hold Superior’s cash flow stream in quite the same regard as dentistry or death-care services given the unpredictability of the weather on propane heating demand but it does still tick the box of resilient and recurring and the distribution model generates strong FCF, so we are relatively comfortable with SPB’s leverage at 3.6 times.”

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Concurrently, seeing an “industry valuation re-set underway,” Mr. Young assumed coverage of Dentalcorp Holdings Ltd. (DNTL-T) with a “buy” recommendation, seeing an “attractive entry point for [a] recession resistant platform.”

“We are attracted to Dentalcorp’s large and highly fragmented market opportunity, strong free cash flow profile as a capital-light services provider and the recession resistant characteristics of dentistry,” he said. “Furthermore, we believe Dentalcorp holds significant scarcity value as a scaled healthcare service platform, with a recurring patient load and proven repeatable low-risk acquisition model.”

Mr. Young trimmed the firm’s target for the Toronto-based company’s shares to $11.50 from $15 to reflect lower estimates, given a “moderating pace of M&A [is] overshadowing organic momentum.” The average on the Street is $11.25.

“Dentalcorp’s valuation has experienced a sharp negative reaction across 2022/2023, precipitated by the dramatic increase in interest rates.” he said. “In our view, this reflected investor’s indiscriminately selling balance sheet risk at the onset, combined with the rising opportunity cost of capital against the somewhat lower returns profile of the dental industry consolidation strategy in recent years; dentalcorp has an approximately 11-per-cent corporate-level ROIC [return on invested capital] calculated on EBITDA/IC. In the ultra-low rate environment, dental practices garnered premium valuations owing to the highly attractive four-wall practice economics, and utility-like cash flows, anchored in recession resistant healthcare spending (recall practices generate 22-per-cent EBITDA margins, with low capital intensity). However, over the past several quarters practice valuations have been re-setting lower, recalibrating Dentalcorp’s relative returns at attractive levels. We believe that the decline in practice valuations reflects reduced capacity to pay by associate dentists (still the largest acquirer of dental practices), combined with lower activity by Dentalcorp and the #2 consolidator, 123/Altima (which we surmise is focused on integration and possibly de-levering following the transformative deal with KKR in 2022, which was reportedly completed at more than 17 times EBITDA). In Q3/23 Dentalcorp paid an average of 5.9 times EBITDA for the practices it acquired, representing multiples 34 per cent below those paid in Q3/22.”

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In other analyst actions:

* Expecting acceptance of its proposed acquisition by majority shareholder Fairfax Financial Holdings Ltd., Raymond James’ Steve Hansen moved Farmers Edge Inc. (FDGE-T) to “market perform” from “underperform” with a 25-cent target to match the offer and average on the Street, up from 10 cents.

* Jefferies’ Owen Bennett raised his targets for Canopy Group Corp. (WEED-T. “hold”) to 73 cents from 59 cents and Cronos Group Inc. (CRON-T, “hold”) to $2.72 from $2.61. He cut his Aurora Cannabis Inc. (ACB-T, “hold”) target to 61 cents from 69 cents. The averages are $3.46, 81 cents and 91 cents, respectively.

* RBC’s Pammi Bir dropped his Dream Office REIT (D.UN-T) target to $10 from $15, which was the high on the Street, with a “sector perform” rating. The average is $9.49.

“Post Q3 results that were short of our call, we dialled back our outlook on D. On the one hand, operational progress is being made with committed occupancy trending higher and organic NOI growth at healthy levels. However, higher interest costs and a substantial uptick in leasing expenditures are putting pressure on our AFFOPU forecasts, while leverage is above our comfort zone,” said Mr. Bir.

* In response to its reduced expectations for Cobre Panama, CIBC’s Cosmos Chiu cut his Franco-Nevada Corp. (FNV-T) target to $250 from $258 with an “outperformer” rating. Other changes include: BMO’s Jackie Przybylowsk to $214 from $219 with an “outperform” rating, Canaccord Genuity’s Carey MacRury to $183 from $205 with a “hold” rating and Raymond James’ Brian MacArthur to US$162 from US$163 with an “outperform” rating. The average is $205.88.

* Canaccord Genuity’s Carey MacRury lowered his target for Pan American Silver Corp. (PAAS-Q, PAAS-T) to US$22 from US$23.50 with a “buy” rating. The average is US$21.81.