Wednesday’s analyst upgrades and downgrades

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

Citing strong sector fundamentals and “insane” valuations, iA Capital Markets analyst Johann Rodrigues now sees InterRent Real Estate Investment Trust (IIP.UN-T) as a “must-own REIT.”

Accordingly, he raised his recommendation for its stock to “strong buy” from “buy” in a research note released Wednesday.

“It was universally accepted that multi-family fundamentals pre-pandemic were among the strongest they had ever been, with peak immigration and constrained supply growth leading to sizeable mark-to-market gaps and robust rent growth,” said Mr. Rodrigues. “ We would contend that with the pandemic in the rear view, fundamentals are stronger than ever. The Federal government’s immigration target for the year (432K) would set a new all-time high by 8 per cent (vs. 2019) and new supply is being hit with cost inflation and labour shortages.”

The analyst said the Canadian-based multi-family sector has “spiralled” down by 6 per cent in the last month due to fears of the “punitive” policy changes to be introduced this year and the impact of rising rates.

“On the [post-earnings] conference call, management mentioned, more than once, its desire to increase exposure to newbuilds by acquiring (not just via development), perhaps to offset a change in rent control, which would be seen as a victory if vacancy decontrol was left intact,” he said.

“No doubt we are in an inflationary environment. CPI has spiked to lofty levels in Canada (6.7 per cent in March) and other G7 members fall on either side. Central banks have raised policy rates and pledged to do so again, and the bond market has ratcheted higher; 10-year money is now being priced at 3.7-3.9 per cent, a good 100 basis points higher than at the beginning of the year! But the REIT just posted 12-per-cent SPNOI growth in a quarter when its peers thus far have struggled. With leverage, that’s 20-per-cent NAV growth in what is seasonally the asset class’ weakest quarter. Student immigration is ramping up right as they hit their summer leasing season so expect things to get even better.”

Despite those obstacles, Mr. Rodrigues thinks “fundamentals remain as strong as ever and cap rates have yet to budge, especially in urban markets.” However, InterRent now trades at a 25-per-cent discount to net asset value, or “the largest since the Great Financial Crisis.”

“At this point, both risks are more than priced in,” he said. “While perhaps not finished trending lower if the entire market continues to drift lower on recession fears, we feel any buyers at these levels will be more than happy 18 months from now.”

He maintained a $20 target for InterRent units. The average on the Street is $18.81, according to Refinitiv data.

Other analysts making target adjustments include:

* Scotia Capital’s Mario Saric to $17.50 from $19.50 with an “sector outperform” rating.

“We are pleased to see strong Q1 SSREV and cost control drive double-digit SPNOI growth, by far the best among its peers to date,” said Mr. Saric. “With unamortized incentives roll-off accelerating through 2022, we think IIP can deliver near-sector leading per unit growth, like it did in Q1, and like it has over 10+ years. We get the regulatory uncertainty, but IIP near-term fundamental outlook is improving. The ‘slight positive’ sounds strange in the context of a 10-per-cent drop in TP but we think that is recoverable over time too.”

* RBC’s Jimmy Shan to $20 from $22 with an “outperform” rating.

“At an implied cap rate of 4.6 per cent, we believe regulatory and interest risks are more than priced in. If we put our private market hat on, IIP’s valuation implies that little growth is needed to achieve a reasonable levered IRR based on current interest rate,” said Mr. Shan.

* TD’s Jonathan Kelcher to $18 from $20 with a “buy” rating.

* Raymond James’ Brad Sturges to $18.25 from $20.25 with an “outperform” rating.

* CIBC’s Dean Wilkinson to $17 from $17.50 with a “neutral” rating.

* Canaccord’s Mark Rothschild to $17.25 from $18 with a “buy” rating.

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In response to Keyera Corp.’s (KEY-T) recent share price depreciation, Raymond James analyst Michael Shaw recommends “investors take advantage of this dislocation in the equity” following its better-than-anticipated quarterly results and guidance increase.

He raised his rating to “strong buy” from “outperform” on Wednesday, a day after its shares rose 0.9 per cent with the premarket release of its earnings report.

“Keyera’s first quarter beat and raise underscores the strong fundamental backdrop that is driving higher volume through KEY’s existing assets while simultaneously improving the fundamental and funding outlook for the KAPS pipeline,” Mr. Shaw said. “All of this is occurring while Keyera’s equity is moving lower, caught up in general market downdraft. This presents an opportunity for investors: Keyera is trading at just 10.4 times our 2023 EBITDA estimate — the lowest multiple in our Canadian pipeline and midstream coverage universe. As we move closer to the in-service date for the KAPS pipeline and the project becomes increasingly de-risked, we expect KEY’s multiple will similarly re-expand.”

Mr. Shaw said the fundamentals for Keyera are “unfolding as favourably as we could have hoped.”

“High commodity prices and improved producer cash flows are driving higher production volumes, all within the confines of producer capital discipline,” he added. “The combined impact of the better fundamentals in the core infrastructure segments and marketing EBITDA is having a material impact on funding outlook for Keyera as it completes a capital-heavy year. We expect KEY will now end the year at 4.2 times net debt to EBITDA (previously 4.3 times) and 3.7 times at the end of 2023.”

The analyst maintained a $36.50 target for Keyera shares. The average is $36.10.

Elsewhere, others making changes include:

* RBC’s Robert Kwan to $37 from $35 with an “outperform” rating.

“With the recent Investor Day in March, we viewed most of the quarterly updates as incremental, although we note the increase in guidance for 2022 realized Marketing margin. While Marketing results can be volatile, we positively view the potential for the stronger than previously forecast Marketing cash flow to more rapidly reduce balance sheet leverage, which would pave the way for other capital allocation decisions including dividend increases and/or share buyback,” said Mr. Kwan.

* CIBC’s Robert Catellier to $37 from $36 with an “outperformer” rating.

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While Nuvei Corp. (NVEI-Q, NVEI-T) reported first-quarter results that modestly exceeded the Street’s expectations on Tuesday, a group of equity analysts lowered their target prices for the financial technology company to fall in line with recent sector weakness.

“Nuvei results were in-line-to-modestly-higher versus our expectations,” said Citi analyst Ashwin Shirvaikar. “Nuvei left its FY22 outlook unchanged, while 2Q22 represents a measurable deceleration in the growth rate vs. 1Q22 (organic growth in the teens by our calculation)… this does imply a 2H22 re-acceleration and we believe investors will begin to ask about visibility. Notably, the company mentioned the possibility of a transformative acquisition down the road. Our estimates change modestly, but we’re reflecting the decline in comp valuations since prior earnings.”

Shares of the Montreal-based payment processor fell 6.4 per cent on Tuesday as tech stocks continued to slide. That drop came despite reporting revenue of US$215-million, up 43 per cent year-over-year and above the consensus forecast of US$211-million. Adjusted earnings per share of 46 US cents was 5 US cents above the Street’s expectation.

It also reiterated its prior outlook for fiscal 2022, including revenue of US$940-$980-million (up 33 per cent year-over-year at its midpoint) and adjusted EBIYDA of US$407-US$425-million (up 31 per cent).

“While we continue to believe in the many positives in the Nuvei story (high percentage of revenues from e-commerce; exposure to differentiated and growing revenue mix including online gaming; tech stack geared to take advantage of the revenue mix; attractive financial metrics, etc.), we are cautious of the risks (M&A-heavy backdrop; limited track record in current form; controlled corporation dynamics, etc.,),” said Mr. Shirvaikar. “Taken together, we believe the risk/reward is balanced. We believe the implied forward outlook should support the stock at current levels but also that a combination of sustained follow-through on the profitability metrics and better disclosure is needed to provide a material upside catalyst.”

Maintaining a “neutral” recommendation for Nuvei shares, Mr. Shirvaikar cut his target to US$50 from US$63. The average on the Street is US$87.87.

Others making changes include:

* RBC’s Paul Treiber to US$80 from US$100 with an “outperform” rating.

“Nuvei reported Q1 above consensus,” said Mr. Treiber. “However, Q2 guidance below consensus materially weighed on the stock. While the shortfall reflects FX and Nuvei is continuing to execute (record customer wins, share gains, etc.), the market is punishing any uncertainty. We believe Nuvei’s discounted valuation (14 times EV/EBITDA) and solid FCF/economics will provide a backstop for the stock in time.”

* Credit Suisse’s Timothy Chiodo to US$85 from US$95 with an “outperform” rating.

* Cowen and Co.’s George Mihalos to $87 from $123 with an “outperform” rating.

* JP Morgan’s Tien-Tsin Huang to US$65 from US$83 with an “overweight” rating.

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Scotia Capital analyst Konark Gupta sees the potential for “significant” growth from Exchange Income Corp. (EIF-T) following its largest acquisition to date, a $325-million deal for Northern Mat & Bridge.

Accordingly, he raised his rating for the Winnipeg-based company to “sector outperform” from “sector perform” previously “after sitting on the sidelines for more than two years.”

“Since the start of the pandemic, our primary concerns were headwinds facing EIF’s dominating segment (aviation), lack of visibility on cash flows when government support ends, and stock’s rich valuation vs. history,” he said. “However, our long-term earnings outlook has now significantly improved (more than 20 per cent) on the latest acquisition, while valuation has become highly attractive as the stock has underperformed over the past several months (down 8 per cent year-to-date). In addition, we believe EIF offers a nice defence against macro uncertainty given its highly diversified cash flow stream and a solid annualized dividend yield of 6.2 per cent (reflecting the latest 5-per-cent hike), which limit downside risk. [Tuesday], the company announced its largest acquisition to date, significantly raised EBITDA guidance, and resumed dividend growth after 32 months, while reporting record Q1 results against a challenging backdrop.”

Exchange Income is now projecting EBITDA in a range of $410-million to $430-million in 2022 and $500-million to $530-million in 2023, which Mr. Gupta called a “significant” improvement from its forecast of $400-million-plus run-rate after next year. He said it represents “remarkable” growth of 50-60 per cent by 2023 from the pre-pandemic peak of $329-million in 2019.

“The growth largely reflects the latest acquisition of Northern Mat which closed on May 10,” he said. “The company also notes upside potential from any incremental growth capital deployment (organic or inorganic). Equally important, we believe EIF will achieve this solid EBITDA growth by 2023 while bringing down the leverage ratio to the low end of the historical range of 3-4 times and the dividend payout ratios to new record low levels, thereby creating room for more capital deployment and potentially more frequent dividend increases.”

Mr. Gupta hiked his target for its shares to $56 from $47. The average is $52.64.

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Pointing to lower-than-expected capex costs for its Phase II underground project, Scotia Capital analyst Orest Wowkodaw raised his rating for Turquoise Hill Resources Ltd. (TRQ-T) to “sector outperform” from “sector perform” before the bell on Wednesday.

“We are upgrading our investment rating on TRQ shares .. based on a significantly more attractive risk-reward profile following (1) lower-than-anticipated preliminary Phase II capex, which further de-risks the investment case; (2) the recent decline in the share price due to market conditions; and (3) ongoing share price support from the proposed plan of arrangement by Rio Tinto at $34.00 per share (we continue to believe that a markedly higher offer price will be required to convince minority shareholders to tender),” he said.

The miner is now expected capex for Phase II of $7.06-billion, up a “modest” 2 per cent from its previous guidance of $6.95-billion (including $195-million in COVID costs) but 6 per cent lower than Mr. Wowkodaw’s estimate of $7.5-billion.

“Overall, given the lower than anticipated Phase II capex, we view the update as positive for the shares,” he said.

The analyst raised his target by $1 to $44. The average is $41.50.

Elsewhere, Canaccord Genuity’s Dalton Baretto bumped his target to $45 from $43 with a “buy” rating.

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Expecting short-term macro concerns to stretch through the remainder of 2022, Raymond James analyst Rahul Sarugaser lowered his recommendation for Village Farms International Inc. (VFF-Q, VFF-T) to “outperform” from “strong buy” despite reporting a first-quarter revenue beat.

“We must admit, we got this one partly wrong: in our Mar. 9 note, ‘we firmly disagree[d] with the view that VFF will turn unprofitable,’ estimating that cannabis positive EBITDA would outweigh the inflationary headwinds on VFF’s produce business,” he said. “What we failed to account for was the scale of these headwinds that, in the end, drove VFF’s negative net EBITDA in 1Q22. This notwithstanding, we remain steadfast in our view that VFF’s produce business is a breakeven ‘placeholder’ for future large-scale cannabis cultivation assets in the U.S.; we keep our eye squarely trained on VFF’s cannabis business in the meantime. To that end — as we expected — Pure Sunfarms delivered another quarter of positive EBITDA from its Canadian cannabis business, the company’s 14th consecutive quarter as such. That’s 3.5 years of profitable operations from Pure Sunfarms: a standout in this sector.”

Before the bell on Tuesday, the Vancouver-based company reported revenue of US$70.2-million, down from US$72.8-million during the same period a year ago but exceeding both the analyst’s US$68.9-million forecast and the US$69.4-million projection from the Street. However, an adjusted earnings before interest, taxes, depreciation and amortization loss of US$6.1-million fell short of expectations (profits of US$7.6-million and US$6.7-million, respectively), which was attribution to its produce business facing inflationary pressures in freight, labour, fertilizer and packaging.

“While we remain very positive on the long-term prospects of VFF’s cannabis business, we acknowledge VFF’s cash position —now $41.4-million vs. $58.6-million in 4Q21 — which we expect may be weighing on sentiment, alongside near-term cost pressures on VFF’s produce business,” said Mr. Sarugaser. “We do, however, point to Pure Sunfarms’ potential to drive significant Rev. and EBITDA outperformance in 2Q and 3Q22, tipping the EBITDA scales back into net positive territory by 2022YE, essentially self-funding VFF’s option on the U.S. (its produce business).”

After reducing his revenue and earnings expectations for both 2022 and 2023, Mr. Sarugaser cut his Street-high target for U.S.-listed Village Farms shares to US$14 from US$16. The current average target is US$10.73.

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Ritchie Bros. Auctioneers Inc.’s (RBA-N, RBA-T) first-quarter report was “a good print amidst the tight supply environment,” according to RBC’s Sabahat Khan

“Ritchie Bros.’ Q1 results reflected strong topline and margin performance amidst a tight supply environment, with results outperforming RBC and consensus estimates across all metrics,” he said. “On the earnings call, management noted that the supply-related issues being faced by the Machinery industry have not abated, and we believe equipment supply is likely to remain constrained over the coming quarters. With that said, we believe the tight supply environment will in part be mitigated by higher pricing (the U.S. and Canada composite price indexes as reported by Ritchie Bros. were up 28 per cent and up 20 per cent year-over-year in April, respectively, albeit prices have slightly moderated since peaking in January). We note that Ritchie Bros. has countercyclical characteristics, which should position the company well amidst the current backdrop given the outlook for higher interest rates over the course of 2022 (which could dampen economic activity). In the case of an economic slowdown, we believe Ritchie Bros. would be better positioned than OEM/Dealer names given its countercylical characteristics (i.e., less demand for machines should drive increased disposition activity through Ritchie Bros.’ various channels).”

For the quarter, the Burnaby, B.C.-based company reported gross transaction volume of US$1.439-billion, up 12.9 per cent year-over-year and above Mr. Khan’s US$1.268-billion estimate. Revenue of US$394-million, rising 18.8 per cent, also topped his estimate (US$329-million).

“On the earnings call, management noted that M&A going forward will be focused on accelerating the company’s transition further “upstream” (i.e., further toward the marketplace channel), and that the company has a robust pipeline of M&A opportunities. We note that the balance sheet is in good shape (Net Debt/ Adjusted EBITDA of 0.5 times exiting Q1), particularly given that the company is no longer pursuing the Euro Auctions transaction,” he said.

Keeping an “outperform” rating, Mr. Khan hiked his target for Ritchie Bros. shares to US$67 from US$60 with an “outperform” rating. The average is $59.57.

Elsewhere, Scotia’s Michael Doumet raised his target to US$64 from US$60 with a “sector perform” rating.

“The significant size of the EPS beat came as a surprise following on the soft 4Q,” he said. “While we have yet to see the full consistency of Ritchie’s growth initiatives, directionally, the satellite yards, the new sales coverage model, the rollout of the IT platform, the transition to a marketplace, growth in IMS activations (up 103 per cent year-over-year) etc., are having a positive impact on GTV, service revenue growth, and earnings.

“For 1Q22, we (and we suspect consensus) could not have expected the strong GTV performance, up 13 per cent, particularly against the tight supply environment. While the company benefited from additional auctions/calendar shifts and strong agriculture auctions, it executed well and drove share gains (according to management). Additionally, the company benefited from strong fee growth, through additional services and fee structures, and cost leverage (core SG&A increased 8 per cent vs. service revenue growth of 19 per cent).”

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After better-than-expected first-quarter results, including “strong” same-store sales growth of 22.8 per cent and margin expansion, Stifel analyst Martin Landry sees Pet Valu Holdings Ltd.’s (PET-T) momentum continuing into the current quarter.

“According to management, demand remained strong in Q2/22 despite a low promotional environment and continued price inflation across all product segments,” he said in a research note titled That is a healthy PET. “The company is seeing strong growth across all categories from consumables to hard lines. PET benefits from 2/3rd of its SKUs being staples oriented, which creates recurring traffic, helping to navigate the difficult macroeconomic environment. These comments suggest that demand is rather inelasticity supporting our view about the industry being defensive.”

Mr. Landry increased his 2022 revenue forecast by 2 per cent to reflect the company’s momentum, which includes a loyalty program showing notable growth, and “strong growth prospects.” His full-year earnings per share projection is now $1.50, up from $1.42 previously.

“We see upside potential to our estimates as PET continues to outperform both our estimates and consensus driven by continued strong same-store sales growth that as averaged over 13 per cent over the past 3 years,” he said.

However, the analyst cut his target for Pet Valu shares to $42 from $44 “to reflect the general contraction in public equity valuations seen recently.” The average on the Street is $41.

Elsewhere, National Bank Financial’s Vishal Shreedhar raised his target by $1 to $38 with a “sector perform” rating.

“We continue to remain on the sidelines given moderating EBITDA growth through 2022. In addition, for now, we see better value elsewhere in our discretionary coverage universe,” he said.

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Following an “improved” first-quarter print, highlighted by margin expansion, Canaccord Genuity analyst Matt Bottomley raised his rating for Cronos Group Inc. (CRON-T) to “hold” from “sell” with a $4.50 target, up from $4.25. The average is $5.75.

“Cronos reported Q1/22 financial results that although flat on the top line, came in higher than our expectations on continued gross margin expansion after finally inflecting into positive territory to end 2021,” he said. “However, independent of earnings, as sector-wide valuations remain under pressure (with CRON down more than 50 per cent year-over-year), we note that as of Tuesday’s close CRON’s cash/short-term investments represented 93 per cent of the company’s $1.4-billion market capitalization (or $3.40 per share). With incremental operational improvements and with a significant portion of the company’s current implied value supported by its cash reserves, we are increasing our recommendation.”

Elsewhere, CIBC’s John Zamparo upgraded Toronto-based Cronos to “outperformer” from “neutral” with a US$7.50 target.

“CRON provides downside protection and upside from a potential continuation of vastly improved results,” he said. “We see multiple reasons for optimism: CRON still has $1-billion ($2.62/share) of net cash; valuation looks attractive (1.7 times 2022 estimated sales); the path to profitability took a significant step forward in Q1; and strategic initiatives like differentiation through rare cannabinoids and a focus on high-margin Israeli sales are gaining traction. Cannabis remains an inherently volatile sector in an evolutionary state. Moreover, sentiment is poor, regulatory catalysts are unpredictable, and risk exists if execution does not continue to improve. However, we view the stock as an attractive option on sustained operational progress from management.”

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“Following a steep share price correction and an associated valuation contraction over the past month,” TD Securities analyst Sean Steuart upgraded Innergex Renewable Energy Inc. (INE-T) to “buy” from “hold,” touring its “growing development potential” in Canada following in-line quarterly results.

“In our view, Innergex has a widening growth opportunity set. We anticipate that this will be augmented by its partnership with Hydro-Québec, which should allow the company to consider larger M&A opportunities in North America. Innergex’s shares have underperformed other Canadian IPPs and, in our view, the company’s valuation has contracted back to attractive levels,” he said.

To reflect a higher risk premium for its development pipeline, Mr. Steuart cut his target to $19 from $21, below the average of $22.33 on the Street.

“Given an 18-per-cent share price correction since early-April, we see a compelling entry point,” he emphasized.

Elsewhere, Desjardins Securities’ Brent Stadler cut his target to $20 from $20.50 with a “hold” rating, citing project delays.

“1Q22 results were solid,” he said. “INE reached a favourable settlement with BC Hydro over curtailment issues from May 2020, which should set a precedent. Also, INE has locked in elevated prices at some of its assets in France and could sign attractively priced PPAs for its merchant exposure in Chile, which would drive some modest upside to our estimates. The payout ratio is trending lower, which is a positive sign.”

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In other analyst actions:

* CIBC’s Paul Holden upgraded Element Fleet Management Corp. (EFN-T) to “outperformer” from “neutral” with a $14 target, below the $15.56 average on the Street, while Scotia’s Phil Hardie raised his target to $16 from $15.50 with a “sector outperform” rating.

“Q1 results and revised guidance alleviate our concerns related to vehicle supply,” said Mr. Holden. “EPS revisions are positive rather than negative. We like the business in the current environment given it is a net beneficiary from inflation and has relatively low sensitivity to macroeconomic risks. The current valuation of 11.7 ties, based on our revised 2023 estimate, is comparable to an average of 11.7 times during Jay Forbes’ tenure.”

* Stifel’s Robert Fitzmartyn raised his rating for Journey Energy Inc. (JOY-T) to “buy” from “hold” with a $7.50 target, up from $6.75. The average is $6.83.

“Journey reported its first quarter results that we view as largely in line with expectations,” he said. “It is just beginning a far more expansive drilling program relative to prior years and has formalized the advancement of its 2nd natural gas fired power project at Gilby. We lift our forecast on increased corporate guidance, and restore a BUY rating on implied returns that look attractive on a riskadjusted basis.”

* Canaccord Genuity’s T. Michael Walkley cut his Absolute Software Corp. (ABST-Q, ABST-T) target to US$17 from US$22 with a “buy” rating, while BMO’s Thanos Moschopoulos reduced his target to $12 (Canadian) from $14 with a “market perform” rating and TD’s David Kwan lowered his target to $12 from $13 with a “buy” rating. The average is US$16.33.

“Absolute posted strong Q3/F22 results with adjusted revenue and EBITDA above our estimates and management raised F2022 guidance,” he said. “We believe Absolute has a unique technology moat – an embedded software in the firmware of 500M+ PCs by OEM partners – and the ability to drive towards 20-per-cent-plus long-term growth in a large and growing TAM, while maintaining its rule of 40 metrics. Further, enterprise / government computers typically run an average of 10+ security apps, which Absolute’s resilience offering can ensure are correctly installed and working properly. The beat and raise supports our view that management is executing well and the share price represents a very attractive entry point. We believe patient long-term investors are likely to be rewarded as the newly combined company reaccelerates revenue growth as evidenced by the Q3 results and drives cross-selling opportunities with the integration execution. As a result, we remain bullish on Absolute’s long-term growth drivers, and reiterate our BUY rating.”

* JP Morgan’s John Royall cut his Alimentation Couche-Tard Inc. (ATD-T) target to $57 from $59, below the $61.71 average, with an “overweight” rating.

* CIBC’s Anita Soni cut her Barrick Gold Corp. (GOLD-N, ABX-T) target to US$29 from US$30, keeping an “outperformer” rating. The average is US$28.71.

* Cowen and Co. initiated coverage of Bausch + Lomb Corp. (BLCO-N, BLCO-T) with an “outperform” rating and US$35 target.

* RBC’s Jimmy Shan lowered his Boardwalk Real Estate Investment Trust (BEI.UN-T) target to $68 from $69 with an “outperform” rating. Others making changes include: TD’s Jonathan Kelcher to $68 from $70 with a “buy” rating, Scotia’s Mario Saric to $59 from $61 with a “sector perform” rating and CIBC’s Dean Wilkinson to $60 from $61 with a “hold” rating. The average is $62.50.

“We feel more comfortable at a sub-$50 unit price than $60+, which we think is a reasonable trading range should REIT unit prices stage an anticipated recovery (assuming 3-4-per-cent Real GDP growth through 2023 driving 13-per-cent-plus NAVPU growth),” said Mr. Saric. “Overall, much better absolute entry point, but we still see relatively higher upside in some Ontario-focused peers.”

* BMO’s Joel Jackson increased his Chemtrade Logistics Income Fund (CHE.UN-T) target to $8 from $7.50. with a “market perform” rating. The average is $9.75.

“Even if/when caustic fades (CHE uses presumably IHS’ forecast to assume a 40 per cent/$300 per ton drop in spot caustic by year-end), this should be offset by a normal volume year (2023) at North Van and modest growth elsewhere,” he said. “This might get CHE back on the radar as a high-yielding opportunity (7-8 per cent) with moderate growth prospects but sufficient dividend cushion (50-per-cent payout). This being said, earnings remain highly sensitive to caustic prices, well above mid-cycle currently.”

* CIBC’s Hamir Patel raised his Conifex Timber Inc. (CFF-T) target to $2.50 from $2.25, maintaining a “neutral” rating. The average is $2.75.

* National Bank Financial’s John Shao cut his Copperleaf Technologies Inc. (CPLF-T) target to $16 from $20 with an “outperform” rating, while BMO’s Thanos Moschopoulos reduced his target to $15 from $20 with an “outperform” rating. The average is $17.67.

“Copperleaf reported what we considered essentially in-line results for a seasonally soft quarter,” said Mr. Shao. In our view, while the year-over-year revenue growth moderated off a strong FQ4, we’d note it was largely driven by the seasonality as well as the accelerated perpetual license revenue that was recognized in the prior quarter. The more important metrics – subscription revenue growth and ARR growth, remained solid at 34 per cent and 26 per cent, respectively. If anything, we’d note the FQ1 results were consistent with the financial projections in our initiation report, and what we saw and heard based on today’s press release and earnings call was consistent with our previous view that the Company has already built a strong deal pipeline through its past investments in products and sales channel - as the Company executes on that growing pipeline, we should see a scaling growth towards the second half of the year.”

* RBC’s Douglas Miehm cut his Dentalcorp Holdings Ltd. (DNTL-T) target to $18 from $20 with an “outperform” rating. Others making changes include: TD’s Daryl Young to $19 from $20 with a “buy” rating, BMO’s Stephen MacLeod to $18 from $20 with an “outperform” rating, Canaccord’s Tania Armstrong-Whitworth to $19 from $19.50 with a “buy” rating, Desjardins Securities’ Gary Ho to $18 from $21 with a “buy” rating and CIBC’s Scott Fletcher to $18 from $20 with an “outperformer” rating. The average is $19.30.

“While we are encouraged by the record pace of acquisitions and sequential improvement in organic growth, the recovery from Omicron/COVID-19 in April and May has been slower than expected (more 2H-weighted),” said Mr. Ho. “DNTL’s business model is well-suited to a recessionary environment and should withstand elevated inflation.”

“We view DNTL as a quality compounder given its (1) proven M&A playbook in a fragmented market; (2) organic growth outlook; (3) proprietary technology; (4) compelling financial profile with resilient top-line growth, healthy margins and growing cash flows; and (5) recession-resistant attributes.”

* Desjardins Securities’ Jerome Dubreuil trimmed his target for Dialogue Health Technologies Inc. (CARE-T) to $10 from $10.50, above the $8.61 average, with a “buy” rating. Other changes include: Canaccord’s Doug Taylor to $8 from $10 with a “speculative buy” ratng and Scotia’s Adam Buckham to $8.50 from $11 with a “sector outperform” rating.

“ARE’s results were in line with our estimates, but slightly missed consensus, mainly due to non-recurring margin pressures,” said Mr. Dubreuil. “Revenue was in line with expectations and management indicated its pipeline is at record levels despite recently signing the large Scotiabank contract. Moreover, we believe the stock price does not reflect the recent acquisition of Tictrac, which we believe unlocks international growth opportunities and materially improves CARE’s medium-term profitability profile.”

* Scotia Capital’s Michael Doumet cut his E Automotive Inc. (EINC-T) target to $15 from $17, below the $20.79 average, with a “sector perform” rating, while Canaccord’s Aravinda Galappatthige lowered his target to $17 from $20 with a “buy” rating.

* CIBC’s Mark Petrie hiked his George Weston Ltd. (WN-T) target to $188 from $177, above the $174.43 average, with an “outperformer” rating.

* RBC’s Douglas Miehm cut his Hudbay Minerals Inc. (HBM-T) target to $12 from $14 with an “outperform” rating. Others making changes include: Canaccord’s Dalton Baretto to $11.50 from $12.50 with a “buy” rating, Scotia’s Orest Wowkodaw to $12 from $12.50 with a “sector perform” rating and National Bank’s Shane Nagle to $11.50 from $12.50 with an “outperform” rating. The average is $13.31.

“Moving past whatshould be the weakest quarter of the year, we continue to expectstrong FCF and production growth in 2022 from Hudbay. The Company can create additional value by de-risking the Copper World project in Arizona starting with a PEA in the coming weeks,” said Mr. Miehm.

* National Bank Financial’s Jaeme Gloyn raised his Intact Financial Corp. (IFC-T) target to $230, above the $206.50 average, from $225, keeping an “outperform” rating, while Raymond James’ Stephen Boland cut his target to $206 from $217 with a “strong buy” rating and TD’s Mario Mendonca bumped his target to $210 from $205 with a “buy” rating.

“We believe the sector remains well-positioned for the year given persistent hard market conditions and rising interest rates that support improved investment income,” he said. “We maintain our view that pricing trends will continue to outpace loss cost trends overall, even for Personal Auto lines as driving behaviour has yet to complete its path to normalization and auto repair / parts price increases in Canada still lag U.S. trends.

“As it relates to IFC, we believe the next leg of share price appreciation is contingent on proof of execution. Q1-22 results reaffirmed our view execution will unfold favourably in particular on two areas of recent investor focus: i) the integration of the RSA acquisition (IFC generated operating EPS accretion of 12 per cent in the 10 months since closing), and ii) strong Personal Auto results (the segment delivered in-line results in Q1 with favourable reserve development, suggesting inflation risks remain muted). In addition, we see more M&A and buyback upside near term.”

* BMO’s Jackie Przybylowski cut her Kinross Gold Corp. (KGC-N, K-T) target to US$8 from US$9.75 with an “outperform” rating. The average is US$7.91.

“Kinross’ reported results excluded the Chirano and Kupol mines, which made a miss on production and sales appear more significant,” she said. “The company similarly updated its 2022 and forward guidance to reflect the sales of these assets, as well as to reflect higher oil and gold prices. We continue to expect that Kinross will deliver meaningful catalysts across a number of projects this year and into the medium-term as it refocuses its development efforts on the new Dixie project and other assets in its portfolio.”

* ATB Capital Markets’ Chris Murray lowered his target for Mainstreet Equity Corp. (MEQ-T) to $125 from $140, which is the current average, with a “sector perform” rating.

“The Company delivered a solid quarter despite facing a difficult operating environment, with rising interest rates posing an additional headwind,” he said. “We continue to see management as well-positioned to benefit from its contrarian, countercyclical M&A strategy and strong commodity price environment, helping offset the potential impact of rising cap rates. We remain positive on the Company’s longer-term outlook but continue to see valuations adequately reflecting our expectations for near-term growth and cap rates in MEQ’s core western Canadian markets.”

* Mr. Murray also cut his SNC-Lavalin Group Inc. (SNC-T) target to $37 from $44 with an “outperform” rating. The average is $39.31.

“Q1/22 results were again challenged by the legacy infrastructure (LSTK) segment, which remains in run-off mode and a headwind to profitability, with margin pressure at SNCL Services also contributing to weaker-than-expected results,” he said. “Book-to-bill trends, particularly in Engineering Services, represented a positive in the quarter and are supportive of SNC’s ongoing transition to a design and engineering firm with a more predictable margin profile. Management reaffirmed guidance, and we continue to view valuations as interesting, particularly for those with a longer time horizon given the potential near-term impact of LSTK projects.”

* RBC’s Pammi Bir cut his Melcor Developments Ltd. (MRD-T) target to $18 from $19 with a “sector perform” rating.

“There is no change in our constructive stance on Melcor Developments (MRD) following first-quarter results which came in modestly ahead of our outlook. While we continue to see a number of tailwinds in both Alberta and the U.S., we remain vigilant to potential risks stemming from global supply chain/inflation issues, and rising interest rates. That said, at current levels, we believe the MRD share price reflects a reasonable margin of safety and see an increasingly bullish picture emerging should momentum continue into the back-half of 2022,” he said.

* Calling its first quarter “disappointing,” RBC’s Greg Pardy reduced his Ovintiv Inc. (OVV-N, OVV-T) target to US$50 from US$53, maintaining an “outperform” rating. The average is US$67.16.

“With its formula driven shareholder returns model in motion, Ovintiv’s buybacks and variable dividends should move appreciably higher in the quarters to come,” he said.

* CIBC’s Mark Petrie raised his target for Pet Valu Holdings Ltd. (PET-T) to $43 from $42, exceeding the $41 average, with an “outperformer” rating.

* Scotia Capital’s Phil Hardie lowered his Propel Holdings Inc. (PRL-T) target to $14, below the $14.92 average, from $15 with a “sector outperform” rating, while Canaccord’s Scott Chan trimmed to his target to $13.50 from $13.75 with a “buy” rating.

* JP Morgan’s Phil Gresh increased his Suncor Energy Inc. (SU-T) target to $54 from $52 with an “outperform” rating. Others making changes include: RBC’s Greg Pardy to $47 from $42 with a “sector perform” rating and BMO’s Randy Ollenberger to $54 from $48 with an “outperform” rating. The average is $49.75.

“Suncor’s first-quarter results were solid while its conference call was uneventful, which is just how we like it. From where we sit, the path of Suncor’s operating performance—safety and reliability—will determine its relative market performance over the coming months,” said Mr. Pardy.

* CIBC’s Jacob Bout cut his Superior Plus Corp. (SPB-T) target to $13.50 from $14 with an “outperformer” rating. The average is $13.75.