Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

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

RBC Dominion Securities Inc. analyst Darko Mihelic upgraded Bank of Montreal to “outperform” from “sector perform,” saying he forecasts BMO to deliver the strongest growth in earnings per share in 2019 and 2020 of any of the large Canadian banks the firm covers. His model calls for 8.2 per cent gains in 2019 and 5.1 per cent in 2020, versus peer averages of 4.1 per cent and 4.5 per cent in the next two years.

“Our forecast reflects good revenue growth and cost control … partly offset by higher provisions for credit losses,” he writes. With the bank having relatively smaller exposure to Canada, BMO will likely experience smaller increases in loss provisions than other banks, he says.

Story continues below advertisement

Mr. Mihelic’s call was part of a broader report where he cut his price-to-earnings multiple on all the banks, including moving BMO’s multiple on his 2020 estimate from 12 to 11.5. That’s based on his forecasts of slower asset and revenue growth; increasing loan-loss provisions across the sector; and less benefit from cost-cutting. However, his boost in his estimate of BMO’s earnings yielded an increased target price, from $120 to $124. BMO closed Tuesday at $103.67.

He says BMO is currently trading at 11.4 times consensus forward earnings, a 6 per cent premium to the large Canadian banks, versus trading in line, on average, with those peers during 2010-2015. However, he notes, during that period BMO did trade as high as a 9 per cent premium to peers, “so we do see some room for relative valuation improvement.”


Credit Suisse analyst Susan Roth Katzke upgraded Goldman Sachs Group Inc. to “outperform” from “neutral,” saying the major U.S. investment bank’s earning power has “stepped up.”

Her note comes in the wake of a second-quarter earnings report of US$5.98 in earnings per share, well above Ms. Katzke’s estimate of US$4.55, with revenue, expenses, and the company’s tax rate all better than expected. “Better yet” for the future, she says, “is the progress against the bank's previously articulated growth initiatives, the health of the banking pipeline (record levels) and the realization of operating leverage,” including better compensation numbers.

Ms. Katzke raised her earnings estimates for this year and next, to US$24.70 from US$23.25 in 2018 and to $25.75 from $24.35 for 2019. But after “conservatively assessing” minimum capital levels, she’s sticking with her US$280 target price versus Tuesday’s close of US$231.02.

“With [more than] 20 per cent share price upside, a healthy enough macroeconomic backdrop and progress evident in [first half] results, we’re raising our rating to Outperform from Neutral,:” she writes. “Risks to achievement of both our estimates and target price are tied to the health of the economy and the capital markets and Goldman’s ability to hold its own from a market share perspective.”

Story continues below advertisement


Raymond James analyst Andrew Bradford nudged up his price target on Calfrac Well Services Ltd. as he previewed the company’s second-quarter results scheduled for July 25. He thinks consensus estimates for the earnings report “might be a little on the high side, but not substantially so.”

“On the positive side of the ledger, CFW’s Canadian fracturing was active on at least one major pad in 2Q18, which should make the difference between negative and positive Canadian fracturing EBITDA,” he said.

“CFW stock has tended to outperform in a rising market and underperform in a falling market, as one would expect given its higher-than-average financial leverage (we estimate 2Q net debt at 3.9x trailing EBITDA). Given our positive stance toward producer spending – in Canada in particular – we believe investors can earn amplified, albeit riskier returns via CFW shares," he added.

He reiterated his “outperform” rating and raised his price target to $10.25 from $10.


Story continues below advertisement

BMO Nesbitt Burns analyst Brian Quast downgraded Kirkland Lake Gold Ltd. to “market perform” from “outperform,” citing its “premium valuation … following exceptional share price performance in recent years.”

His target price of $32.50 is about 9 per cent above Tuesday’s closing price of $29.88.

“With a rock-solid balance sheet, continued strong operational results, and ongoing exploration success, we predict that [Kirkland Lake] Gold will retain premium multiples amongst the mid-cap producers,” Mr. Quast writes. However, it trades at 2.4 times the net present value of its assets, per Mr. Quast’s estimate, versus 1.4 times for peers. Its multiple to cash flow per share of 11.1 is above peers’ 8. “We believe much of the future success of the company is already priced in,” he writes.

“Kirkland Lake has been a clear winner in recent times, dramatically outperforming mid-cap peers, and has become a well-deserved premium-rated stock,” he says. “Driven by exceptional results, particularly from [its] Fosterville [mine], KL Gold is up over 50% this year, and had strong performance last year, too. In this context, it is perhaps unsurprising that KL Gold currently enjoys amongst the highest multiples of the mid-cap producers.”


BMO Nesbitt Burns Inc. analyst Troy MacLean initiated coverage of Minto Apartment REIT with an “outperform” rating and an $18.50 price target, versus Tuesday’s close of $16.58, an implied 14 per cent return.

Story continues below advertisement

“Our bullish thesis is based on the very landlord favourable fundamentals in the REIT's two largest markets, Ottawa and Toronto, where vacancy is below its long-term average, and the REIT's attractive relative valuation to its two closest peers, CAP REIT and InterRent,” Mr. MacLean writes.

He estimates Minto trades at a 1 per cent discount to his estimates of the REIT’s net asset value, versus an average premium of 7 per cent for REITs solely focused on Canadian apartment markets. CAP REIT and InterRent, Minto’s two closest peers, trade at NAV premiums of 11 per cent and 13 per cent. “We think the REIT should trade at a premium to NAV given its attractive organic growth outlook (heavy Ontario exposure),” he writes.

All of Minto’s portfolio is located in the large markets of Ottawa, Toronto, Edmonton and Calgary. Its debt is 46.7 per cent of the book value of its assets, which is below its target of 50 per cent to 55 per cent. “We estimate [Minto] has more than $200 million of acquisition capacity without issuing equity,” he writes.


In other analyst actions

* Aphria Inc : Canaccord Genuity cuts target price to C$24.50 from C$25.50

Story continues below advertisement

* First Quantum Minerals Ltd : Barclays raises price target to C$19.40 from C$19

* First Quantum Minerals Ltd : Barclays raises target price to C$19.40 from C$19

* Minto Apartment REIT : TD Securities starts with buy rating; C$20 target price

* Osisko Mining Inc : Eight Capital cuts price target to C$2.60 from C$2.65

* Osisko Mining Inc : National Bank of Canada cuts target to C$4.10 from C$4.50

* WeedMD : Eight Captial resumes coverage with buy rating; target price to C$3.50

Story continues below advertisement

With files from Reuters

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies