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

While Hydro One Ltd.’s (H-T) second-quarter results fell in line with his expectations, iA Capital Markets analyst Matthew Weekes downgraded its shares to “hold” from “buy” in reaction to year-to-date price outperformance and sees it trading at a premium to peers as well as the higher end of its historical trading range.

“H’s stock has performed well YTD due to strong H1 financial results and defensive characteristics,” he said. “We are cautious on the cadence of earnings growth into 2023 given that H will be entering cost of service (COS) re-basing following strong performance under the current Incentive Ratemaking (IR) term. Based on our forecast for flat EPS in 2023, we see H trading at 21.5 times P/E, representing a premium to regulated Canadian peers and on the higher end of the Company’s historical trading range. As such, we are electing to move our rating to Hold (previously Buy) as we await more visibility on the outlook beyond 2022, including a decision on the JRAP [Joint Rate Application Investment Plan] (anticipated Q1/23) and CEO succession.”

Shares of the utility rose 1.1 per cent on Tuesday following the premarket quarterly release.

Earnings per share rose 7.5 per cent year-over-year to 43 cents, matching Mr. Weekes’s forecast and 2 cents ahead of the Street’s estimates. He attributed the beat to “OEB-approved rate increases, higher peak demand due to favourable weather and re-opening of the economy, and lower O&M expenses as a greater amount of expenditures were capitalized due to storm restoration activity.”

“H reaffirmed its guidance for 4-7-per-cent EPS CAGR [compound annual growth rate] through 2022 off of the 2019 normalized figure,” added Mr. Weekes. “This implies 2022 EPS of $1.65 at the upper end. While earnings have been strong in H1, the Company indicated that it expects O&M to be higher in the second half of the year, while weather represents an uncertain variable. We are building in higher O&M in H2/22 but remain above the upper end of H’s guidance with our revised 2022E EPS of $1.69 (cons: $1.68).

“H forecasts capital investment of just under $16-billion from 2022-2027,representing a minor increase from estimates provided in Q1. H’s updated CAPEX forecast reflects updated cost estimates for the Chatham to Lakeshore transmission line along with expenditures related to storm restoration activities. The scope and timing of several southwest Ontario transmission projects remain under review and would be additive to H’s growth expenditures when finalized.”

Mr. Weekes maintained a target price of $37 for Hydro One shares. The average target on the Street is $36.57, according to Refinitiv data.

“We remain cautious on the cadence of earnings growth in 2023 due to COS re-basing following strong earnings anticipated for 2022,” he said. “While we believe it is prudent to move to the sidelines as we await more visibility on H’s outlook beyond 2022, we note that Hydro One’s strong balance sheet and the potential for the OEB to increase allowed ROEs should position the Company favourably to continue delivering solid returns to shareholders in the short-term environment of high inflation and rising interest rates.”

Elsewhere, others making changes include:

* BMO’s Ben Pham to $38 from $37 with an “outperform” rating.

“The solid second quarter results are once again indicative of how H can achieve growth in a volatile market backdrop. EPS grew 7 per cent and rate base expectations are moving higher. In the meantime, allowed ROEs are poised to move higher, ESG remains a focus (new sustainability report released), a search for a new CEO has started, and the balance sheet remains one of the best in our coverage (A-rated),” said Mr. Pham.

* Scotia’s Robert Hope to $36 from $35 with a “sector perform” rating.

“We like the fundamental outlook for Hydro One, though uncertainty on the outcome of the key joint rate application keeps us on the sidelines,” said Mr. Hope.

* TD Securities’ Linda Ezergailis to $35 from $34 with a “hold” rating.

“We believe that Hydro One’s strategic focus on Ontario should support its growth objectives in the long term, given the significant amount of infrastructure investments required in the region, although it comes with the single-jurisdiction risk. Hydro One’s franchise should also benefit from the need to invest in electricity infrastructure to achieve Ontario’s long-term electrification and climate goals. The company’s focus on wires in the electrical value-chain might be of interest to investors looking to participate in regulated utility infrastructure opportunities related to the transition to lower-carbon energy sources over time,” she said.

* Wells Fargo’s Neil Kalton to $40 from $39 with an “overweight” rating.


With its “solid” operating performance driving “healthy” cash flow growth, Canaccord Genuity analyst Mark Rothschild raised his recommendation for RioCan REIT (REI.UN-T) to “buy” from “hold,” citing a forecast total return of 18.9 per cent.

The move comes a day after the Toronto-based REIT reported funds from operations (FFO) per unit for its second quarter of 43 cents, up 7.5 per cent year-over-year and topping the Street’s expectation of 41 cents, The analyst attributed the beat to “a combination of healthy internal growth, residential inventory gains, and greater fee income.”

“RioCan REIT reported an impressive quarter highlighted by strong FFO per unit growth of 7.5 per cent as a result of robust internal growth, driven by continued decreases in pandemic-related expenses and leasing spreads on renewals of, on average, 11.2 per cent,” said Mr. Rothschild. “Demand for space is showing no signs of slowing, and we believe this should allow for continued healthy organic growth, supported by development completions. Following the Q2/22 results, we continue to utilize a cap rate of 5.75 per cent to value RioCan’s portfolio, and our NAV estimate is now $21.74 per unit (previously $20.75).”

Seeing it “well positioned to withstand rising interest rates,” he raised his target for RioCan units to $23.50 from $22. The average is $24.86.

“RioCan’s units currently trade at an implied cap rate of 5.9 per cent, or a 5.2-per-cent discount to our NAV estimate, compared to an average premium to NAV of 0.7 per cent for its Canadian retail peers. On a cash flow multiple basis, the REIT’s units are trading at 13.3 times 2023 estimated AFFO, below the average of 14.7 times for its Canadian retail peers,” said Mr. Rothschild.

Elsewhere, CIBC’s Dean Wilkinson cut his target to $24 from $25 with an “outperformer” rating.


Following a “soft” outlook that could stretch into 2023, National Bank Financial analyst Richard Tse said he’s “taking a pause” on E Automotive Inc. (EINC-T).

Despite seeing “potential upside longer term,” he lowered his recommendation for the Toronto-based online vehicle marketplace provider to “sector perform” from “outperform,” expressing concern over “the degree of headwinds combined with uncertainty around the scale of OPEX reductions in light of the cash burn.”

After the bell on Tuesday, the company reported revenue of $30.1-million, up 45 per cent year-over-year and above the estimates of both Mr. Tse ($28-million) and the Street ($29.5-million). An adjusted earnings before interest, taxes, depreciation and amortization loss of $10.7-million missed expectations (losses of $7.2-million and $4.8-million, respectively).

“While organic growth was positive, we would note U.S. organic growth was negative for a second consecutive quarter, down approx. 14 per cent year-over-year care of a challenging used car market (in the U.S.) which was down a consistent 14 per cent year-over-year according to data from Manheim,” the analyst said.

“Given expectations that the market will continue to be soft from a supply and potentially demand side perspective for the remainder of this calendar year and perhaps into 2023, we’re tempering our outlook to reflect E INC’s adjusted strategy in the short term to focus on select markets – Canada, U.S. West, Midwest, and Gulf States over the broad U.S.”

Reducing his sales and earnings projections for both 2022 and 2023, Mr. Tse cut his target for E Automotive shares to $10 from $17. The average is $18.06.

Elsewhere, others making changes include:

* Canaccord Genuity’s Aravinda Galappatthige to $12 from $17 with a “buy” rating.

“The effects of ongoing supply chain issues coupled with the challenging economic conditions continue to be felt in the auto sector, with lower vehicle volumes being offset by higher pricing for the time being,” he said. “With that said, the Manheim Used Vehicle Value Index, which measures used vehicle price change, reached a peak in January 2022 of 236.3, and fell steadily to 221.5 as of July 2022. ... This is leading to a phase of transitory standoff in the market where sellers are holding out for higher prices (given prior trends) while buyers are unwilling to pay up. This in turn is exacerbating the pressure on volumes. As such, commentary and forecasts from various industry sources (SEMA, Cox Automotive, KAR) suggests that tight inventories and generally lower used car volumes could persist well into 2023.”

* Scotia’s Michael Doumet to $10 from $15 with a “sector perform” rating.

“Given the market conditions (both end-market and capital markets), EINC is adjusting its strategy to focus on growth in existing markets (versus its plan to expand in five U.S. regions),” said Mr. Doumet. “The shift is intended to accelerate the path to profitability. In terms of the profit levers for the 2H, the company is looking to limit discretionary spend and adjust fees on its platform. We expect a modest improvement to 3Q EBITDA – and a much larger improvement in 4Q (as we think supply will improve). We trimmed our estimates and lowered our valuation multiple to 2.25 times EV/Sales to reflect the lower valuations across the space and broader market.”

* CIBC World Markets’ Todd Coupland to $14 from $17 with an “outperformer” rating.


BMO Nesbitt Burns analyst Peter Sklar thinks the motivation for Fairfax Financial Holdings Ltd.’s (FFH-T) $1.2-billion proposal to take Recipe Unlimited Corp. (RECP-T) private is “apparent.”

“Given that the Canadian restaurant space, both quick-service and full-service, is finally turning the corner and gaining momentum after languishing for essentially two years as a result of COVID-19, the pre-bid stock price arguably offers value to Fairfax,” he said in a research note.

“We reference both Restaurant Brands’ and Recipe’s recent Q2/22 quarterly reports which highlighted this recovery with Tim Hortons generating same-restaurant sales (SRS) in Canada of 14.2 per cent and Recipe generating SRS of 61 per cent. We estimate that each of Tim Hortons Canada and Recipe has about 6 per cent/7 per cent of pricing built into the menu board implying that traffic and average check made substantial gains during the quarter. Much of these strong results can be attributed to a depressed comparable period when there were impactful lockdown measures last year due to COVID-19. However, we believe these results also reflect the considerable pent-up demand among Canadians who desire to return to restaurant experiences following about two years of restrictions. While the Canadian consumers’ discretionary income is being squeezed by interest rates and high food and fuel prices, we note that the consumer did accumulate savings during COVID-19 and Recipe’s banners are generally positioned as value in both the quick-service and full-service verticals, which should appeal to consumers in this environment.”

Mr. Sklar thinks a higher price by Fairfax or a superior bid by another party is “unlikely,” noting Fairfax currently owns 61.5 per cent of Recipe’s shares, the offer is being supported Recipe’s board, and “Recipe has always presented an eclectic portfolio of brands that are difficult to assess and would deter interest in the company from other potential parties.”

“Based on the stock’s current level after trading up on the announcement, and our view that the proposed transaction will proceed, we see limited further upside in the stock,” said the analyst, leading him to lower his recommendation for Recipe shares to “market perform” from “outperform” previously.

His target rose to $20.73 to align with the offer from $19. The current average is $21.12.

Elsewhere, CIBC World Markets analyst John Zamparo downgraded Recipe Unlimited to “tender” from “neutral” with a $20.73 target, up from $16.


While a reduction to its full-year financial guidance was expected by investors given the turbulence in the crypto and foreign exchange markets, RBC Dominion Securities’ Paul Treiber said the cuts made by Nuvei Corp. (NVEI-Q, NVEI-T) were more than anticipated “as the company incorporated an incremental buffer for macro uncertainty.”

“While near-term investor visibility has declined, we believe growth will rebound in 2023, as Nuvei’s growth momentum/opportunity in other verticals appears healthy,” he added.

Mr. Treiber was one of a large group of equity analysts on the Street to cut their forecasts for the Montreal-based global payments technology company after Tuesday’s premarket quarterly release, which sent its shares plummeting by over 21 per cent.

He called its second-quarter 2022 results “mixed.”

Revenue increased 19 per cent year-over-year to US$211-million, below guidance of US$217-223-million and the estimates of both Mr. Treiber and the Street (US$220-million and US$221-million, respectively) due to “FX, lower crypto volumes and a mix shift from APMs to credit cards.” However, higher gross margins led to an adjusted EBITDA beat (US$93-million versus a US$90-million expectation). Adjusted earnings per share of 51 US cents also topped estimates (40 US cents and 46 US cents).

Concurrently, Nuvei cut his fiscal 2022 guidance to revenue of US$820-850-million (up 13-17 per cent year-over-year) and adjusted EBITDA of US$335-350-million adj. EBITDA. Those ranges are down previous estimates from US$940-980-million and US$407-425-million, respectively, and below the Street’s forecasts (US$965-million and US$415-million).

To reflect lower near-term growth and cuts to his revenue and earnings estimates for 2022 and 2023, Mr Treiber dropped his target for Nuvei shares to US$60 from US$80 with an “outperform” rating. The average target on the Street is US$65.

“We believe that Nuvei’s profitability and FCF are backstops for the stock,” he said. “On our revised estimates, Nuvei is currently trading at 13 times FTM [forward 12-month] EV/EBITDA and 6-per-cent FTM FCF yield, a discount to high-growth payment peers at 30 times and 4 per cent, despite similar CY23e growth (17 per cent vs. peers at 23 per cent). In time, we expect Nuvei’s discount to peers will narrow, on greater market awareness for Nuvei’s competitive advantages and organic growth normalization.”

“Our Outperform thesis reflects Nuvei’s strong revenue growth drivers and large market opportunity. COVID-19 has accelerated the global shift away from cash to electronic payments and uptake of digital services. Nuvei has a large total addressable market (TAM), which includes opportunities in key fast-growth verticals like online retail, online marketplaces, and social gaming. We believe that Nuvei’s shares show attractive risk-reward, given expected growth and possible valuation multiple expansion, as the mix of digital revenue increases. Key future drivers of growth include: 1) geographic expansion (Latam/APAC is only 4 per cent of Q2 revenue); 2) new enterprise customers in key verticals; 3) increased sales & marketing investments; 4) M&A; and 5) stronger traction with developers. U.S. gaming/gambling is an additional growth catalyst.”

Elsewhere, CIBC World Markets’ Todd Coupland downgraded Nuvei to “neutral” from “outperformer” with a US$40 target, down from US$70.

Others making changes include:

* National Bank Financial’s Richard Tse to US$75 from US$100 with an “outperform” rating.

“Bottom line, while the outlook was below expectations, our analysis suggests the underlying business continues to perform well (ex one-offs like FX and crypto). We expect growth to re-accelerate in F23 as the Company laps tough comps in its Digital Assets (Crypto) Business and macro/FX headwinds subside,” said Mr. Tse.

* Citi’s Ashwin Shirvaikar to US$39 from US$50 with a “neutral” rating.

“Our non-consensus Neutral /High Risk rating on NVEI reflects our caution on the company’s M&A-fueled growth and limited disclosure (though the company has made positive attempts this year to improve),” said Mr. Shirvaikar. “Our view is that there may be less visibility into outcomes than appears at first glance; consider the discretionary nature of gaming – both regulated and social – and other verticals like digital services, crypto, etc. The health of crypto and other clients is also a factor to consider, we believe. Therefore, our view is the revised lower outlook is not necessarily conservative (as was implied in investor Q&A) though it is probably realistic. It may be mid-FY23 before catalysts appear.

* JP Morgan’s Tien-Tsin Huang to US$42 from US$63 with an “overweight” rating.

* Raymond James’ John Davis to US$41 from US$60 with an “outperform” rating.

* Credit Suisse’s Timothy Chiodo to US$37 from US$43 with a “neutral” rating.

* KBW’s Sanjay Sakhrani to US$55 from US$78 with an “outperform” rating.

* BMO’s James Fotheringham to US$108 from US$121 with an “outperform” rating.


Though Pet Valu Holdings Ltd.’s (PET-T) momentum continued in the second quarter as it continues to expand its market share, Stifel analyst Martin Landry warned it will be difficult to maintain such growth moving forward.

“Pet Valu reported strong Q2/22 results and was ahead of expectations for the fourth consecutive quarter,” he said. “The company continues to gain market share, highlighted by its same-store-sales, which are up 45 per cent over the last three years. The pace of organic growth is expected to normalize in the coming quarters and range between 6-9 per cent, still a healthy pace. The integration of Chico seems to be progressing well with Performatrin, Pet Valu’s private label brand, expected to be introduced into Chico stores starting in September. We have not changed our forecasts which are now more aligned with management’s EPS guidance, which has been revised upward by 6 per cent. Q3/22 faces a difficult comp and EPS could be down year-over-year as a result. The balance sheet continues to improve and leverage should be around 1.7 times net debt/EBITDA.”

Before the bell on Tuesday, the Markham, Ont.-based retailer reported adjusted earnings per share of 39 cents, rising 225 per cent year-over-year and above the expectations of both Mr. Landry (33 cents) and consensus (32 cents) as gross margins expanded.

“According to management, market share gains over the last year come from a combination of competitors, including specialty peers, mass players and smaller mom-and-pop operators, especially in smaller rural markets where there is a limited offering,” the analyst said. “Proactive actions to strengthen inventory position in-store by ordering products early allowed the company to have the appropriate product mix in-store to meet customer demand and gain share of wallet. This initiative is continuing with Pet Valu accelerating purchases of imported merchandise by a few months for the holiday season.”

“Pet Valu’s same-store sales growth of 21.2 per cent year-over-year was driven by a 19.3-per-cent increase in transaction growth and a 1.5-per-cent increase in same-store basket size. Intuitively, one would have expected to see the basket size increase at a faster rate given the 5-10-per-cent price increases implemented by the company in recent quarters. The muted basket growth was due to fewer items per basket compared to last year as customers are visiting stores more often for casual visits rather than a once a month larger trip. Moving forward, the company expects SSS growth of 5 per cent to 9 per cent in H2/22 attributed to 60-per-cent transaction growth and 40 per cent from average spend growth, in-line with historical average.”

While he raised his earnings and revenue estimates for 2022 and 2023, Mr. Landry kept a $42 target for its shares (with a “buy” rating), warning a reliance of the U.S. dollar and a greater use of third party logistics providers could weigh on margins moving forward. The average is $42.71.

“Pet Valu is a growth story with a significant growth runway,” he said. “We believe that the company can double its store count over time to 1,200-plus, an increase of 70-per-cent from current levels. According to our analysis, PET has the potential to grow its EPS sustainably at a CAGR of mid-to-high teens. Pet Valu’s balance sheet is healthy with leverage expected to decrease to 1.5 times in Q1/23, providing the company with good flexibility to allocate capital.”

“Pet Valu has several positive attributes, which include: (1) more than 2 million members in its loyalty program, generating more than 70 per cent of all system sales in Q1/22, (2) high performing private label brands, generating more than 30 per cent of sales and margins 1,200bps higher than similarly priced national brands, (3) a rapid payback of three years on new corporate stores, (4) flexible store formats that enable increased penetration in rural areas, a significant differentiation vs PetSmart and (5) a healthy network with 99 per cent of corporate stores profitable after 24 months of operations..”

Others making changes include:

* National Bank’s Vishal Shreedhar to $42 from $39 with a “sector perform” rating.

“We consider Pet Valu to be a well-managed retailer underpinned by solid and stable growth in a defensive sector. Pet ownership has increased through the pandemic, providing a tailwind,” said Mr. Shreedhar. “According to Statistics Canada, the total pet market (excl. veterinary/other) increased by $1.339-billion from 2019 to 2021, or about 23 per cent. “For reference, over that same time period PET’s system sales grew by 35 per cent (market share gains) ... While we have a favourable orientation on PET, we remain on the sidelines as we see better value elsewhere in our coverage.”

* RBC’s Irene Nattel to $43 from $42 with an “outperform” rating.

“Strong and higher than forecast Q2 results reinforce our view of PET as a compelling, growth oriented, staple leaning, defensive SMID-cap idea in Canadian specialty retail. Performance and outlook supportive of the company’s premium valuation, and consistent with execution of strong long-term growth opportunity outlined at IPO. Strong Q2 results and higher guidance likely to drive upward bias on 2022 consensus view,” said Ms. Nattel.

* Barclays’ Adrienne Yih to $40 from $38 with an “overweight” rating.

* CIBC’s Mark Petrie to $48 from $43 with an “outperformer” rating.


In other analyst actions:

* Scotia Capital analyst Maher Yaghi assumed coverage of Cineplex Inc. (CGX-T) with a “sector outperform” rating and dropped the firm’s target for its shares to $16, matching the average on the Street, from $20.

“Overall, we think the valuation multiple bifurcation between CGX and its U.S. peers has become extreme, even though box office revenues in Canada are very closely tracking those in the United States,” he said. “As we roll into the back half of the year, and as the covenant tests that CGX needs to satisfy become easier, we expect stock performance to begin to pick up and close the valuation gap with U.S. peers. In our view, management has done a tremendous job navigating through the pandemic, and the company is well positioned to benefit yet again from consumers’ appetite for theatrical releases.”

* Stifel’s Annabel Samimy cut her Bausch Health Companies Inc. (BHC-N, BHC-T) target to US$15 from US$40 with a “buy” rating. Other changes include: BMO’s Gary Nachman to US$8 from US$15 with a “market perform” rating and RBC’s Douglas Miehm to US$4.50 from US$5 with a “sector perform” rating. The average is $13.25.

“Q2 revenues and adj. EBITDA missed consensus estimates,” said Mr. Miehm. “The company lowered the 2022 revenue ($190-million at midpoint) and adj. EBITDA guidance ($230-million at midpoint). Management reiterated its stance that it would ‘vigorously’ defend the Xifaxan patents. It noted that it is evaluating all considerations related to the distribution and spin of BLCO as the company assesses the potential impact of the Xifaxan patent litigation. The company also reaffirmed the target leverage ratio of 6.5– 6.7 times at RemainCo (vs. current 8 times) before the spin. We lower our price target to $4.50 as we incorporate the miss and updated guidance.”

* RBC’s Tom Callaghan raised his BTB REIT (BTB.UN-T) target to $4.25, which is 2 cents below the average, from $4. He kept a “sector perform” rating.

“BTB REIT delivered a strong set of second-quarter results, punctuated by robust organic growth and another round of healthy renewal spreads,” he said. “Indeed, work done over past years to high-grade the portfolio appear to be paying dividends. While we remain cautious toward office fundamentals over the medium-to-long term, at a healthy—and above average—7.8-per-cent yield, we believe BTB should appeal to patient investors.”

* Raymond James’ Steven Li lowered his target for shares of Converge Technology Solutions Corp. (CTS-T) to $9.50 from $12.50, maintaining an “outperform” rating. The average is $11.10.

* Scotia’s Himanshu Gupta cut his CT REIT (CRT.UN-T) target to $18 from $19 with a “sector outperform” rating, while CIBC’s Sumayya Syed lowered her target to $17.50 from $18 with a “neutral” rating. The average is $17.71.

“CRT is one of the better performing REIT’s YTD (down 2 per cent vs sector down 15 per cent),” said Mr. Gupta. “In our view, CRT provides a high degree of protection in a recession-like scenario. With continued talks of economic deceleration, we think CRT will continue to outperform in the current uncertain environment. We remind that CRT has almost bond-like cash flow profile with long lease terms at pre-determined rent reset formulas. CRT has delivered consistent AFFOPU growth of 5.8-per-cent CAGR since 2014 (Exhibit 4). Recession or no recession, we place a very high likelihood of 5.4-per-cent AFFOPU CAGR in 2021A-23E. Combine this with distribution yield of 5.1-per-cent at 71-per-cent payout ratio, CRT is well-positioned to deliver low-double-digit total return.”

* BMO’s Stephen MacLeod lowered his Dorel Industries Inc. (DII.B-T) target to $9 from $11 with a “market perform” rating, while TD Securities’ Derek Lessard cut his target to $11.50 from $17 with a “buy” rating. The average is $10.25.

“Dorel reported another Q2 miss, as F/X, cautious consumer spending and higher costs weighed on earnings. Easing supply chain issues led to improved product flow, which coincided with slowing consumer demand, resulting in elevated inventories. These headwinds are expected to impact H2, with an expectation for improvements in 2023E; however, visibility remains low. While monetization of Home & Juvenile remains a potential outcome, it is unlikely without a more stabilized earnings profile. Absent incremental sale clarity, low earnings visibility will likely limit the stock’s upside,” he said.

* RBC’s Geoffrey Kwan trimmed his target for EQB Inc. (EQB-T) shares to $74 from $75, below the $79.64 average, with an “outperform” rating, , while National Bank’s Jaeme Gloyn cut his target to $73 from $75 with an “outperform” rating.

“While we believe EQB will deliver on robust medium-term growth objectives (high single-digit adjusted EPS growth, low-teens pre-provision pre-tax income (PTPP) growth, and 20-25-per-cent annual dividend increases) and profitability targets (adjusted ROE of more than 15 per cent), we reiterate our cautious stance on the Mortgage Finance sector,” said Mr. Gloyn. “In our view, several factors represent downside risks that will continue to constrain sector valuations and share price performance near term, such as rising regulatory and policy uncertainty, rapid rise in interest rates, and housing market risk.”

* CIBC’s Anita Soni cut her Equinox Gold Corp. (EQX-T) target to $5.30 from $5.75 with an “underperformer” rating. The average is $8.38.

* CIBC’s Jamie Kubik lowered his Freehold Royalties Ltd. (FRU-T) target to $18 from $19 with a “neutral” rating. The average is $20.57.

* RBC’s Sam Crittenden cut his Hudbay Minerals Inc. (HBM-T) target to $10 from $12 with an “outperform” rating. Other changes include: Canaccord Genuity’s Dalton Baretto to $9 from $9.50 with a “buy” rating and Scotia Capital’s Orest Wowkodaw to $8 from $7.50 with a “sector outperform” rating. The average is $9.73.

“Hudbay is now trading at less than 2.0 times our 2023 EBITDA estimate and we believe the company can drive a re-rating as they execute on production growth, improve FCF, and de-risk key projects. Exploration success in Peru and advancing Copper World in Arizona could provide catalysts,” said Mr. Crittenden.

* CIBC’s Dean Wilkinson cut his InterRent REIT (IIP.UN-T) target to $15 from $15.50, keeping a “neutral” rating, while iA Capital Markets’ Johann Rodrigues trimmed his target to $18 from $20 with a “strong buy” rating and Scotia’s Mario Saric lowered his target to $16.50 from $16.75 with a “sector outperform” rating. The average is $16.71.

“Despite management’s view that cap rates may creep up in secondary/tertiary markets, we have proactively taken our own cap rate up 10 basis points (to 3.65 per cent), which has lowered our NAV by $0.50 (to $16.00),” said Mr. Rodrigues. “This is a cautious change – one we expect to make across the board through earnings season. Nevertheless, InterRent trades at a 17-per-cent discount to our revised NAV, up off a 25-per-cent trough a few weeks back but still at the widest it’s been since the REIT’s inception. This is for a REIT that just delivered 6-per-cent rent and 9-per-cent SPNOI growth, with 7-per-cent NAV growth even after the hike in our cap rate. The stock has bounced 11 per cent in Q3, 2 times the TSX REIT Index and 3 times the broader TSX. We’ve been adamant that there is a window to buy Canadian multi-family REITs at a once-in-a-decade discount, a window that closes once Trudeau drops his review of the asset class. The window is closing so take advantage quickly.”

* Following its $200-million merger agreement with BBQ Holdings Inc., RBC’s Sabahat Khan raised his MTY Food Group Inc. (MTY-T) target to $67 from $66 with a “sector perform” rating. Others making changes include: TD’s Derek Lessard to $70 from $62 with a “hold” rating, National Bank’s Vishal Shreedhar to $68 from $63 with an “outperform” rating and Scotia’s George Doumet to $68.50 from $64 with a “sector perform” rating. The average is $68.36.

“We are constructive on the transaction given a longer-term opportunity for unit growth, operational improvement and possible synergies (supply, public company costs, efficiency),” said Mr. Shreedhar. “That said, we also acknowledge that BBQ’s business has a higher skew towards corporate stores (more than 90 per cent of revenue) and casual dining, which could place pressure on MTY’s margin rate, capex intensity, returns and cyclicality (all else equal).”

“We are constructive on MTY given attractive valuation, anticipated improving operational performance, and supportive capital allocation outcomes. That said, we also acknowledge heightened risk related to inflation, supply chain, labour and general macro-economic conditions”

* National Bank Financial’s Rupert Merer raised Northland Power Inc. (NPI-T) target to $47, above the $46.73 average, from $44 with an “outperform” rating.

“With power prices persistently above contract levels in Q3E so far, we update our 2022E and 2023E estimates to capture the potential upside NPI should see from its exposure to the high power price environment in Europe,” he said. “We model for power prices in Germany and the Netherlands of €300/MWh for the remainder of this year as well as for FY’23E. We believe this forecast remains conservative as these assumptions are below current forward price levels in the market.”

* Barclays’ Benjamin Theurer lowered his Nutrien Ltd. (NTR-N, NTR-T) target to US$105 from US$126 with an “overweight” rating. The average is US$108.94.

* Following “very strong” second-quarter results and a dividend raise, BMO’s John Gibson raised his PHX Energy Services Corp. (PHX-T) target to $10 from $9.50 with an “outperform” rating. The average is $11.38.

“Given PHX’s differentiated technology offering, pristine balance sheet, leverage to higher pricing and inexpensive valuation we continue to rate the shares as Outperform,” he said.

* National Bank Financial’s Dan Payne hiked his Spartan Delta Corp. (SDE-X) target to $22.50, above the $19.05 average, from $20 with an “outperform” rating, while Raymond James’ Jeremy McCrea raised his target to $16 from $15 with an “outperform” rating.

“Another solid quarter that continues to validate the strength of the consolidated asset base and its resonant value prospects, in association with which, and in comparison to the peers, we are compelled to increase our target multiple to the peer group average (approximately 4.0 times), and which drives an

increased target price of $22.50 per share, as one of the best risk/reward propositions in the group offering 79-per-cent implied upside to current trading,” he said.

* IA Capital Markets’ Matthew Weekes trimmed his Superior Plus Corp. (SPB-T) target to $12.50 from $13, reiterating a “hold” rating. The average is $13.60.

“SPB’s Q2/22 results were below estimates, with Adj. EBITDA declining 19 per cent year-over-year as growth in volumes and unit margins was offset by operating cost inflation and the loss of $7-million of CEWS,” said Mr. Weekes. “SPB reaffirmed its 2022 guidance and upon incorporating the lower-than-expected Q2 results, our Adj. EBITDA estimate moves closer to the midpoint. We are modestly lowering our estimates for H2/22 and 2023.″

* CIBC’s Cosmos Chiu lowered his Triple Flag Precious Metals Corp. (TFPM-T) target to $21 from $23 with a “neutral” rating. The average is $21.46.

* Craig-Hallum’s Eric Des Lauriers downgraded Village Farms International Inc. (VFF-Q) to “hold” from “buy” with a US$3 target, down from US$5 and below the US$6.66 average.

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