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

In the wake of a “strong” share price performance over the last two months, CIBC World Markets analyst Kevin Chiang now sees the risk-reward proposition for Canadian National Railway Co. (CNR-T) “as being more balanced at current levels.”

Accordingly, while continuing to see promising signs as it follows through on its strategic plan, he lowered his rating for its shares to “neutral” from “outperformer” on Wednesday.

“We still see upside in CN’s share price as it marches towards a mid-50-per-cent OR (operating ratio) but downgrade the stock reflecting its relative returns to our price target and the implied return even looking past our target year (2023 is our target year),” he said in a research note.

“For example, if we assume CN achieves a 55-per-cent OR in 2024 on a revenue print of $17.8-billion (7-per-cent year-over-year topline growth off our 2023 sales estimate), this can get us to $9 in EPS. If we look at CN’s historical P/E premium to the S&P 500 and the major Class 1s (CP, CSX, UNP, NSC), it is 1.3 points. Based on where these benchmarks are trading today, that would infer a 22-times forward P/E multiple. If we apply that to our implied 2024 EPS estimate, that gets an equity value of $200 per share. This reflects a 10-per-cent CAGR [compound annual growth rate] over a two-year period. We see greater upside in other transportation names we cover.”

Also emphasizing its valuation spread is at “extreme levels,” Mr. Chiang maintained a 12-18 month target for CN shares of $170. The average on the Street is $158.25, according to Refinitiv data.

“CN shares are up almost 13 per cent since its proposed merger with KSU was terminated on September 15 and up 8 per cent since reporting Q3 results on October 19,” he noted. “For reference, the S&P 500 is up 3 per cent and 1 per cent, respectively, over these timeframes. Similarly, the S&P/TSX is up 3 per cent and 0 per cent, respectively. If we look at the forward P/E spread between CN and the major Class 1s (CP, CSX, NSC, UNP) and the S&P 500 going back a decade, against both benchmarks it is trading close to a two standard deviation premium. This also suggests to us that CN shares have priced in much of the upside from its strategic plan to drive stronger pricing and margins over the next 2-3 years.”

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The current energy “crisis” renews a “pathway to opportunity” for investors, reinforcing the transition to renewable sources will be “long and challenging,” according to ATB Capital Markets analyst Patrick O’Rourke.

In a research report released Wednesday, he initiated coverage of five large-cap Canadian oil sands producers.

“In our view, this has presented an opportunity for Canada’s very low geological risk and low decline oil sands assets to once again shine in a global context, as a highly reliable source of energy,” the analyst said. “Canada is well noted for its strong human rights, governance and environmental practices relative to other globally significant producers of oil. However, a credible and tangible reduction in emissions is clearly required for the social license to continue to meet the world’s energy needs. The recently announced, industry collaborative, Oil Sands Pathway (a partnership of the five companies discussed in this report) to net zero provides a clear, three-phase path to net zero scope one emissions by 2050.”

Mr. O’Rourke initiated coverage of these companies:

* Canadian Natural Resources Ltd. (CNQ-T) with an “outperform” rating and $58 target. The average on the Street is $58.70.

Analyst: “CNQ has built a diverse asset base consisting of heavy, light, and synthetic crude oil (SCO), as well as natural gas and natural gas liquids. It is the largest oil producer, and the second largest natural gas producer in Canada – CNQ has the highest gas weighting of the oil sands group (ATB 2022 estimatd 22-per-cent gas), providing it the most insulation and risk reduction to rising gas prices. ... CNQ generates essentially 100 per cent of its CF from its upstream operations, with the Company having no refining/downstream operations. CNQ has an excellent history of strategic growth through M&A, often acquiring assets off-cycle to the natural business cycle, and a strong track record of execution on acquired assets. The Company maintains a strong balance sheet (ATB 2022 D/CF of 0.7 times) and has plenty of available liquidity to further acquire assets at attractive metrics. We anticipate CNQ will reach its near-term debt target by YE2021, at which time we see the potential for incremental returns to shareholders. CNQ holds a vast inventory of low-decline, long-life assets, with the Company holding the highest PDP reserve life index (RLI) and the second highest 1P & 2P RLIs, of the Oil Sands producers, under our estimates – a critical metric and enviable position in our view.”

* Cenovus Energy Inc. (CVE-T) with an “outperform” rating and $19.50 target. Average: $17.74.

Analyst: “CVE currently offers the highest upside to our NAV, at 32.6 per cent, while we see an average upside of 16.3 per cent for the group ... a key driver of our outperform rating. The focus on Cenovus’ merger with Husky was on improving market access and integrating its operations from the wellhead to the refinery. Cenovus is now focused on the $1.2-billion in identified cost structure savings and the project high gradings that were laid out in the merger announcement, and given the confidence and execution that CVE has been conveying, we believe there is further potential upside, though broader economic inflationary pressures may limit that. In addition, we continue to believe there is plenty of opportunity to improve upon the prior existing and Husky acquired assets (most visibly through the margin enhancing integration of Foster Creek/Christina with Husky’s Lloydminster upgrader). Finally, we believe that CVE is also best positioned for asset rationalization that accelerates debt repayment and the path to shareholder returns relative to peers, with the obvious focus being the Deep Basin and retail assets (while the Company clearly alluded to the potential for other asset sales on recent investor calls).”

* Imperial Oil Ltd. (IMO-T) with a “sector perform” rating and $45 target. Average: $45.50.

Analyst: “IMO’s Syncrude mining project (25-per-cent WI, non-operated) and the Cold Lake in-situ project (100-per-cent WI) have been around since the formative beginnings of the industry. The Company’s newest mining project within the Oil Sands, Kearl (71-per-cent WI), has risen to form recently, and has reached new production records multiple times in 2021, and is a shining star not only within the IMO portfolio, but also in the context of the broader industry, in our view; with the move to once annual turnarounds, from the prior twice annual cadence, we only anticipate further improvement. Further, the Company’s clear structural advantage is its downstream business, which is largely due to the unique nature of the Canadian downstream market, where diesel and gasoline crack margins have consistently outperformed the U.S. market. We forecast IMO as having the healthiest balance sheet out of its oil sands peers, with the potential to exit 2022e with a positive working capital position of $564-million (this of course will be dependent on return of capital choices, which are a key near-term focus for investors in the business at the moment). However, asset quality and strong management seem to be well appreciated by investors at the moment, with the Company trading at a premium multiple to peers (2022 estimated FCF/EV yield 11.3 per cent vs. 14.0-per-cent peer average; 2022 estimated EV/DACF of 5.9 times vs. 4.6 times for peers) and the narrowest intrinsic value NAV discount, under our modeling, in the peer group at the moment, with further valuation complexity added by parent company ExxonMobil’s (XOM-N, NR) 68.6% ownership stake – valuation is the key driver of our Sector Perform rating at this time.”

* MEG Energy Corp. (MEG-T) with an “outperform” rating and $14.75 target. Average: $13.65.

Analyst: “The quality of MEG’s operations is demonstrated by its strong steam-oil-ratio at Christina Lake, while it offers the highest oil price torque and second highest 2022 estimated FCF/EV yield (15.5 per cent) of the group and a 26-per-cent upside to our current $14.75 per share NAV based target, a key driver of our Outperform Rating

* Suncor Energy Inc. (SU-T) with a “sector perform” rating and $33 target. Average: $35.92.

Analyst: “Suncor is Canada’s largest pure oil sands producer, with its core assets focused on mining (Millennium/Steepbank – 100-per-cent W.I., Fort Hills – 54.11-per-cent W.I., and Syncrude – 58.74-per-cent W.I.) and SAGD production (Firebag and Mackay River – 100-per-cent W.I.). Between these assets, the Company has access to a diverse supply of bitumen, where it can choose to upgrade or blend the bitumen, to optimize its marketing streams and refinery inputs. SU’s oil sands operations consume in excess of 600 mmcf/d of natural gas (the largest net exposure within the peer group), yet there is no natural hedge in the system at this time. Though this can in part be managed by financial hedges, it does highlight one part of the cost structure which SU has a reduced ability to control, with natural gas prices now well recovered from their prior (and long enduring) weakness. On the other hand, SU’s significant downstream and retail presence has reduced revenue volatility, and has been a key attraction (along with liquidity) during historical times of oil price weakness for investors seeking (or required to maintain) exposure to the sector. While the Company has a long track record of excellent execution, it has more recently been plagued by investor perception of minor missteps, including at Fort Hills. Our Sector Perform rating is primarily driven by valuation (2022 estimated FCF/EV yield of 12.4 per cent vs. peers at 14.0 per cent, though is cheaper on our less preferred 2022 EV/DACF valuation at 4.2 times vs. peers 4.6 times) and our desire to observe near-term performance more indicative of the strong historic track record – in our view, the greatest opportunity to display this will be through its new operator status at Syncrude and improving the performance of this asset.”

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Though Celestica Inc. (CLS-N, CLS-T) has displayed “impressive” improvement in its profit over the last two quarters, Citi analyst Jim Suva said he’s “concerned” over its organic growth sales.

On Tuesday, shares of the electronics company surged 7.2 per cent in Toronto after it reported adjusted earnings per share for the third quarter of 35 US cents, exceeding the Street’s forecast by 9 per cent (or 3 US cents) and resting at the upper end of its guidance (30-36 US cents) due largely to better operating margins and a lower tax rate. However, sales of US$1.47-billion missed the consensus projection of US$1.49-billion and fell at the midpoint of the company’s estimate.

“Celestica’s Q3 results and Q4 outlook can both be described as stronger profitability by the company but sales upside continues to be capped by supply chain constraints,” he said. “Last month, the company announced its acquisition of PCI which we already included in our forecasts starting at the end of 2021 but now is slated to close in November. We are concerned with the company’s organic sales growth as Celestica has lost some large customers in the past and is now doing more M&A. We see risk of increased competition for the company’s compute/cloud business which is 21 per cent of sales and maintain our Sell rating.”

After the Toronto-based company’s guidance for 2022 exceeded the Street’s adjusted EPS projection by nine per cent (US$1.49 versus US$1.37), Mr. Suva raised his own estimate to US$1.40 from US$1.34 with his 2023 forecast moving to US$1.54 from US$1.47.

That prompted him to increase his target for Celestica shares to US$9.50 from US$8.50 with his “sell” recommendation The average on the Street is US$11.11.

“We view recent demand trend favorable particularly with the JDM upside,” he said. “However, our experience shows disengagement and program exit with top customers typically cause topline deleverage and stock turbulence for several quarters.”

Other analysts making target adjustments include:

* Canaccord Genuity’s Robert Young to US$12 from US$11.25 with a “buy” rating.

“Celestica’s Q3 results impressed with record operating margin despite a marginal miss on the top line,” said Mr. Young. “Management comments and guidance point to another operating margin record in Q4 and demand strength continuing into 2022. Management reiterated its 2022 guidance of $6.3-billion-plus in revenue and 4-5-per-cent OM, which is in line with our model. HPS and capital equipment, key drivers of margin in Q3, are expected to see some growth moderation, which we believe is not unusual given strong 2021 comps. We continue to see the opportunity for further margin expansion from higher-margin revenue lines with 1) HPS growth more than 10 per cent in 2022, 2) steady expansion of industrial, bolstered by PCI, and 3) return of display and commercial aerospace as early as 2023.”

* Scotia Capital’s Paul Steep to US$11 from US$10 with a “sector perform” rating.

“Celestica’s Q3/F21 results had slightly lower revenues than our estimates and consensus, with continued growth in its ATS business and adjusted operating income and EPS reflecting improving operating margins,” said Mr. Steep. “We expect that going into the next fiscal year and lapping the y/y comparison ex. Cisco revenues will improve visibility into the underlying revenue and margin growth of the business.

“We anticipate that the stock will continue to remain volatile, given (1) the effect of reopening of various geographies and normalization in material availability in the firm’s supply chain; (2) ongoing recovery in semiconductor demand leading to improved results within the capital equipment segment; and (3) new wins in ATS helping to offset pressure related to continued weakness in the Aerospace & Defense segment.”

* BMO’s Thanos Moschopoulos to US$11 from US$10.50 with a “market perform” rating.

“CLS is benefitting from a strong demand environment, while successfully mitigating the impact of supply constraints. We maintain our Market Perform rating on the stock (largely a relative call, and in relation to our coverage universe, rather than CLS’s EMS peers; we note CLS continues to trade at a large discount to the latter). However, we see potential upside to CLS’s guidance, given strong end-market demand and the potential for further operating leverage,” he said.

* CIBC World Markets’ Todd Coupland to US$12 from US$11.50 with a “neutral” rating.

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While Neighbourly Pharmacy Inc.’s (NBLY-T) second-quarter 2022 financial results fell short of expectations, iA Capital Markets analyst Chelsea Stellick thinks its $62-million acquisition of 26 pharmacies in Alberta and British Columbia accelerates its already aggressive growth plan.

On Tuesday, the Toronto-based company, which is Canada’s largest network of independent pharmacies, reported revenue for the quarter of $90.7-million, up 54 per cent year-over-year but missing both Ms. Stellick’s $92.7-million estimate and the $92.5-million consensus projection. Adjusted earnings before interest, taxes, depreciation and amortization jumped 52 per cent to $10-million but also below expectations ($10.9-million and $11-million, respectively).

“Growth rates [are] still struggling against pandemic comps,” said Ms. Stellick. “Same store sales were only up 1.2 per cent (trailing average 4 per cent) due to heightened front of store demand in Q2/F21, but same-store prescriptions were up 2.9 per cent (trailing average 3 per cent) despite net new prescriptions remaining below pre-pandemic levels. The Company believes it has lapped COVID-19 related volatility and same store growth rates should normalize going forward.”

Concurrent with the quarterly results, Neighbourly continued its aggressive streak of acquisitions, gaining locations that are expected to add $10-million in total adjusted EBITDA

“Including the 14 pharmacies previously acquired, this puts NBLY well ahead of its historical 35 pharmacies per year average to 40 pharmacies added to the network thus far in F2022,” said Ms. Stellick.

She added: “Despite a miss on Q2/F22 earnings, the net impact of announcements made today by NBLY is positive due to the strong M&A growth in Q3/F22 which accelerates NBLY’s growth plan. We believe incremental M&A can make the most of Neighbourly’s increasingly powerful competitive advantage of operating leverage through consolidation which will translate to gradually improving EBITDA margins over time. We are forecasting a strong Q3/F22, especially in light of NBLY’s guidance of more than 60,000 flu vaccines.”

Maintaining a “buy” recommendation for its shares, Ms. Stellick increased her target to $36 from $31. The average is currently $33.71.

“We view Neighbourly’s roll-up strategy as having staying power and therefore garners a premium to peer valuations in the short and medium-term as a result of the growth rate associated with expected acquisitions. We have added the shares from the recent Treasury offering to the forecasted shares outstanding in the valuation, resulting in modest dilution,” she said.

Others making adjustments include:

* Desjardins Securities’ Chris Li to $33 from $31 with a “hold” rating.

“NBLY’s results and management’s positive M&A outlook reinforce our view that this is a compelling growth story driven mainly by acquisitions in a highly fragmented industry,” said Mr. Li. “We now believe an annual M&A pace of at least 40 sites is highly achievable (with upside) vs our previous expectation of 30–35. We believe this supports a low $40s valuation by March 2024 (10-per-cent CAGR).”

* RBC’s Irene Nattel to $36 from $34 with an “outperform” rating.

“Q2/F22 results solid and consistent with narrative during and post IPO, and supportive of our constructive view,” he said. “Announcement of 5 more pharmacies brings year-to-date total to 40, above annual target of 35, implying F22 will be another strong year for NBLY acquisitions. Revising forecasts upward to reflect stronger M&A drives forecasted three-year EBITDA CAGR to 33 per cent, at the very high end of our coverage universe.”

* BMO’s Peter Sklar to $33 from $30 with a “market perform” rating.

“FQ2/22 results were in line with preliminary estimated results provided as part of the recent offering prospectus. Another five-pharmacy acquisition was announced, bringing the number of confirmed acquisitions to 40 for FY to date, above the target of 35 per year,” he said. “We continue to find Neighbourly’s pharmacy roll-up story a compelling investment thesis, as there is a significant valuation arbitrage opportunity. However, since the IPO, the stock has run up considerably from the $17 issue price and is currently valued at 21 times our FY2023 estimated EBITDA, limiting potential return to our target price.”

* National Bank Financial’s Zachary Evershed to $35 from $34 with a “sector perform” rating.

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Ag Growth International Inc. (AFN-T) has the “potential to harvest robust returns,” according to iA Capital Markets analyst Matthew Weekes, who warns litigation overhangs are likely to persist.

Touting its “combination of stable baseline revenues with growth opportunities” and seeing “positive” secular growth trends, he initiated coverage of the Winnipeg-based company with a “speculative buy” rating on Wednesday.

“AFN’s Farm segment sells mission-critical equipment to farms, largely in North America, and tends to be primarily driven by grain volume growth and overall crop size,” Mr. Weekes said. “North American farming is considered stable but mature, while international markets, particularly Brazil, offer additional growth upside. AFN’s Commercial segment has global diversification, and while we view Commercial sales as being more subject to variability than Farm sales, we believe they also offer greater growth potential. AFN also has a developing Technology platform in which we see significant potential growth and hidden value.”

“AFN’s products play an essential role in the global agri-food supply chain. We believe AFN is positioned to deliver sustainable, long-term growth as the global population and agricultural consumption for food and animal feed rises, and many key growing regions and importing countries invest to upgrade and expand their agri-food infrastructure.”

Mr. Weekes noted Ag Growth’s share price has been “under pressure” since the 2020 collapse of one of its commercial storage bins North Vancouver, leading to both financial liabilities and legal claims that have created “uncertainty.”

However, he emphasized the company’s operational outlook “remains constructive” and he now sees its shares trading an enticing valuation.

“AFN’s diversified business offers global reach with both defensive qualities and growth potential,” said Mr. Weekes. “We are constructive on AFN’s outlook, underpinned by secular growth trends in global food infrastructure investment and farm digitization, and we project substantial valuation upside for the stock. While we believe much of the downside from the legal claims against AFN is built in, we are reserving a degree of caution due to these claims creating uncertainty and overhang for a potentially extended period of time, particularly given AFN’s relatively elevated leverage and credit facility covenants.”

He set a target of $44 per share. The current average on the Street is $46.

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National Bank Financial’s Jaeme Gloyn made a series of target changes to diversified financials in his coverage universe on Wednesday. They include:

  • Home Capital Group Inc. (HCG-T, “outperform”) to $59 from $58. The average on the Street is $47.75.
  • Equitable Group Inc. (EQB-T, “outperform”) to $93 from $89.50. Average: $79.25.
  • First National Financial Corp. (FN-T) to $54 from $56. Average: $49.20.
  • Timbercreek Financial Corp. (TF-T) to $10 from $9.75.

After Tuesday’s earnings release, BMO Nesbitt Burns analyst Étienne Ricard downgraded First National to “market perform” from “outperform” with a $46 target, down from $54.

“Top-line growth appears set to slow with downside risks to securitization margins and origination activity. In addition, rising headcount growth, while favorable to FN’s long-term underwriting service capabilities, is likely to weigh on operating leverage over the nearterm. Lastly, with the pace of regular dividend growth likely to normalize to long-term average levels, we are mindful of the stock’s premium valuation relative to history,” he said.”

Others making changes include:

* RBC’s Geoffrey Kwan to $48 from $50 with a “sector perform” rating.

“Q3/21 results were mixed with EPS below our forecast and mortgages under administration slightly below our forecast, partly offset by originations and special dividend that were ahead of our forecast. Maintaining our Sector Perform rating, but trimming our price target to $48 (was $50) due to slightly lower-than-forecast MUA in Q3/21 and margin pressure that appears to be slightly greater than we expected. We think FN appeals to small cap investors as it gives investors an attractive blend of exposure to continued strong housing/mortgage market activity, defensive attributes, and a 5.0-per-cent dividend yield underpinned by strong FCF,” said Mr. Kwan.

* TD Securities’ Graham Ryding to $49 from $51 with a “hold” rating.

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Desjardins Securities analyst David Newman thinks LifeSpeak Inc. (LSPK-T) is “unique,” seeing “characteristics of both an established [software as a service] player with proven gross margins (high 80s–low 90s) and profitability (EBITDA margin of 40 per cent and growing) and a fast-growing healthcare technology company.”

In a research report released Wednesday, he initiated coverage of the Toronto-based mental-health content creator with a “buy” recommendation.

“Our positive view is based on: (1) its unique approach to mental health and total well-being through microlearning, with a focus on B2B; (2) a predictable SaaS-driven business model witnessing strong growth (recurring revenue, strong customer retention), with elevated margins and attractive cash flows; and (3) M&A with $50–55-million in cash following the recent LIFT and ALAViDA acquisitions,” said Mr. Newman.

Seeing it “starting the conversation on growth,” he set a target of $13 per share, exceeding the $12.67 average on the Street.

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In other analyst actions:

* With its acquisitions of the remaining 51-per-cent issued and outstanding shares of Skelton USA and 100 per cent of Boyle Transportation, CIBC World Markets analyst Kevin Chiang increased his target for Andlauer Healthcare Group Inc. (AND-T) to $54 from $49, exceeding the $52.83 average, with a “neutral” rating.

“We view these transactions positively as they provide another layer of growth to a company that already benefits from a strong organic growth pipeline,” he said.

* RBC Dominion Securities analyst Matt Logan raised his FirstService Corp. (FSV-Q, FSV-T) target to US$215 from US$200, topping the US$194.33 average, with a “sector perform” rating. Others making changes include: CIBC World Markets’ Scott Fromson to US$205 from US$190 with a “neutral” rating; Raymond James’ Frederic Bastien to US$195 from US$180 with a “market perform” rating and TD Securities’ Daryl Young to US$200 from US$190 with a “hold” rating.

“FSV reported an in-line Q3/21, showing once again the company’s ability to generate growth from its resilient asset portfolio,” said Mr. Fromson. “FirstService Residential continues to win contracts and operations are almost back to normal (90 per cent of building amenities have reopened). Home improvement demand remains strong, although supply chain issues put a limiter on growth. We expect revenue growth to remain robust, though margins will likely compress due to rising materials and labour costs; FSV will be able to pass on most of this cost inflation to its customers, but on a lagged basis.”

* A group of analysts came off research restriction following the $177.4-million equity offering from Topaz Energy Corp. (TPZ-T). Those making target changes include: RBC’s Luke Davis to $22 from $20 with an “outperform” rating and Scotia Capital’s Cameron Bean to $27 from $24 with a “sector outperform” rating. The average on the Street is $22.13.

“We continue to see TPZ as the top royalty/income stream name in the sector given its: (1) strong upstream and midstream asset base; (2) top-tier free cash flow conversion profile and dividend growth potential (demonstrated by 20-per-cent year-over-year growth through Q4/21); and (3) emerging position as the financial partner of choice for quality E&Ps in a capital constrained market,” said Mr. Bean.

* In response to a $2.2-billion plan to take it private led by Canderel Real Estate Property Inc., CIBC World Markets analyst Sumayya Syed raised her Cominar Real Estate Investment Trust (CUF.UN-T) target to $11.75 from $11.50, reiterating a “neutral” rating, while RBC’s Pammi Bir trimmed his target to $11.75 from $11.50 with a “sector perform” rating. The average is $11.50.

“While we positively view the outcome of the strategic review, the offer appears underwhelming to us, both in the context of historical transactions and given the potential in the portfolio,” said Ms. Syed. “We acknowledge there are some operational challenges and leverage is high, but believe there is significant untapped potential. The offer price reflects a discount to as-is value, which is on the conservative side as the pandemic weighs on operations, and we do not believe it reflects market value for the stronger assets. Strategically we see the merits of the privatization given the somewhat disparate assets, and acknowledge that currently Cominar is not equipped to extract the embedded intensification value. While we would have liked to see a higher offer, we see low probability of one materializing.”

* TD Securities analyst Graham Ryding increased his target for Equitable Group Inc. (EQB-T) to $87 from $85 with a “buy” rating. The average is $79.25.

* Scotia Capital analyst Phil Hardie raised his target for TMX Group Ltd. (X-T) to $157 from $155 with a “sector outperform” rating. The average on the Street is $154.86.

“TMX valuation has likely garnered a sustainable re-rate reflecting the transformation of its business over the past few years but its multiple appears to have become range-bound more recently,” he said. “We think one of the key investor issues holding back further multiple expansion relates to uncertainty in the mid-term outlook for capital markets activity and what the ‘new normal’ is likely to look like for trading and financing, following the recent rebound in activity and potential shifts in market structure. TMX has successfully demonstrated its ability to prosper across a range of market conditions with likely catalysts for the next leg up in its valuation relating to 1) material acquisitions that accelerate its strategy and further shift its exposure to less cyclical segments that support recurring revenue, and 2) increased investor confidence in its ability to sustainably generate average double-digit earnings growth over the mid-term.

“Despite a sequential drop in capital markets activity and year-over-year declines in equity trading and financing activity, we expect TMX to deliver double-digit EPS growth over last year for Q3/21 reflecting a rebound in derivatives trading and the acquisition of AST Trust.”

* BMO Nesbitt Burns analyst John Gibson raised his Trican Well Service Ltd. (TCW-T) target to $4.50 from $4.25, exceeding the $4.04 average, with an “outperform” rating, while TD Securities’ Aaron MacNeil bumped up his target to $3.50 from $3.25 with a “hold” recommendation.

“TCW reported Q3/21 results that were above expectations, driven by a lean cost structure and higher utilization on its active equipment. Pricing remains challenged, although we believe equipment scarcity is creating positive momentum as we head into 2022,” Mr. Gibson said.

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