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

While he sees the outlook for Aecon Group Inc. (ARE-T) remaining “generally positive” following weaker-than-anticipated fourth-quarter financial results, National Bank Financial analyst Maxim Sytchev lowered his rating for its shares to “sector perform” from “outperform” on Wednesday, citing a “muted” risk/reward profile and share price outperformance thus far in 2022.

“Heading into the quarter, we placed our construction coverage under the ‘avoid’ bucket due to Omicron (see Tug of war between multiples and EPS growth; thoughts on positioning),” he said in a research note. “In addition to lacklustre results, we also have a 4-per-cent year-over-year decline in backlog and flat 12-months out backlog metric, making revenue acceleration more challenging. The completion of CGL (Coastal GasLink) project also puts us towards 2023, a long time to wait for an ultimate resolution with a client. Q1 is also a seasonally least relevant quarter, making a potentially stronger print less relevant in terms of annual impact. All in, we believe Aecon shares will be range-bound, especially considering a 3-per-cent year-to-date return vs. flat TSX and consulting peers that are putting out strong numbers down 10 per cent to 18 per cent. We would rather be buying those laggards at the moment. We are therefore downgrading ARE shares.”

After the bell on Tuesday, the Toronto-based construction and infrastructure company reported revenue of $1.089-billion, up 1 per cent year-over-year and inline with both Mr. Sytchev’s $1.123-billion projection and the consensus forecast on the Street of $1.136-billion. Consolidated adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $61.3-million missed expectations ($79.6-million and $84-million, respectively) with margins affected by the pandemic and civil & urban segment negative adjustments. Adjusted earnings per share of 19 cents also fell well short of projections (56 cents and 47 cents).

“The company has a robust bid pipeline, same language as in prior quarters,” said Mr. Sytchev. “The company is already prequalified for a number of large project bids that are expected to be awarded in 2022-2023. Coastal Gas Link Pipeline 4 (with SA Energy partnership of which ARE owns 50 per cent) has been impacted by pandemic-related costs; the partnership is working to receive additional compensation. For the arbitration process, even though the company says there won’t be a material impact on cash flow till the project is completed (2023), the ultimate outcome will take place at project end.”

He cut his target for Aecon shares to $18 from $21. The average on the Street is $21.81.

Elsewhere, RBC Dominion Securities’ Sabahat Khan lowered his target to $18 from $20 with a “sector perform” rating.

“We maintain a cautious view on Aecon shares given: 1) our view that COVID-19 and supply chain related headwinds could continue to impact Aecon’s projects/sites (with full recovery from clients not a certainty); 2) potential risks associated with labor/input cost inflation; and, 3) an uncertain timeline for a return to ‘run-rate’ traffic/volumes for the Bermuda Airport concession,” he said. “We note that foot traffic at the airport was down 45 per cent quarter-over-quarter and down 42 per cent year-over-year based on our proprietary Bermuda flight tracker, likely driven by the emergence of the Omicron variant in late-Q4 (see link here for our recent flight tracker note). Looking ahead, we expect traffic to gradually recover and likely track departure/arrival trends out of the U.S. as 75 per cent of pre-pandemic (i.e., 2019) air travelers to Bermuda originated from the U.S.”


Pembina Pipeline Corp.’s (PPL-T) new joint venture with U.S. private equity firm KKR & Co. Inc. (KKR-N) values its assets at a premium and “enhances” exposure to key western Canadian gas supplies, according to iA Capital Markets analyst Matthew Weekes.

On Tuesday, its shares rose almost 2.3 per cent following the announcement of the agreement, which will be owned 60 per cent by Pembina and 40 per cent by KKR’s global infrastructure funds. It also incorporate some assets from Energy Transfer Canada.

“The Newco JV increases the Company’s interest in the Veresen Midstream assets and provides new interest in ETC’s assets in exchange for a portion of PPL’s assets, diversifying PPL’s gathering and processing infrastructure and expanding its exposure to NEBC,” said Mr. Weekes. “By pooling complementary assets into the JV, Newco aims to achieve enhanced scale, efficiency, and utilization of assets, improving netbacks for producers and driving increased volumes through facilities. In the short term, Newco will be focused on the integration and optimization of existing assets, but PPL acknowledged on yesterday’s conference call that there could be opportunities for the JV to pursue greenfield or M&A growth down the road. The Newco assets will be underpinned by 65-per-cent utilization of existing physical capacity, with contract duration averaging 14 years, a cost structure that is largely pass-through, and 80-per-cent investment grade or secured entity counterparty exposure. Finally, the assets include $4.6-billion of tax pools. PPL expects tax efficiencies to contribute to AOCF accretion, with Newco able to defer cash taxes for several years as it will be able to depreciate tax pools against an expanded asset base.”

Viewing the deal “positively,” Mr. Weekes said it allows Pembina, which will oversee operations, to proportionately earn $45-million in additional EBITDA on a run-rate basis while “holding leverage metrics consistent by our estimate, accounting for the planned sale of Newco’s non-operated interest in KAPS.”

“Transaction expected to provide $700-million of cash proceeds to PPL, mid- to high-single-digit cash flow/share accretion over five years, and lead to a dividend increase,” he said. “PPL intends to put $550-million toward debt repayment and $150-million toward additional share repurchases following closing (est. Q3/22 subject to competition review), as well as increase its monthly dividend by 3.6 per cent. PPL anticipates mid- to high single-digit accretion to its cash flow/share over the next five years, part of which should be recognized immediately while some will take longer to play out.”

Maintaining a “hold” rating, Mr. Weekes raised his target for Pembina shares to $46 from $44. The average on the Street is $46.09.

“In summary, the JV merges complementary assets into a well-capitalized entity that can leverage scale and efficiency to save costs for producers and generate incremental volumes, with potential for new growth opportunities down the road. The increased ownership in Veresen Midstream increases PPL’s exposure to NEBC Montney growth,” he said.

Elsewhere, a pair of analysts upgraded Pembina shares:

* CIBC World Markets analyst Robert Catellier moved it to “outperformer” from “neutral” and increased his target to $48 from $45.

“The transaction to consolidate gathering and processing assets better positions the company for growth, modestly reduces risk, and at the same time extracts capital, some of which is returned to shareholders in the form of a dividend increase and an enhanced share buyback program. The transaction may also prove timely if drilling activity continues to improve,” said Mr. Catellier.

* Saying it is now one of his “Top 3 Best Ideas,” BMO’s Ben Pham raised it to “outperform” from “market perform” with a $50 target, up from $43.

“We view the JV creation positively given the positive valuation marker for its gas processing assets (implied 12 times EBITDA), mid-to-high single-digit accretion to cash flow, and accelerated capital return initiatives without change in financial guardrails, ESG targets (30-per-cent reduction in GHGs by 2030), and/or business risk profile,” he said.

“We rate PPL shares Outperform given: (1) free upside optionality to new growth projects, i.e., Peace Phase VIII; (2) ability to exceed 2022 adj. EBITDA guidance on continued volume growth and Marketing/frac spread tailwinds; and (3) attractive relative valuation.”

Meanwhile, those making target changes include:

* Canaccord Genuity’s John Bereznicki to $49 from $47 with a “buy” rating.

“We believe this transaction has financial and strategic merit for Pembina,” said Mr. Bereznicki.

* Scotia’s Robert Hope to $49 from $47 with a “sector outperform” rating.

“The transaction increases the reach of its G&P footprint, which longer term could increase volumes directed to its downstream NGL / condensate infrastructure,” he said. “We see the transaction as quite accretive to cash flow, and we increase our estimates.”

“We recently upgraded Pembina to Sector Outperform given (1) upside to our growth estimates as Pembina is well positioned to benefit from the strong commodity price environment, including restarting deferred projects; (2) its very strong balance sheet and funding outlook, which includes share buybacks; and (3) attractive absolute and relative valuation.”

* National Bank Financial’s Patrick Kenny to $45 from $44 with a “sector perform” rating.

* Raymond James’ Michael Shaw to $45.50 from $44.50 with a “market perform” rating.


A series of equity analysts on the Street raised their target prices for shares of Bank of Montreal (BMO-T) following Tuesday’s release of better-than-anticipated first-quarter results.

Before the bell, BMO reported higher first-quarter profit helped by strong retail banking revenue in Canada and the U.S. and a busy quarter for capital markets. Excluding one-time gains from hedging strategies related to its pending acquisition of California-based Bank of the West as well as the sale of its European asset management business, it earned $3.89 per share, exceeding the Street’s forecast of $3.26.

Citing a receding financing risk for its Bank of the West deal and “best-in-class” results, Scotia Capital’s Meny Grauman upgraded BMO shares to “sector outperform” from “sector perform” with a $169 target, up $165. The average on the Street is $165.10.

“We downgraded BMO shares to Sector Perform on the back of its announced acquisition of San Francisco-based Bank of the West (BoW) for $21-billion on December 20,” said Mr. Grauman. “At the time, we acknowledged that the deal had some notable strategic attributes that outweighed its weaknesses, and also had very compelling financial metrics. Yet we were concerned about uncertainty surrounding the ultimate size of the equity raise that BMO would need to finance the transaction, and believed that this would be a headwind for the shares in the short run. That in fact is what happened, as the shares have trailed the peer group since rumors of a deal first made headlines. Yet that performance gap has narrowed since the acquisition was announced, and narrowed even further on the back of another peer-leading set of quarterly results. We believe that this gap is likely to continue to close, especially relative to TD which this week announced a large US acquisition of its own. While BMO is still projecting that it will need to raise $2.7-billion in the open market, we increasingly believe that this figure is unlikely to get larger, and in fact could be quite a bit lower if Fed approval takes longer than the end of calendar 2022.”

Elsewhere, RBC Dominion Securities’ Darko Mihelic called it a “strong start” to 2022 and sees it making “the road to closing its acquisition [of Bank of the West] an easier ride.”

“Revenue and PTPPE growth in Canada P&C, U.S. P&C, and Capital Markets were solid and better than the peers that have reported,” he said. “While some elements of Q1 may not repeat (e.g., trading), we believe BMO will continue to have solid PTPPE growth for the remainder of 2022, possibly enough to cause the ultimate equity issue for the Bank of the West acquisition to come in under plan.

“We continue to view BMO’s valuation as attractive and we believe its earnings power gets stronger after the BoW deal closes.”

Raising his earnings and revenue projections through fiscal 2023, Mr. Mihelic increased his target for BMO shares to $164 from $160 with an “outperform” rating.

“On a forward P/E basis, BMO is trading at 9.3 times our 2023 core EPS estimate, the lowest multiple among peers and 9 per cent below its historical average premium to peers,” he said. “On a P/B basis, BMO is trading at 1.73 times, below the peer average of 1.87 times.”

Other analysts making changes include:

* Desjardins Securities’ Doug Young to $161 from $157 with a “buy” rating.

“Adjusted pre-tax, pre-provision (PTPP) earnings were above our forecast, which was partially due to strong capital markets results, but its Canadian and US P&C banking operations also handily beat our forecasts. Commercial loan growth was strong, with further upside potential. And, its non-interest expense (NIX) ratio was better than anticipated. We increased our estimates,” said Mr. Young.

* Canaccord Genuity’s Scott Chan to $171 from $169 with a “buy” rating.

“We increase our F22E/F23 adj. EPS forecast by 3 per cent/2 per cent, respectively,” said Mr. Chan. “This primarily reflects higher revenue (NII, Other Income), partially offset by larger NIX and removal of its NCIB program this FY. We suggest that BMO’s implied equity raise (at announcement was $2.7B) to help fund the Bank of the West (BOW) transaction could track lower (e.g. solid internal capital generation), although timing of a raise is still uncertain.”

* Stifel’s Mike Rizvanovic to $172 from $170 with a “buy” rating.

“BMO reported a strong Q1, in our view, beyond just an outsized Capital Markets result, with both the Canadian and U.S. P&C Banking segments exceeding our forecasts on solid loan volumes and a surprising sequential increase in margins, while benign credit conditions allowed for a further release of performing-loan PCLs, with more releases likely on the way over the next several quarters,” he said. “Our EPS estimates move up modestly coming out of Q1 (up 1 per cent for F2023) to reflect broad-based strength across BMO’s operating segments and a partial offset from a weaker earnings trajectory for Wealth.”

“We continue to view the bank as being undervalued relative to its peers, which we believe provides a favorable entry point for investors.”

* TD Securities’ Mario Mendonca to $175 from $170 with a “hold” recommendation.

“Our positive outlook is supported by industry-leading PTPP growth, reflecting an advantaged business mix and expense control. We are also influenced by management’s optimistic outlook for 2022. Although we believe BMO’s PTPP growth will not exceed the group average in 2022 by as much as 2021, we believe relative valuation does not reflect BMO’s very strong performance during the pandemic. Our calls on the group are also influenced by the view that the capital actions taken today will play an important role in differentiated EPS growth in 2024-2025. In this respect, we view the BOTW acquisition favourably,” he said.

* CIBC World Markets’ Paul Holden to $160 from $158 with a “neutral” rating.


After its first-quarter financial results also topped the Street’s expectations, National Bank Financial analyst Gabriel Dechaine sees the biggest factor to revive investor sentiment toward Bank of Nova Scotia (BNS-T) being a recovery of its International segment.

“On that front, we see clear signs of progress: 1) PTPP growth of 7 per cent quarter-over-quarter marked the third consecutive quarter of growth; 2) margins expanded 7 basis points quarter-over-quarter representing an inflection point following steady compression since the start of the pandemic; and 3) loan growth across mortgage, commercial and unsecured lending categories,” he said. “In terms of the outlook, management expects growth trends to continue, with steady margin expansion and mid-high single-digit loan growth, led by mortgages and commercial. We note that this origination mix should dampen the pace of margin recovery relative to pre-COVID levels (i.e., that were 75 basis points higher than current run-rate). On the other hand, the bias towards secured loans should result in more stable profits and less capital consumption. As a side note, the acquisition of the remaining 16.8-per-cent stake in the ex-BBVA Chile from the Said family will add roughly $35-million per quarter to BNS’ earnings.”

Before the bell on Tuesday, Canada’s third-largest bank reported earnings per share of $2.15, exceeding consensus estimate of $2.06.

Mr. Dechaine said investor focus on the International segment recovery “likely overshadows a string of strong quarters from BNS’ domestic business, with Q1/22′s results no exception.”

“A third consecutive quarter of double-digit PTPP growth was underpinned by stable margins and industry-leading growth of mortgages (up 15 per cent year-over-year) and commercial loans (up 16 per cent),” he said. “One area that continues to restrict growth is the auto loan book, which has hovered around the $40-billion mark for nearly three years.”

While noting “volatile geopolitical and macroeconomic backdrop results in greater uncertainty,” he raised his target for Scotiabank shares by $1 to $91, maintaining a “sector perform” rating. The average is $98.07.

Others making adjustments include:

* Desjardins Securities’ Doug Young to $99 from $95 with a “buy” rating.

“Adjusted pre-tax, pre-provision (PTPP) earnings were above our estimate, and while the beat wasn’t as large as that posted by several peers this quarter, the sequential improvement at its international banking business — specifically in Peru and Colombia — was encouraging,” said Mr. Young.

* Stifel’s Mike Rizvanovic to $107 from $104 with a “buy” rating.

“BNS reported a solid quarter with most of the bank’s operating segments coming in ahead of our expectations,” he said. “And while the bank did not see the same outsized Capital Markets performance as its peers in Q1, importantly, the key International segment showed sequential improvement on many fronts, while Canadian Banking saw continued momentum with another quarter of strong market share gains in residential mortgage lending. We’ve increased our EPS estimates coming out of the quarter (up 2 per cent for F2023) largely to reflect continued strength in International, while maintaining our BUY rating on the shares. And while the bank’s valuation discount vs. peers has moderated through Q1 earnings season so far, we see further relative upside for the shares in the coming quarters.”

* CIBC’s Paul Holden to $103 from $105 with an “outperformer” rating.

* BMO’s Sohrab Movahedi to $95 from $93 with an “outperform” rating.


With Kinross Gold Corp. (KGC-N, K-T) being the sole North American gold producer with meaningful Russia exposure, RBC’s Josh Wolfson sees the current conflict in Ukraine as “a key overhang for shares and at risk of impacting prior-outlined capital allocation.”

The Toronto-based miner’s holds in the country now represent approximately 10 per cent of its net asset value and contributes 12 per cent of its earnings before interest, taxes, depreciation and amortization.

“Kinross has thus far publicly maintained its interest in remaining a Russian operator,” said Mr. Wolfson. “Management views have been justified by past Russian geopolitical conflict as not historically materializing as negative operating events for Kinross. Given this ongoing exposure, a prolonged valuation discount may be justifiable from both a risk and ESG perspective, reinforced by recent updates from companies with Russian exposure announcing high profile exits at high costs, and major investors/indices announcing dispositions in Russian-linked companies.

“We view risks to Kinross’ near-term financial outlook being minimal excluding Russia. Kinross’ Russia exposure consists of its mature Kupol mine and its Udinsk development project. These two assets dovetail, whereby Kupol cash flow is intended to be reinvested in Udinsk over 2022-25, largely insulating the company from capital control risks and where excluding both assets results in a muted net corporate free cash flow change. Furthermore, our calculations suggest the market has fully priced out Russia, with Kinross now trading at a slight discount to peers after applying zero value to its Russian assets. In a hypothetical and unexpected exit, or with Udinsk development deferred, Kinross corporate production would more sharply decline after 2023.”

Emphasizing geopolitical risk and gold price upside are closely linked, Mr. Wolfson thinks Kinross faces a relative disadvantage versus its peers.

“In our view, gold prices today are supported by a geopolitical risk premium, whereby a continuation or degradation of the current Russian-Ukraine conflict prolongs Kinross’ valuation challenges. Conversely, a resolution of this conflict may yield lower gold prices, where Kinross’ higher-leverage is a relative disadvantage (but with a valuation recovery),” he said. “We argue 2014′s Russia-Ukraine conflict is a poor comparison to draw parallels from, where Kinross and Russian equities underperformed for 1-2 years, but were heavily influenced by sharply lower gold and oil prices over this period.”

Maintaining an “outperform” rating for its shares, Mr. Wolfson cut his target to US$6 from US$6.50. The average is US$8.36.

Elsewhere, Jefferies’ Christopher LaFemina lowered his target to US$5.50 from US$6 with a “hold” rating.


After “strong execution” in the fourth quarter of 2021, Stifel analyst Martin Landry sees Spin Master Corp. (TOY-T) possessing “continued momentum” into the current year.

“Spin Master reported Q4/21 results ahead of expectations on strong revenue growth and margin expansion,” he said. “Gross margin expanded 300 basis points, impressive given supply chain challenges and inflationary pressures. It also contrasts with the margin erosion reported by Hasbro and Mattel during Q4/21. Spin Master has successfully diversified its product portfolio in recent years and reaped the benefits with each of the company’s six segments up double digits year-over-year in 2021. Momentum is expected to continue into 2022, despite a record 2021, partly explained by the company’s broad product portfolio.”

Touting its “healthy” market share gains in 2021 and the impact of the recent renewal of its global license agreement with Warner Bros. for DC Comics’ super heroes properties, including Batman, Mr. Landry said he expects a “healthy” first half of the year.

“Heading into 2022, TOY is well positioned with low inventory levels at retail according to management. This is expected to translate into good replenishment in Q1/22 and should also result in low sales allowance. We have increased our Q1 forecasts and expect revenue growth of 21 per cent year-over-year boosted by the new DC Comics toy lines, continued strength in Kinetic Sand, Paw Patrol, Gabby’s Dollhouse and Purse Pets. We expect Q1/22 adjusted EBITDA of $45 million, up 22 per cent year-over-year and adjusted diluted EPS of 12 cents, up 54 per cent year-over-year.”

Reiterating a “buy” recommendation for Spin Master shares, Mr. Landry raised his target to $60 from $58. The average is $57.91.

“In addition, the low inventory at retail should trigger healthy replenishment rates in H1/22,” he said. “TOY’s shares are trading at 8x forward EBITDA, a discount of 20 per cent to the average of HAS and MAT, which we feel is not justified given similar growth prospects and TOY’s stronger balance sheet. Spin Master is currently our best idea amongst our large cap coverage universe.”

Others making changes include:

* Canaccord Genuity’s Luke Hannan to $60 from $56 with a “buy” rating.

“Given (1) Spin Master’s ability to create coveted toy brands and verticals, (2) the potential for the company to undertake accretive acquisitions, and (3) higher contributions from the margin-accretive Digital Games segment, we believe the shares are undervalued at current levels,” said Mr. Hannan.

* TD Securities’ Brian Morrison to $60 from $58 with a “buy” rating.

“We see many positives within the Q4/21 financial release that support our BUY recommendation. This includes guidance in excess of consensus, the potential to deploy its material surplus cash resources to accelerate growth, and an attractive runway for growth from its expanding high-margin digital platform. With revenue momentum continuing in 2022 and the company providing profitability by operating segment commencing in Q1/22, we believe this should narrow the valuation discount to its peers,” he said.


In other analyst actions:

* Calling its 100-per-cent Windfall mine in Quebec “the best undeveloped, underground gold project in Canada,” Raymond James analyst Craig Stanley initiated coverage of Osisko Mining Inc. (OSK-T) with an “outperform” rating and $5 target. The average on the Street is $6.28.

* CIBC World Markets’ Mark Jarvi increased his target for Boralex Inc. (BLX-T) to $45 from $42, keeping an “outperformer” rating, while TD Securities’ Sean Steuart raised his target to $50 from $46 with an “action list buy” recommendation. The average is currently $45.19.

“The 30-per-cent sale of the France business exceeded our expectations, showing investors the value in BLX’s portfolio (at least in France) as well as putting BLX in a much better funding position to deliver on its growth targets. While shares have moved higher on this news and the resurgence in renewable stocks, we still see more upside and potential catalysts (NY RFP, M&A). After reflecting the France sell-down, our price target moves to $45,” Mr. Jarvi said.

* RBC’s Paul Quinn cut his Canfor Pulp Products Inc. (CFX-T) target by $1 to $7 with a “sector perform” rating. The average is $7.30.

“Canfor Pulp reported Q4 earnings that were well below our forecast and consensus expectations due to significant challenges in the pulp business. We think that ongoing transportation challenges, operational upsets, and an increasingly scarce B.C. fiber supply outweigh near-term positives in global pulp pricing,” he said.

* RBC’s Geoffrey Kwan raised his target for shares of Element Fleet Management Corp. (EFN-T) to $18, above the $15.67 average, from $17 with an “outperform” rating, while TD Securities’ Mario Mendonca reduced his target to $13.50 from $14.50 with a “hold” recommendation..

“EFN is our 2nd best idea for 2022. While the big picture message on 2022 and 2023 guidance remains unchanged, we think Q4/21 results demonstrate EFN is delivering strong financial performance despite the OEM production shortage and that the company continues to have positive momentum winning new customers and cross-selling existing customers more products and services, which should further drive revenue growth when OEM production normalizes. With the shares trading at 11 times P/E and 11-per-cent FCF yield (2023E), we view the shares as undervalued and offer substantial valuation upside as OEM production normalizes,” said Mr. Kwan.

* ATB Capital Markets’ Waqar Syed raised his Ensign Energy Services Inc. (ESI-T) target to $5.50, exceeding the $2.74 average, from $4.75 with an “outperform” rating.

* Canaccord Genuity’s Matt Bottomley cut his Green Thumb Industries Inc. (GTII-CN) to $43 from $46 with a “buy” rating, while Stifel’s Andrew Partheniou cut his target to $73 from $80 with a “buy” rating. The average is $51.63.

“Green Thumb Industries reported Q4/21 financial results that came in above our more muted top-line expectations (given sector-wide inflationary and wholesale pricing pressures anticipated for the period), while adj. EBITDA took a transient step back but maintained what is still a healthy margin profile (and above management’s previously communicated benchmarks),” Mr. Bottomley said.

“As one of the top players in the sector, we believe a premium valuation continues to be warranted.”

* Raymond James’ George Huang increased his Imperial Oil Ltd. (IMO-T) target to $57, above the $56.26 average, from $55 with a “market perform” rating.

“4Q21 wrapped up a strong year across the board for IMO which saw the Company achieve its highest upstream production in 30 years,” he said. “This coupled with robust utilization in the downstream complex (which averaged 97 per cent in 4Q21) and a strong financial position entering 2021 allowed IMO to return almost $3-billion to investors in the form of dividends and share repurchases throughout the year. The 26-per-cent dividend increase announced with quarterly results underscores Management’s intention to continue to return the lion’s share of FCF to shareholders. To this end, management commentary indicated a preference for a substantial issuer bid versus a special dividend. We continue to be impressed by IMO’s operating momentum and cash return potential but, the shares’ premium valuation relative to peers ultimately supports our Market Perform Rating.”

* RBC’s Jimmy Shan hiked his Morguard Corp. (MRC-T) target to $200 from $190, which is the current consensus. He kept a “sector perform” rating.

“Morguard Corp reported a better-than-forecast Q4, with NFFO/unit of $4.58, up 15 per cent year-over-year,” he said. “The retail and hotel segments caused a major divot in 2020 and 2021 to MRC’s track record of growing & compounding FFO/share. Outlook for its largest segment, multi-res, looks better in 2022. Centerpoint Mall can surface material upside but patience is required.”

* Mr. Syed also hiked his Precision Drilling Corp. (PD-T) target to $112 from $98, above the $79.73 average, with an “outperform” rating.

* Jefferies’ Christopher LaFemina cut his Sierra Metals Inc. (SMT-T) target to $1.80 from $2 with a “hold” rating. The average is US$2.79.

* RBC’s Luke Davis raised his target for Topaz Energy Corp. (TPZ-T) to $25, topping the $24.11 average, from $22.50 with an “outperform” rating, while Stifel’s Robert Fitzmartyn increased his target to $24 from $21.75 with a “buy” rating.

“Topaz reported year-end results in line with our expectations and slightly ahead of the market once again, with a robust FCF generation into 2022 providing for a small dividend increase while preserving the bulk of Excess FCF for M&A/A&D investment,” said Mr. Fitzmartyn.

* Canaccord Genuity’s Shaan Mir reduced her Valens Company Inc. (VLNS-T) target to $7 from $9, keeping a “speculative buy” rating. The average is $10.03.

“Valens FQ4/21 financial results (November-ended) came in slightly behind expectations as the company transitioned toward its ‘fewer, bigger, better’ strategy in its B2B segment (in anticipation of headwinds for undercapitalized partners),” he said. “Regardless, we remain optimistic on Valens outlook given continued momentum in its provincial sales channels (up 31.7 per cent sequentially) - what we believe is the key value driver for the business today.”


With a file from James Bradshaw

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