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

Pointing to the impact of rising interest rates, National Bank Financial analyst Matt Kornack and Tal Woolley lowered their target prices for Canadian real estate equities by an average of 15 per cent on Tuesday ahead of the start of third-quarter earnings season for the sector.

“This was not uniform across asset classes: we significantly reduced targets for Office (down 40 per cent on average),” the said.

“We revised our FFO [funds from operations] forecasts 5 per cent lower for 2024: issuers with elevated variable debt were disproportionately impacted. Our forecasted cap rates increased an average of 31 basis points (again, office is an outlier at up 62 basis points), driving NAV [net asset value] estimates down 12 per cent. Our price targets follow suit, down 15 per cent.”

The analysts noted seniors and healthcare REITS are currently showing the highest average return for investors.

“Mean returns for seniors housing/healthcare are (up 32 per cent) followed by multi-family (up 28 per cent), industrial (up 26 per cent) and retail (up 21 per cent),” they said. “While the expected mean return for seniors/healthcare is highest, this is due to some target prices being set on non-fundamental factors (e.g., a potential bid for NWH from its former CEO), inflating the average. Across all asset classes, limited new supply expectations and immigration-fuelled demand for space is positively impacting all asset classes (excluding office), resulting in high occupancy and improving rents. Unfortunately, the spread offered by implied cap rates over marginal borrowing costs is not high historically, making a challenging market for equities.”

The analysts made one rating change with Mr. Kornack downgrading True North Commercial REIT (TNT.UN-T) to “underperform” from “sector perform” previously, citing a “challenged operating/financial backdrop” and emphasizing a deterioration in office REIT valuations.

“Underlying this is a belief that there should be a risk premium to owning non-core and suburban properties that doesn’t currently exist relative to peers,” he said. “We believe TNT’s occupancy is elevated relative to the broader suburban office market and the REIT’s current leverage levels present an earnings and refinancing challenge as lenders are pulling back on office financing availability and LTVs.

“TNT reported Q2 occupancy of 89 per cent (which has continued to trend lower) with sales of vacant buildings propping up headline figures. Having said this, market reports show the national vacancy of suburban office in the low-80-per-cent range; thus, further deterioration is possible. Capital investment will be required to maintain occupancy, but we anticipate this to come at a significant cost to the REIT (by way of TI’s/free rent) which will further pressure forward earnings.”

Mr. Kornack reduced his target for True North units by $1 to $1.25. The average target on the Street is $2.55, according to Refinitiv data.

“A return to a more positive bias on the name would require a more constructive operating environment and a shift in investor/ lender sentiment around office,” he said.

For their “Focus List” ideas, the analysts made these target changes:

Seniors Housing/Healthcare

Sienna Senior Living Inc. (SIA-T) to $13 from $13.50. with an “outperform” rating. The average is $13.71.

Mr. Woolley: “Our highest total return to target within our seniors housing/healthcare coverage is Sienna, following a quarter where shares performed weakly. We see SIA’s retirement platform to continue driving occupancy growth in line with its goal of 88-90 per cent. Recent bullish intra-quarter occupancy updates from CSH supports this belief. SIA’s high exposure to LTC has likely diminished investor enthusiasm given its need to redevelop its Class C beds that will require meaningful capital. We do note, however, that SIA remains confident that Ontario government development and operating funding will improve (and any announcement along those lines should help shares). We also note that SIA retains optionality to exit LTC too, given the willing buyers that have been transacting in the market. In the meantime, investors will earn an 9-per-cent dividend yield on the back of improving NOI margins due to cost saving initiatives deployed in H1 2023.”


Minto Apartment REIT (MI.UN-T) to $17.25 from $18 with an “outperform” rating. The average is $18.83.

Mr. Kornack: “Apartment REITs with exposure to densely populated urban cores have benefitted from outsized increases in market rents over the past two years and a lagging supply response. Low land availability in these markets is supportive of elevated values and deep discounts to replacement cost are generating asset sales with negative spreads to financing costs as investors increasingly price sustained above inflationary rent growth. We favour MI and CAR given their substantial exposure these core urban markets. Minto also offers investors a higher going-in yield with an improving earnings growth trajectory as it terms out its balance sheet. Considering Minto’s relative asset quality and growth prospects, we believe current trading levels represent a valuation mismatch given their current mid-5-per-cent implied cap rate and 14 times FFO/u multiple.”


Dream Industrial REIT (DIR.UN-T) to $16 from $17.50. with an “outperform” rating. The average is $17.08.

Mr. Kornack: “Our highest total return to target for the industrial segment goes to Dream Industrial as the REIT remains relatively inexpensive vs. its asset exposure. On the latter, DIR is the best way to get exposure to the strong GTA/GMA industrial markets with its Alberta portfolio now offering a unique exposure to accelerating market rent growth. We view it as the closest proxy for an urban smaller-bay Canadian play with a portfolio primarily located in higher barrier to entry markets. DIR still has a strong MTM opportunity providing the highest organic growth profile across the Canadian peer set with a favourable lease maturity profile over the next few years.”


RioCan REIT (REI.UN-T) to $21 from $22 with an “outperform” rating. The average is $23.94.

Mr. Woolley: “RioCan is our highest total return idea within the retail asset class. We like REI for its above average SPNOI growth in comparison to peers offered at a cheaper valuation. We see NOI growth driven by healthy SPNOI growth in the 3 per cent, along with significant development completions that continue to add a tailwind to NOI. REI should also see leverage ratio relief with developments coming online and the fact that development spending should roughly equal development completions in the coming years. REI is also set to liberate up to $860-million in proceeds through condo and townhouse sales over the next three years, which we see providing optionality and likely further de-risking the balance sheet if development spending is curtailed in the current environment.”


Allied Properties REIT (AP.UN-T) to $19 from $24 with an “outperform” rating. The average is $25.73.

Mr. Kornack: “Our highest total return to target in the office sector is Allied, given the REIT’s relative asset quality (including an exceptional urban footprint) and capital structure vs. an increasingly tempting valuation. Given an ongoing flight to quality where tenants are prioritizing quality, built-out space with access to amenities, we believe Allied is best positioned despite broader office turbulence. Additionally, their above-noted ultra-core urban portfolio provides for a value floor as it would appeal to investors with a long-term view on the Canadian market and particularly its top cities. Allied trades at a depressed valuation of 7 times FFO, a 30-plus-per-cent discount to NAV and a 9-per-cent cap rate, which we think provides enough of a cushion to own the name at current levels.”


H&R REIT (HR.UN-T) to $9.75 from $11.25 with a “sector perform” rating. The average is $12.92.

Mr. Kornack: “Within the diversified group, H&R remains our top focus idea, driven by earnings growth exposure to multi-family assets in growing U.S. markets and industrial development lease-up around the GTA combined with a better balance sheet and limited office maturities. Despite recent distractions around the management team, investors have likely moved to the sidelines on the name given a complete freeze in transaction markets, which will delay the move away from a diversified ownership structure. While we think H&R should trade at a narrower discount, it may take more time than we originally expected to close this gap.”

Special Situations

Flagship Communities REIT (MHC.U-T) to US$19.50 from US$21 with an “outperform” rating. The average is US$21.25.

Mr. Woolley: “In H2 2023, MHC’s operations exceeded our expectations by printing SPNOI growth of 6.3 per cent and 9.4 per cent in Q1 and Q2, respectively. We anticipate much of the same steady growth to be on display during Q3 as MHC captures the lease-up of their communities (84.9 per cent occupied as of Q2 reporting). Supporting the asset class is the countercyclical nature of demand for affordable housing, barriers to adding MHC supply and higher costing alternative rental housing options (costing $200-400 per month more than MHC product). In addition, the rapid ascent of mortgage rates further places these alternatives out of reach. Year-to-date, MHC has deployed $44-millipn to acquisitions as it is a more accretive route than some of our other M&A stories covered. While we believe there could be slower pace in H2, we see the likelihood of additional deals increasing as rates begin to settle in place and buyers and sellers adjust their pricing to account.”


Elsewhere, TD Securities’ Sam Damiani and Jonathan Kelcher lowered their targets for Canadian real estate equities by an average of 9 per cent to “reflect recent increases in prevailing and forecast long-term government bond yields, a more challenging capital-raising environment, and heightened geopolitical risks.”

“With more widespread expectations of a ‘higher-for-longer’ interest rate environment, we foresee management commentary leaning more to the defensive this quarter,” they said. “This could encompass a heightened focus on liquidity generation and/or a possible tempering of growth capex/objectives (though the GST/PST rebates for rental residential construction are an offset). We will watch for any changes in leasing momentum, along with the transaction market and capital recycling/disposition programs.

“Since we published our 2025 estimates and forecast balance-sheet debt metrics, the outlook for interest rates has once again risen, which will likely affect our interest cost assumptions and some SPNOI forecasts, with business/consumer spending power being more impacted. Over Q3/23 earnings season, we believe both consensus NAVs and earnings forecasts have some downside potential.”

The analysts added: “We continue to prefer the Industrial, Residential, and Retail property sectors. Our ACTION LIST BUY-rated names are CAPREIT [$59 target, down from $62], First Capital REIT [$16 target, down from $18) and Granite REIT [$86 target, down from $95].”


Scotia Capital analyst Robert Hope sees Gibson Energy Inc. (GEI-T) as “a name with limited downside risk and potential for upside in both [his] estimates and valuation.”

In a research note released Tuesday titled What’s Not to Like?, he upgraded the Calgary-based company to “sector outperform” from “sector perform” previously, believing it “exhibits many of the characteristics of the companies that are outperforming in this market.”

“We believe investors should like Gibson’s: 1) strong balance sheet and easy-to-execute funding plan that includes the expectation of debt repayments in 2024/2025, 2) low payout ratio and very secure 7.5-per-cent dividend yield, and 3) improved growth outlook. It appears to us that sentiment is shifting more positive on this name, which could accelerate if the duration of the contracts at its South Texas Gateway Terminal (STGT) are extended, which we expect in the coming months,” he said. “Looking at valuation, we see Gibson trading at a sizable discount to its Canadian peers.”

He raised his target to $25, exceeding the average on the Street of $24.85, from $24 previously.

In a parallel research report tiled Canadian vs. U.S. Midstream — Can the Divergence Continue?, Mr. Hope made a trio of target price reductions:

  • Enbridge Inc. (ENB-T) to $50 from $52. Average: $54.69.
  • Pembina Pipeline Corp. (PPL-T) to $48 from $49. Average: $50.17.
  • TC Energy Corp. (TRP-T) to $54 from $55. Average: $52.41.

“North American midstream stocks have seen sharply divergent returns this year, with our U.S. coverage seeing a 9-per-cent median price increase, versus negative 12 per cent for the Canadian group,” he said. “We see a variety of factors driving this including: 1) strong commodity prices being a tailwind for the U.S. group, 2) perceptions of an M&A bid in U.S. names, 3) company-specific issues dragging down Canadian performance, and 4) rising rates and the amount of leverage. Broadly speaking, the trading of the U.S. group has been more correlated with energy pricing given its higher proportion of commodity and volume sensitive cash flows, whereas the more defensive Canadian group is trading like an interest sensitive sector. With tax loss selling and limited near-term catalysts, there could be some further Canadian underperformance as we end the year. Looking to 2024, we believe the two groups should trade more in-line with each other, and overall, we have a positive outlook for the group.”

Mr. Hope named Keyera Corp. (KEY-T, “sector outperform” and unchanged $38 target) his favourite pipeline and midstream stock in Canada.

“We believe it is well positioned to benefit from increasing natural gas and natural gas liquids (NGL) volume growth in Western Canada as LNG exports ramp up,” he said. “We see cash flows growing as returns improve at existing assets, all the while leverage moves down.”


Ahead of earnings season for Canadian telecommunications companies, Canaccord Genuity analyst Aravinda Galappatthige upgraded BCE Inc. (BCE-T) to “buy” from “hold” with a $54 target, down from $56 and below the $59.08 average on the Street.

He also made these target changes:

  • Cogeco Communications Inc. (CCA-T, “hold”) to $65 from $70. The average is $76.57.
  • Quebecor Inc. (QBR.B-T, “buy”) to $33 from $35. Average: $38.42.
  • Rogers Communications Inc. (RCI.B-T, “buy”) to $65 from $72. Average: $72.10.
  • Telus Corp. (T-T, “buy”) to $26 from $30. Average: $27.75.


With the consumer backdrop “softening,” Citi analyst Tyler Radke lowered his estimates and target price for shares of Shopify Inc. (SHOP-N, SHOP-T) ahead of the release of its third-quarter financial results on Nov. 2.

“With uncertainty around interest rate hikes and cracks beginning to form in the U.S. consumer health profile, we are cautious on SHOP heading into FQ3 earnings due to its sensitivity to consumer discretionary budgets and higher SMB [small and medium-sized business] exposure,” he said. “We remain positive on the ability for SHOP to benefit from long-term consolidation in front office/commerce software and as e-commerce steadily gains more wallet share of overall retail spending. With valuation still near the top of its peer group range and a tougher macro setup we maintain our Neutral rating.”

Pointing to “softer” U.S. retail spending, “weaker” e-commerce engagement and a “moderation” in web traffic during the quarter, Mr. Radke lowered his quarterly gross merchandise and payment volume projections. That led him to reduce his Merchant Solutions and overall revenue growth estimates.

“Though business formation statistics from the Census Bureau in July-September appeared resilient, we saw several third-party data points within the Sept. Q soften that makes us incrementally cautious,” he said. “First, we note weaker Citi credit card data on U.S. Retail categories with declines worsening on easier comps .... U.S. e-commerce app downloads deteriorated and declined 17 per cent year-over-yeaar in August. Finally, we note softer domain growth on Shopify Plus (14 per cent year-over-year vs. 20 per cent year-over-year in 1H). Recent checks with large e-commerce companies at ecosystem partner Braze’s Forge customer conference, Braze (BRZE-Q): Forge 2023 Recap: Incremental Conviction on Braze Momentum, revealed a strong focus by brands on customer retention, which could suggest consumers are being more selective in purchase decisions.

“Shopify’s low-20′s revenue growth guidance for 3Q (with 3-4 pts. of headwinds due to the Deliverr sale to Flexport) seems achievable despite the moderation seen in online web traffic signals. Our expectations for 3Q GMV is $54.2-billion growing at 17.5 per cent vs. consensus of $54.4-billion growing at 17.9 per cent and we expect a smaller magnitude of upside vs. the last two Qs. We believe management will guide to a few points of deceleration for 4Q GMV and revenue growth.”

Citing “weaker consumer spending outlook, which seems to be trickling down into more moderate merchant count growth (Shopify Plus and overall) and weaker engagement on the Shopify commerce platform than prior quarters,” Mr. Radke lowered his third-quarter earnings per share projection by 1 US cent to 10 US cents. His full-year 2024 and 2025 estimates fell to 69 US cents and 97 US cents, respectively, from 70 US cents and 99 US cents.

“We believe the weaker outlook will extend to 4Q and 2024, which is reflected in the reduction of our top line estimates,” he said.

Keeping a “neutral” rating for Shopify shares, he lowered his target to US$62 from US$77. The average on the Street is US$66.14.

“With valuation still near the top of its peer group range and a tougher macro setup we maintain our Neutral rating,” he said. “We slightly lower our top-line projections with a 4-year revenue CAGR [compound annual growth rate] to FY27 of 22.0 per cent (down from 22.6 per cent previously) and a FY27 non-GAAP operating margin of 22 per cent, which, with our updated regression variables, reduces our TP.”


RBC Dominion Securities analyst Geoffrey Kwan named Element Fleet Management Corp. (EFN-T) his “high-conviction best idea” heading into earnings season for Canadian diversified financial companies, believing it is mispriced and a recent share price decline is “unwarranted.”

“EFN trades at just 12.9 times 2024 estimated P/E [price to earnings] and 10-per-cent 2024 estimated FCF [free cash flow] yield, which we think is undervalued given LTM [last 12-month] EPS and FCF/share growth of 26 per cent and 28 per cent, respectively, and we think EFN can deliver a more than 16-per-cent EPS CAGR [compound annual growth rate] over the next 5-years, helped by factors like significant growth opportunities (OEM production normalizing; self-managed fleets; continued market share wins; crossselling more fleet services to existing clients; mega fleets) and substantially lower credit and other risks vs. other Financials,” he said. “We think the UAW strike impact as likely immaterial as EFN’s customers still need substantial vehicle replacements given the OEM production shortage over the past 2+ years. EFN has very strong fundamentals (new customer wins, cross-selling existing clients additional fleet services); strong defensive attributes (recession unlikely to be a headwind; positively benefits from high inflation; low interest rate risk); potential catalysts (e.g., substantial return of capital likely exiting 2024); and very attractive valuation.”

In a research report released Tuesday, Mr. Kwan maintained his “outperform” rating and $30 target for shares of Element Fleet, exceeding the $25.69 average on the Street.

However, he made several target changes to stocks in his coverage universe, including his second- and third-ranked stocks. They are:

No. 2: Brookfield Asset Management Ltd. (BAM-N/BAM-T, “outperform”) to US$41 from US$45. Average: US$37.24.

Mr. Kwan: “Trading at 19 times 2024 estimated Fee Related Earnings (FRE), while we believe FRE multiple expansion is likely (1 times FRE = approximately US$1.50, or 5 per cent to BAM’s share price), we think significant valuation upside is likely to be driven by FRE growth as BAM is fundraising for numerous Flagship (Global Transition, Real Estate, Opportunistic Credit, Direct Lending) and non-Flagship funds.”

No. 3: Brookfield Corp. (BN-N/BN-T, “outperform”) to US$43 from US$48. Average: US$47.36.

Mr. Kwan: “BN’s shares trade at a substantial 31-per-cent discount to NAV. While investor concern regarding Real Estate is understandable, BN’s share price implies zero value for its Real Estate investments and we think overall performance in BN’s other sectors remains positive.”

The analyst’s other changes were:

  • AGF Management Ltd. (AGF.B-T, “sector perform”) to $7.50 from $9. Average: $9.13.
  • CI Financial Corp. (CIX-T, “sector perform”) to $19 from $21. Average: $19.50.
  • Definity Financial Corp. (DFY-T, “outperform”) to $48 from $49. Average: $42.75.
  • ECN Capital Corp. (ECN-T, “sector perform”) to $2.75 from $3.50. Average: $3.11.
  • Fiera Capital Corp. (FSZ-T, “sector perform”) to $6 from $7. Average: $7.36.
  • First National Financial Corp. (FN-T, “sector perform”) to $40 from $43. Average: $42.83.
  • IGM Financial Inc. (IGM-T, “sector perform”) to $42 from $49. Average: $46.67.
  • Power Corp. of Canada (POW-T, “sector perform”) to $41 from $45. Average: $42.36.
  • Sprott Inc. (SII-T, “sector perform”) to $47 from $51. Average: $49.33.

Elsewhere, National Bank’s Jaeme Gloyn lowered his target for Fiera Capital to $6.50 from $7 with a “sector perform” rating, while Desjardins Securities’ Gary Ho reduced his target to $6.75 from $7.50 with a “hold” rating.

Mr. Gloyn also cut his target for IGM Financial to $44 from $47 with an “outperform” rating.


Citi analyst Jon Tower sees “little room” for a near-term re-rating in shares of Restaurant Brands International Inc. (QSR-N, QSR-T) ahead of the Nov. 2 release of its third-quarter results, seeing its relative multiple already sitting ahead of historical averages.

“We expect management continues to pitch the Burger King U.S. turnaround narrative, in particular highlighting capital deployment behind the royal remodel/reset program and how that could evolve to a long-term remodel cycle that covers the majority BK U.S. stores,” he said. “That said, FX is a hit to #s, it looks like quarter-to-date traffic has slowed, BK may be between a rock and a hard place with commitments to improve franchisee profitability in a more value-centric consumer environment, and fuel prices are a risk to Tims distribution margins. "

Mr. Tower expressed concern about the year-over-year decline in foot traffic to U.S. Burger King stores, though it falls in line with the comment’s commentary following its second-quarter release. He also said use of the Tim Hortons app in Canada slowed “perhaps in part due to a promo shift (Smile Cookie moved from 3Q to 2Q in ‘23).”

While also seeing a “mixed read” on input prices, he raised his 2023 EPS projection to US$3.25 from US$3.21 with his 2024 estimate sliding to $3.32 from US$3.41 after tweaking his same-store sales outlook and adjusting for foreign exchange.

“Key topics/questions for the call — (1) How does the BK U.S. brand plan to spend the remaining $90-million-plus in reclaim the flame ad contribution over the next 5 Qs – have plans been altered due to a weakening demand backdrop? (2) How are CA wage rate changes altering the company’s thinking about U.S. pricing in ‘24? Could recent legislation alter the outlook for BK U.S. store footprint? (3) Color around the NTM [next 12-month] unit growth pipeline, specifically growth by brand outside TH China. (4) How is the company thinking about the size/scope/timing of BK US incremental investment and what alternatives are being explored to lift some of the near-term cash flow burden for franchisees (e.g., lower upfront franchisee spend in exchange for higher LT royalties)? (5) How are brands, specifically BK US, balancing the need for ongoing discounting to drive traffic against franchisee cash flows? (6) Progress on daypart expansion at TH CAN,” he said.

Maintaining a “neutral” recommendation for Restaurant Brands shares, he cut his target to US$72 from US$83. The average is US$79.25.

“We don’t believe the market is fully capturing ramping international stories at Tims, Popeyes (and soon Firehouse) that can drive medium-term upside to net unit growth (NRG) and long-term upside to profits; however, limited visibility into the economics of these nascent businesses means limited ability to layer into valuation,” he concluded. “At the same time, we see above average room for near- to medium-term estimate volatility related to the Burger King U.S. brand repositioning/reinvestment (including incremental closures) and potential pressure on supply chain profits.”


While National Bank Financial analyst Rupert Merer sees Exro Technologies Inc. (EXRO-T) as “a great company with a promising future,” he initiated coverage with a “sector perform” recommendation based on “uncertain” macroeconomic conditions.

“The clean technology investment space has been challenging to navigate, with start-up companies battling large OEMs to establish share in nascent markets,” he said. “Exro’s largest opportunity is in the medium-heavy-duty vehicle market, which historically has been positively correlated with economic conditions. Challenging financing conditions could pose a risk to some of Exro’s customers, which in turn could impact Exro’s revenue ramp and its ability to raise capital. Additionally, Exro relies on numerous third parties and the global supply chain is still facing some challenges. While optimistic about Exro’s future, in the near-term we remain cautious as we monitor economic conditions and Exro’s production ramp.”

In a research report released Tuesday, Mr. Merer said the Calgary-based company provided “high-torque in inverters and battery shortage” and believes “pieces are in place for rapid sales growth.”

“Its flagship product, the coil driver, is positioning itself to be a critical component for the rapidly growing EV market, specifically in the medium-heavy duty segments,” he said. “It delivers superior performance (5-15-per-cent range increases) compared to traditional three-phase inverter systems, while simplifying the EV powertrain and reducing weight. Exro is also set to scale its cell driver, a battery storage unit with cell-level control, which comes at an opportunistic time.”

“Exro entered production in Q3′23 and is currently scaling up, lead by a team with experience commercializing complex systems for vehicle OEMs. Exro has a diverse set of partners and customers, providing visibility on demand for its product. After raising $35-million in May, Exro has the funding needed to undergo its initial sales ramp. With utilization of third parties, Exro is able to run a capex-light facility that translates to a high ROIC business model.”

The analyst set a target of $2.25 per share. The current average on the Street is $2.90.


Desjardins Securities analyst Jonathan Egilo initiated coverage of a trio of “high-quality” intermediate gold producers on Tuesday.

* Alamos Gold Inc. (AGI-T) with a “hold” rating and $19.50 target. The average is $19.76.

“The company currently has an approximately 500koz production base with a line of sight to grow to 600koz from its current operations, or to more than 800koz by 2027 should it elect to build from within its development portfolio,” he said. “We see very strong rationale for AGI shares to hold a significant premium to the peer group given its Canada-focused operating base and track record of surfacing value from within its portfolio, as well as an organic growth profile fully supported by operating cash flows. Our Hold rating is based solely on valuation, as we estimate AGI trades at 1.10 times P/NAV, a 51-per-cent premium vs peers.”

* OceanaGold Corp. (OGC-T) with a “buy” rating and $3.50 target. The average is $4.34.

“We believe OGC is a standout among its peer group due to its substantial FCF generation and three-year production growth profile, which could grow to 600koz by 2025 from 475koz in 2023,” he said. “OGC trades at a 3.4 times EV/EBITDA multiple and has averaged 4.1 times FY1 EV/EBITDA over the LTM [last 12 months] and peaked above 5.0 times. We believe OGC could become increasingly more attractive on FY1 EV/EBITDA near-term as the company executes on its growth plans—ie ramp-up of Haile’s underground mine. When considering EV/EBITDA, we calculate a 2.9 times valuation on our 2024 estimates, which declines to 2.6 times on our 2025 estimates.”

* SSR Mining Inc. (SSRM-T) with a “buy” rating and $22.75 target. The average is $21.98.

“SSRM has a stable annual production base of 700koz Aueq and a stake in one of the best development projects globally, Hod Maden,” he said. “Our investment thesis is based on SSRM regaining its historical premium vs intermediate gold producers. While the company has faced operational challenges over the past year, we believe this has been baked into the stock price as evidenced by its eroded premium. We now see the stock at what we believe is an attractive entry point, trading near the lowest P/NAV multiples over the past two years.”


In other analyst actions:

* HSBC’s Samantha Hoh upgraded Ballard Power Systems Inc. (BLDP-Q, BLDP-T) to “buy” from “hold” with a US$4.50 target. The average on the Street is US$6.04.

* Following Monday’s announcement that it has divested a 27.5-per-cent interest in its Utilities business to Oaktree in exchange for a $150-million preferred equity investment, Canaccord Genuity’s Yuri Lynk raised his target for Aecon Group Inc. (ARE-T) to $14 from $10 with a “buy” rating, while Stifel’s Ian Gillies trimmed his target to $12 from $13 with a “hold” rating.. The average is $13.89.

“The company intends to use its partnership with Oaktree to accelerate growth of this business in the U.S.,” said Mr. Gillies. “We remain concerned that the capital injection will be used to fund future losses on the four large problem projects that need to close over the next two years and that the company has sold off a portion of another strong operating asset. The deal also brings added complexity to a stock that already has many moving parts. We are reducing our target price ... as we have lowered our target EV/EBITDA to 4.0 times from 4.5 times due to increased complexity of the business.”

* TD Securities’ Cherilyn Radbourne lowered her Brookfield Infrastructure Partners L.P. (BIP-N, BIP.UN-T) target to US$45 from US$50, keeping a “buy” recommendation. The average is US$41.

“We believe that at current levels, BIP offers a compelling combination of yield (6.5 per cent plus) plus high-single-digit to low-double-digit FFO/unit growth, consistent with its long-term track-record (10-year FFO/unit CAGR of 11 per cent during 2012-2022),” she said.

* In an earnings preview for Canadian diversified industrial companies, Stifel’s Ian Gillies cut his targets for Badger Infrastructure Solutions Ltd. (BDGI-T, “buy”) to $50 from $52 and Doman Building Materials Group Ltd. (DBM-T, “buy”) to $9.25 from $9.75. The averages are $39.19 and $9.08, respectively.

* Echelon Partners’ Gabriel Gonzalez resumed coverage of E3 Lithium Ltd. (ETL-X) with a “speculative buy” rating and $5.70 target. The average is $10.07.

“The combined Bashaw District lithium resource is already among the top 10 largest lithium resources globally and is the lowest-risk project jurisdictionally according to S&P Markets & Intelligence,” he said. “The Clearwater project benefits from significant existing shared infrastructure (road, pipeline, transportation, energy) in the province of Alberta’s oil patch. In addition, the Clearwater project benefits from strong government support, with over $30M in grants and funding received to date. In terms of regulation, lithium extraction and processing has largely been farmed into Alberta’s existing oil & gas regulatory framework.”

* While touting “good visibility on growth, National Bank’s Cameron Doerksen trimmed his Exchange Income Corp. (EIF-T) target to $65 from $67 with an “outperform” rating prior to its Nov. 9 earnings release. The average is $66.59.

“On our updated 2024 forecast, the stock trades at 6.0 times EV/EBITDA versus the historical forward average for the stock of 7.7 times,” he said. “We view this current multiple as attractive, especially in the context of the strong contracted growth ahead for the company, the full impact of which will only be seen in 2025. Although our EBITDA forecast for 2024 moves modestly higher driven by the addition of the DryAir acquisition into our model, this is offset by slightly higher assumed debt levels and interest expense, the net result of which is that our target moves to $65.”

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 01/03/24 3:59pm EST.

SymbolName% changeLast
AGF Management Ltd Cl B NV
Alamos Gold Inc Cls A
Allied Properties Real Estate Inv Trust
Aecon Group Inc
Badger Infrastructure Solutions Ltd
Ballard Power Systems Inc
Brookfield Asset Management Ltd
Brookfield Corporation
Brookfield Infra Partners LP Units
CDN Apartment Un
CI Financial Corp
Cogeco Communications Inc
Definity Financial Corporation
Doman Building Materials Group Ltd.
Dream Industrial REIT
Ecn Capital Corp
Enbridge Inc
Exchange Income Corp
E3 Lithium Ltd
Fiera Capital Corp
First Capital REIT Units
First National Financial Corp
Flagship Communities Real Estate Investm
Gibson Energy Inc
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Igm Financial Inc
Keyera Corp
Minto Apartment REIT
Oceanagold Corp
Pembina Pipeline Corp
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Sienna Senior Living Inc
Sprott Inc
Ssr Mining Inc
TC Energy Corp
Telus Corp
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