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

After TC Energy Corp. (TRP-T) reported “solid” fourth-quarter financial results, iA Capital Markets analyst Matthew Weekes said he’s looking “beyond near-term uncertainty to solid long-term fundamentals.”

Seeing a “compelling valuation entry point,” he raised his recommendation for the Calgary-based company’s shares to “buy” from “hold” previously.

“While we remain cautious on both (a) project execution risk on CGL [Coastal GasLink] and (b) execution risk in the asset sales program under growing credit pressures, we believe that the Company will be able to manage through these headwinds over the next couple years,” said Mr. Weekes. “Long-term, we believe that TRP’s fundamentals are solid, as the Company offers investors (a) high-quality assets, including incumbent gas pipeline footprints in key supply-push/demand-pull regions in North America; (b) mid-single-digit EBITDA CAGR [earnings before interest, taxes, depreciation and amortization compound annual growth rate] projected to 2027, driven by low-risk secured growth projects, with longer-term growth supported by energy market fundamentals; and (c) stable fee-based and contracted cash flows, which comprise the vast majority of TRP’s EBITDA and support an 6.5-per-cent dividend yield at an 50-55-per-cent DCF payout ratio. Given the compelling entry point that we believe is offered at the current valuation, we are upgrading the stock.”

Before the bell on Tuesday, TC Energy reported comparable EBITDA of $2.68-billion for the quarter, up 12 per cent year-over-year and exceeding both Mr. Weekes’s $2.541-billion estimate and the consensus forecast of $2.585-billion. He attributed the beat to “projects placed into service during the year, growth in the Nova Gas Transmission Line (NGTL) rate base and ANR Pipeline rates, strong system utilization, and higher contract prices at Bruce Power, partially offset by lower Liquids contribution.” Adjusted earnings per share grew 6 per cent to $1.11, a penny below the analyst’s expectation but 1 cent higher than the Street.

“TRP expects Comparable EBITDA growth of 5-7 per cent, driven by NGTL growth and a full year from the Villa-de-Reyes North and Tula East pipeline sections placed into service in Q3/22,” said Mr. Weekes. “TRP expects U.S. Gas Pipelines and Power and Storage to be consistent year-over-year and for Liquids Pipelines to be modestly lower due to a Keystone system de-rate and continued lower margins on the Gulf Coast section. TRP expects Comparable EPS to be modestly higher in 2023 with SGP AFUDC helping offset higher finance costs and share count.

“TRP placed $5.8-billion of projects into service in 2022 and sanctioned $8.8-billion of new projects, which TRP expects to deliver risk- adjusted returns above its targeted range of 7-9 per cent. TRP expects to place $6-billion of projects into service in 2023 and reiterated its guidance for 2023 CAPEX of $11.5-12.0-billion, focused on NGTL system expansions, the SGP, CGL, US gas pipeline projects, the Bruce Power Life Extension program, and normal course maintenance CAPEX.”

While he warned that it could take longer than anticipated to complete asset sales to reach deleveraging targets, Mr. Weekes “modestly” raised his EBITDA and adjusted funds from operations estimates after the company reaffirmed its 2023 guidance and raised its dividend by 3.3 per cent to 93 cents per quarter, in line with his expectations.

He maintained a target of $62 per share. The average on the Street is $61.82, according to Refinitiv data.

Analysts making target changes include:

* TD Securities’ Linda Ezergailis to $68 from $71 with a “buy” rating.

* National Bank’s Patrick Kenny to $54 from $53 with a “sector perform” rating.


Citi analyst Jon Tower expects shares of Restaurant Brands International Inc. (QSR-N, QSR-T) to continue “taking a breather” in the near term ahead of next week’s investor discussion with executive chairman Patrick Doyle, pointing to the current absence of details on its global business plans and the high expectations heading into Tuesday’s earnings release.

“Perhaps we’ll hear a different tune next week with the Chairman’s meet & greet, but as of now, QSR’s planned reinvestments back into the business (particularly Burger King U.S.) have not changed,” he said. “This, along with the bottom-line miss, lower-than-expected dividend and outlook calling for greater supply chain cost pressures/ongoing net closures at BK U.S. help explain the stock’s relative weakness on an otherwise strong top-line quarter. We’re of the belief that greater company investment may be required to accelerate & sustain a BK U.S. turnaround within the timeframe expected by investors (e.g., consistent comp growth and NRGs within 24 months).”

Shares of the parent company of Tim Hortons and Burger King dropped 2.8 per cent on Wednesday following the premarket announcement of the departure of chief executive officer Jose Cil, who will be replaced by chief executive officer Joshua Kobza. It is the company’s significant leadership change in the last four months, following the hiring of Mr. Doyle, who is known for leading a turnaround at Domino’s Pizza Inc.

The shakeup came with the release of the company’s fourth-quarter results, which saw total revenue grew by 9.2 per cent to US$1.69-billion, narrowly higher than the Street’s expectation of US$1.67-billion. However, adjusted EBITDA came in below expectation at US$572-million, versus the consensus forecast of US$630-million.

“Inflation has taken its toll on store-level economics since 2019, with both TH Canada and BK U.S. seeing a marked step-down in 4-wall EBITDA since 2018,” said Mr. Tower in a note. “TH Canada has seen 4-wall EBITDA shrink from CAD 320k in 2018 to CAD 220k in 2022 (AUVs were essentially flat over this period in USD) and BK U.S. has seen 4-wall EBITDA collapse to $140k from $200k in 2018 (AUVs have grown by 6 per cent over this period). For the latter, recapturing a little under 50 per cent of that loss by the end of 2024 will trigger a 50 basis points step-up in franchisee marketing contribution starting in 2025, which could work to regain BK’s lost share of voice in the U.S.

“Expect supply chain margins to remain subdued vs. history (closer to 19-per-cent-ish in 2023, higher 2H) as the company works through higher-priced inventory while keeping pricing in-check for franchisees. The company reviews pricing periodically, and incremental pricing could impact revenue/margin later in the year.”

Citing weaker supply chain margins, the analyst reduced his earnings per share forecast for 2023 and 2024 to US$3.14 and US$3.45, respectively, from US$3.27 and US$3.48.

That led Mr. Tower to reduce his target price for Restaurant Brands shares to US$70 from US$72, keeping a “neutral” recommendation. The average is US$69.78.

“Our $70 price target is based upon a 16.5 times NTM [next 12 months] from now EV/EBITDA multiple, 5.0-per-cent FCF yield and represents at 1.15 times the S&P 500 multiple (above the long-term average of 0.9 times),” he said. “We believe this multiple accurately balances the company’s improving global unit growth against limited visibility into economics in these newer markets, potential near-term headwinds tied a global economic slowdown and risks of a significant closure and reinvestment cycle ahead for the Burger King U.S. business.”

Elsewhere, other analysts making adjustments include:

* Credit Suisse’s Lauren Silberman to US$74 from US$69 with an “outperform” rating.

“The 4Q call was primarily focused on RBI’s long-term strategy to enhance franchisee profitability & accelerate growth under the leadership of new Executive Chairman Patrick Doyle & newly appointed CEO Joshua Kobza (previously COO, CFO),” she said. “Doyle appears to be playing an active role in franchisee relationships & RBI’s strategy, which should help support sentiment and conviction in the ability to accelerate growth, and we expect to learn more about the long-term strategy at RBI’s Investor Day next week (2/22). Given expectations for improving fundamentals & current valuation, we believe RBI offers a favorable risk/reward.”

* BMO’s Peter Sklar to US$76 from US$72 with an “outperform” rating.

“While the comps were generally strong (especially for Tim Hortons Canada and domestic Burger King) the EBITDA generated by the businesses were disappointing with Tim Hortons up slightly and Burger King down noticeably,” said Mr. Sklar. “Despite the EBITDA miss, we reiterate our Outperform rating as we see SSS momentum continuing in both Tim’s and BK’s domestic markets.”

* CIBC’s Mark Petrie to US$76 from US$70 with an “outperformer” rating.

“Though margin challenges drove an earnings miss, we place greater emphasis on the improving top-line momentum, notably at Tims Canada and Burger King (BK) U.S. Franchisee profitability is an increasing focus and we view top line as the key–but certainly not only—fix. Valuation is no longer a tailwind, and 2023 earnings are suppressed by BK investments, FX and interest, but we believe brands are healthy and BK payoffs will materialize,” said Mr. Petrie.

* Jefferies’ Andrew Barish to US$65 from US$63 with a “hold” rating.

* Truist Securities’ Jake Bartlett to US$73 from US$71 with a “buy” rating.

* Barclays’ to US$78 from US$80 with an “overweight” rating.

* Stephens’ Joshua Long to US$63 from US$61 with an “equal-weight” rating.

* BoA Securities’ Sara Senatore to US$65 from US$64 with a “hold” rating.

* CFRA to $93 from $90 with a “hold” rating.


According to RBC Dominion Securities analyst James McGarragle, CAE Inc.’s (CAE-T, CAE-N) end markets remain “attractive” after the release of “solid” second-quarter results, however supply chain disruptions are likely to remain a significant concern for investors.

“CAE posted stronger than expected FQ3 results and reiterated F23 operating income guidance, both of which were favourably received in our view,” he said. “Overall, we came away from the quarter more positive on the stock with solid trends in Civil, including the China re-open, expected to act as near-term catalysts. However, while we expect management to meet Defense margin targets by fiscal 2025, we point to near-term supply chain headwinds that could weigh on sentiment. Overall, with the shares trading at 20 times our F25 EPS estimates, we see an attractive risk/reward at today’s levels.”

TSX-listed shares of the Montreal-based aircraft simulator maker rose 5.1 per cent on Tuesday after it reported adjusted operating income of $161-million, topping both Mr. McGarragle’s $150-million estimate and the consensus forecast of $141-million driven by margin strength in both its Civil and Defense segments.

“Management reiterated guidance on today’s call for F23 operating income growth of mid-20 per cent,” he said. “We expect operating income to come in at the low end of management’s guide, and are modelling for growth of 21 per cent (from 17 per cent). While we see robust Civil trends continuing in FQ4 on the back of increased simulator deliveries, we see risk to Defense margins from supply chain issues as elevated.”

“We remain positive on CAE shares at current levels and believe that end markets in pilot training and defence provide a platform for robust top line growth over the next decade. However, commentary from the call and read throughs from US defense companies suggest supply chain headwinds are likely to persist into F24, thereby pressuring margin and potentially affecting sentiment in our view.”

In response to the quarterly beat, Mr. McGarragle raised his 2023 EBITDA estimate to $876-million from $861-million, however he cut his 2024 projection to $1.080-billion from $1.092-billion to reflect expected supply chain headwinds.

“Our F25 EPS estimate of $1.60 (from $1.64) represents FY22- F25E CAGR [compound annual growth rate] of 24 per cent, in line with Investor Day targets for mid-20-per-cent growth,” he said.

Reaffirming an “outperform” rating for CAE shares, he hiked his target to $37 from $33. The average on the Street is $35.25.

Other analysts making target adjustments include:

* Desjardins Securities’ Benoit Poirier to $36 from $35 with a “buy” rating.

“Overall, we are pleased with the results in the quarter and management’s positive tone on the recovery of the Civil segment. We remain cautious but believe that for long-term investors, CAE is well-positioned to benefit from the increase in defence spending globally as well as the hot bizjet sector,” said Mr. Poirier.

* National Bank’s Cameron Doerksen to $37 from $34 with an “outperform” rating.

“Although Defence is an important contributor to CAE and end market fundamentals in Defence are positive, our underlying positive view on CAE continues to be informed mainly by our expectation of further recovery in the Civil segment, which we note will still account for over 70 per cent of total company EBIT based on our forecast even if Defence EBIT margins ultimately recover to 10 per cent-plus,” said Mr. Doerksen.

* Canaccord Genuity’s Matthew Lee to $35 from $30 with a “hold” rating.

“CAE reported Q3/23 with revenue below but profitability above expectations, primarily driven by Civil Aviation. We continue to be very constructive on the Civil segment as it benefits from a profusion of tailwinds including: a) the reopening of China, b) a drastic shortage of pilots, particularly in business jets, and c) the overall growth in air travel expected over the next 3-5 years. With that said, we believe at these levels, investors will have to become more comfortable with a recovery in the defence business and CAE’s ability to shift its segment revenue mix to reach double-digit EBIT margins in F25,” said Mr. Lee.

* Scotia Capital’s Konark Gupta to $37 from $35 with a “sector outperform” rating.

“We are encouraged by the momentum in FQ3, regardless of the accounting noise and ongoing industry issues,” said Mr. Gupta. “This momentum is expected to continue into FQ4 and F2025 as pilot shortage, rising OEM production rates, strong bizjet activity and the looming Asian recovery should drive further strength in Civil. Defense is gradually recovering from recent issues as some legacy contracts are nearing completion and new contracts are won at higher margins. Healthcare has positively surprised and promises more. Meanwhile, the leverage ratio is improving toward CAE’s goal, increasing our confidence in the resumption of shareholder returns. We have pushed our earnings outlook slightly to the right to reflect continued defense industry challenges, which however improves our C2024E, driving a slight increase in our target.”

* BMO’s Fadi Chamoun to $35 from $33 with an “outperform” rating.

“Demand drivers in the Civil and Defense segments remain very strong, which combined with CAE’s increased focus on integrating and maximizing returns from recent acquisitions, should continue to support robust earnings growth over the next several years. Stronger than expected year-to-date performance in Civil and continued gradual improvement in Defense drive our adjusted operating profit estimates slightly higher for F2023,” said Mr. Chamoun.

* CIBC’s Kevin Chiang to $37 from $33 with an “outperformer” rating.


As a “challenging” macroeconomic backdrop lingers following weaker-than-anticipated second-quarter results, Canaccord Genuity analyst Scott Chan downgraded Axis Auto Finance Inc. (AXIS-T) to “hold” from a “speculative buy” recommendation.

Before the bell on Tuesday, the Mississauga-based financial technology company reported adjusted earnings of $0.7-million for the quarter, down from $1.6-million a year ago. Total revenue rose 6 per cent to $10.6-million but missed Mr. Chan’s $11-million forecast due to lower loans and average portfolio yield.

“We made some downward revisions to our F2023 and F2024 estimates, mainly reflecting lower revenues (from declining yields) and higher expenses (impacted by the current inflationary environment) mainly resulting in a reduction to our F24E EPS to 4 cents (from 6 cents),” said Mr. Chan. “While the business continues to deliver resilient results, we believe the macro backdrop remains challenging, particularly for Axis’ core subprime auto business (FQ2: originations down 3 per cent year-over-year). Macro headwinds include persistent inflation (which could continue to create upward pressure on expenses), higher interest rate environment for a longer period (impacting consumers ability to borrow and/or repay), and unemployment (which currently remains strong, but the trend could reverse if Canada enters a recession). While Axis has the ability to adapt to deteriorating macro conditions (e.g., by tightening underwriting standards, controlling costs etc.), a meaningful adverse impact on credit cannot be ruled out (given their subprime exposure). We, thus, reduce our target P/E multiple to 10 times (from 11 times) and P/B multiple to 1.2 times (from 1.3 times), but still very much comparable to Cdn. peers.”

After maintaining a full-year earnings per share estimate for 2023 of 2 cents and cutting his 2024 forecast to 4 cents (from 6 cents previously), Mr. Chan reduced his target for Axis shares to 50 cents from 65 cents. The average is 78 cents.


Acumen Capital analyst Jim Byrne said Alithya Group Inc.’s (ALYA-T) “continuous improvement” gives him increased confidence in its future.

Accordingly, he raised his recommendation for the Montreal-based strategy and digital technology consulting firm to “buy” from “hold” on Wednesday.

“The company has shown steady improvement in the past number of quarters across all metrics,” he said. “We had been watching the steady improvement in results over the past few quarters. With another positive result in Q3, we are more constructive on the outlook. With a return to our target of 40 per cent we are moving to a buy. ALYA is delivering organic growth, showing improved operating leverage, and paying down debt. We believe the shares are attractively valued at current levels reflecting a significant discount to its peer group.”

Before the bell on Tuesday, Alithya reported third-quarter revenue of $130.8-million, up 19 per cent year-over-year and ahead of Mr. Byrne’s $130.5-million estimate but narrowly below the consensus forecast of $132.1-million. Adjusted EBITDA of $10-million topped the Street ($8.7-million) but missed the analyst’s projection ($10.2-million).

“Top line growth of 19 per cent represented an increase of $21.1-million from last year,” said Mr. Byrne. “The year-over-year increase included revenue from the Vitalyst and Datum acquisitions, which added $12.6-million to the revenue growth. The company highlighted that it had reached its goal of 30-per-cent gross margin. The improvement in gross margin was due to an increase in full time employees in low-cost regions and a decrease in subcontractors, as well as higher margin offerings. Overall organic growth was solid at 6.5 per cent.”

Despite trimming his full-year earnings estimate, the analyst maintained a $3.50 target for Alithya shares. The average is $3.61.

“The company’s organic growth is showing momentum, and Q3 was another solid result,” said Mr. Byrne. “We believe the Q3 results are another positive step for the company to regain confidence from investors, and we look forward to another strong indication with the next quarterly report. At current levels we believe the shares are attractively valued.”

Elsewhere, others making changes include:

* Echelon Capital’s Amr Ezzat to $4.25 from $4 with a “buy” rating.

“With current net leverage standing at 2.9 times proforma LTM [last 12-month] EBITDA, we expect continued margin improvement and deleveraging to help resurface value in the share price,” said Mr. Ezzat.

* BMO’s Deepak Kaushal to $3.50 from $3 with a “market perform” rating.

“Alithya reported generally strong results, with improved gross and EBITDA margins, resilient organic growth, healthy cash flow and an improving balance sheet. We don’t think the market appreciates the recent progress, and valuation remains low at a ~20% discount to peers. We make slight changes to our forecast on expectations for higher margins, and revise our target to $3.50. However, we prefer to temper enthusiasm with uncertain macroeconomic environment and would like to see improvement in ROIC, before considering becoming more positive,” said Mr. Kaushal.

* Cormark Securities’ Gavin Fairweather to $3.85 from $3.50 with a “buy” rating.


In a research report titled Earning Its Place as an Intermediate Producer, National Bank Financial analyst Rabi Nizami initiated coverage of Aura Minerals Inc. (ORA-T) with an “outperform” recommendation, touting its “strong management team that delivered an impressive turnaround in recent years” and “ambitious” growth trajectory.

Aura is a British Virgin Islands-based emerging gold and copper mining company with a focus on Latin America. It currently operates mines in Brazil, Mexico and Honduras. It also possesses three near-term growth projects in Brazil and a growing portfolio of exploration properties.

“Our Outperform rating considers the merits of a strong management team that has led a successful turnaround and doubled production to 250kGEO per year in recent years, an ambitious pipeline of development projects which could see production grow to over 450kGEO/year (annualized) by the end of 2025 and the large portfolio of mineral properties which is minimally explored,” said Mr. Nizami. “Aura has a disciplined capital management strategy and healthy balance sheet with low leverage ratios and strong cash flow margins, which gives the flexibility to continue investing in growth projects and pay strong dividends while maintaining capacity for additional leverage to optimize project IRRs or fund accretive M&A opportunities.

“The company trades at a discounted 3.0 times EV/EBITDA valuation which is lower than Intermediate peers and does not reflect the upcoming period of growth. We believe Aura could earn a higher multiple over time by reliably delivering growth projects and reinvesting in exploration to prove up reserve life and establish itself among Intermediate producers.”

Mr. Nizami set a target of $15 for Aura shares. The current average on the Street is $17.17.


In other analyst actions:

* Eight Capital’s David Ocampo downgraded Algoma Steel Group Inc. (ASTL-T) to “neutral” from “buy” with an $11 target, up from $10.35, while BMO’s David Gagliano increased his target for to $15, above the $13.20 average, from $11 with an “outperform” rating.

* Ahead of its Feb. 22 earnings release, RBC Dominion Securities’ Douglas Miehm raised his Bausch + Lomb Corp. (BLCO-N, BLCO-T) target to US$20 from US$17, reiterating an “outperform” rating. The average is US$19.75.

“Although we expect FX headwinds in Q4 to be lower than previously anticipated, they will likely be offset by China-related factors where the lifting of zero-COVID policy resulted in increased cases and hospitalizations,” he said. “We have revised our FY23 estimates higher based on current FX rates. Additionally, we have revised our target multiple higher given the re-rating in peers.”

* CIBC’s Anita Soni cut her B2Gold Corp. (BTG-N, BTO-T) target to US$4.50 from US$4.75. The average is US$5.02.

* Several analysts cut their targets to Converge Technology Solutions Corp. (CTS-T). They include: Cormark Securities’ Gavin Fairweather to $8 from $9 with a “buy” rating, Raymond James’ Steven Li to $7 from $8.50 with an “outperform” rating, Canaccord Genuity’s Robert Young to $8.50 from $10.50 with a “buy” rating and BMO’s Deepak Kaushal to $7.50 from $8 with an “outperform” rating. The average is $8.29.

* iA Capital Markets’ Ronald Stewart bumped his Copper Mountain Mining Corp. (CMMC-T) target to $3 from $2.50 with a “buy” rating. The average is $2.68.

* Scotia Capital’s Kevin Krishnaratne raised his Descartes Systems Group Inc. (DSGX-Q, DSG-T) target to US$80 from US$78 with a “sector outperform” rating. The average is US$77.

“Descartes announced [Tuesday] morning that it had acquired final-mile carrier logistics provider GroundCloud,” he said. “We view this acquisition as positive as it builds upon the firm’s existing final-mile logistics solutions portfolio. GroundCloud allows final-mile carriers to receive delivery orders, plan and execute routes, manage assets and resources, and analyze the efficiencies of their operation.”

“Our view is that Descartes’ leading global Logistics and SCM solutions platform continues to benefit from ongoing supply chain trends (e.g., trade restrictions and increased traction in e-commerce), with acquisitions being a key part of the growth story with the potential to drive upside to estimates. While we acknowledge the robust valuation at 11.0 times calendar 2023 estimated sales, we also view DSG as one of the rare Enterprise Software stocks in our coverage exhibiting both offensive and defensive characteristics that can do well amidst a tough tech tape.”

* Upon assuming coverage, RBC’s Wayne Lam raised the firm’s target for shares of Frontier Lithium Inc. (FL-X) to $3.75 from $3.25 with an “outperform” rating. The average is $4.45.

“In our view, PAK has potential to represent a Tier I project driven by high grades and growing scale with multiple near-term catalysts ahead including a resource update, PFS, and infrastructure development. Exploration also continues to demonstrate potential for higher grades and expansion off a solid base. Amidst a number of new lithium projects being developed globally, we view PAK as standing out on asset quality with attractive valuation as the project continues to advance,” said Mr. Lam.

* Canaccord Genuity’s Yuri Lynk raised his H2O Innovation Inc. (HEO-T) target to $3.50 from $3.25 with a “buy” rating. Others making changes include: Desjardins Securities’ Frederic Tremblay to $3.65 from $3.50 with a “buy” rating and National Bank’s Endri Leno to $3.25 from $3 with an “outperform” rating. The average is $3.48.

“Our investment thesis is based on 1) HEO continuing to profitably grow as it focuses on recurring revenues and higher-margin work; 2) continued multiple expansion on improving results; and 3) multiple positive macro trends including aging U.S. water infra, increasing water desalination/reuse needs, municipalities outsourcing operation and maintenance of water facilities, fragmented industry, etc.,” said Mr. Leno.

* RBC’s Jimmy Shan moved his H&R REIT (HR.UN-T) target to $15.25 from $15 with a “sector perform” rating. Others making changes include: TD Securities’ Sam Damiani to $15.50 from $15 with a “buy” rating and National Bank’s Matt Kornack to $15.25 from $15 with an “outperform” rating. The average is $15.53.

“H&R’s Q4 results were ahead of our expectations on NOI as the industrial and apartment portfolios continued to put up solid figures while lease-up at River Landing further aided the print,” said Mr. Kornack. “With the post-quarter disposition of 160 Elgin, H&R continued to make progress in its shift towards assets with better growth profiles. The remaining office exposure consists of $1.3-billion in US assets that are well-leased and located representing an attractive disposition opportunity in a normalized environment, $700-million of stabilized Canadian properties and $700-million of redevelopment assets where we expect upside on re-zoning. Regardless, the outlook for 2-5-per-cent organic growth in 2023 speaks to stability in the retail and office segments with upside being realized in the industrial and apartments. The latter outperformed sun-belt peers on new leasing trends in Q4, realizing 5-plus-per-cent increases on turnover combined with double digits on renewal. We like H&R for its re-rating potential and deep discount to a sum-of-the-parts valuation.”

* iA Capital Markets’ Matthew Weekes raised his Hydro One Ltd. (H-T) target to $38, matching the average, from $36 with a “hold” rating, , while TD Securities’ Linda Ezergailis increased her target to $37 from $36 with a “hold” rating.

“We believe that H offers investors (a) stable earnings and dividend growth from a high-quality, rate-regulated, electric T&D asset base, (b) a strong growth outlook underpinned by a highly visible rate base investment from 2023-2027, incremental medium-term opportunities, and long-term system requirements to support economic growth, decarbonization, and system reliability in Ontario, and (c) a favourable funding outlook having the lowest payout ratio and higher FFO/debt ratio among its Canadian peer group. While we our raising our target price ... we are maintaining our Hold rating on the stock primarily based on the current valuation premium,” Mr. Weekes said.

* National Bank’s Gabriel Dechaine raised his iA Financial Corporation Inc. (IAG-T) target to $92 from $88 with an “outperform” rating. The average is $91.39.

“Unlike peers that have guided to lower earnings under IFRS 17, IAG has not only maintained its 10-per-cent medium-term target, it also anticipates an incremental mid-single digit growth rate in 2023 (i.e., mid-teen growth guidance),” said Mr. Dechaine. “Accounting items and higher rates are factors expected to generate an abnormally higher growth rate this year. Our revised estimates reflect these items, along with a lower tax rate, offset by lower auto-related earnings.”

* Scotia’s Orest Wowkodaw increased his target for Ivanhoe Electric Inc. (IE-N, IE-T) to US$16, below the US$17.25 average, from US$15 with a “sector outperform” rating, while Raymond James’ Farooq Hamed raised his target to US$16 from US$14 with an “outperform” rating.

* Barclays’ Dan Levy initiated coverage of Magna International Inc. (MGA-N, MG-T) with an “equal-weight” rating and US$60 target and Lion Electric Co. (LEV-N, LEV-T) with an “equal-weight” rating and US$3 target. The averages are US$66.50 and US$3.92, respectively.

“Launching coverage of U.S. Autos & Mobility industry with a Neutral view,” he said. “Our Neutral outlook reflects: 1.) A mixed cycle view, w/recession pressures offset by positive trajectory for vehicle production, and potential for pricing and inventory to settle in at a healthy and more profitable new normal; 2.) Megatrends positive for industry long term, but not without challenges along the way; and 3.) Valuations currently reasonable.”

‘Two Clocks framework is more relevant than ever for Autos/Mobility: Auto companies must balance two clocks - the ‘near’ (i.e. cycle) and the ‘far’ (i.e. secular - electrification, autonomous, and software-defined vehicles). We believe our framework is more relevant than ever given the cycle has been especially challenging recently, yet at the same time, auto companies must prepare themselves for the forthcoming radical shifts in the industry. Some companies are only focused on ‘one clock’ - i.e. megatrend-neutral suppliers managing to the ‘near,’ or new mobility players focused on the ‘far.’ Yet some industry participants, most notably legacy OEMs, must balance both clocks, with the challenge of balancing supply/demand of product that will be phased out (i.e. combustion) alongside development of next-gen offerings (EVs). This balancing act has implications for margins, capital allocation, and organizational structure”

* Scotia’s George Doumet reduced his Neighbourly Pharmacy Inc. (NBLY-T) target to $26.50 from $27 with a “sector outperform” rating, while TD Securities’ Derek Lessard bumped his target to $30 from $28 with a “buy” rating. The average is $29.39.

“NBLY reported a largely in-line Q3,” said Mr. Doumet. “There were some puts & takes today with new CEO Skip Bourdo seeing significant runway for operational improvement (front end, working capital usage, procurement, etc.) and a robust acquisition pipeline (still targeting 35-40 acquisitions per year). In the more near term, labour pressures are expected to persist- and when factoring seasonal considerations, Q4 adj. EBITDA margins are expected to decline q/q (vs. our initial expectations for an improvement).

“We believe organic margins have troughed and as relief expenses decline (aided by a new cohort of pharmacists), we see a more gradual improvement over the medium term. This, in our view, should also be supportive of the recovery in the company’s trading multiple. Bottom line – we continue to like NBLY’s defensive characteristics and see substantial FCF generation over the NTM [next 12 months] – that when coupled with the sale/leaseback initiatives, should allow the company to attain its F24 35-40 acquisition target (in a leverage-neutral manner).”

* Canaccord Genuity’s Tania Armstrong-Whitworth trimmed her Quipt Home Medical Corp. (QIPT-X) target to $11.50 from $11.75 with a “buy” rating. The average is $13.87.

* TD Securities’ Menno Hulshof raised his Suncor Energy Inc. (SU-T) target by $1 to $53 with a “buy” rating. The average is $52.89.

* Raymond James’ Bryan Fast raised his Toromont Industries Ltd. (TIH-T) target to $125, above the $118 average, from $120 with an “outperform” rating.

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