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

Heading into second-quarter earnings season for Canadian banks, Canaccord Genuity analyst Scott Chan sees their domestic operations “very insulated” from U.S. regional banking crisis.

“With recent U.S. regional banking fears, the Big-6 banks have underperformed the TSX Composite year-to-date and since Q1/F23 reporting,” he said. “This comes after Canadian Banks’ relative underperformance in 2022 and in Q4/22 .

“Heading into Q2/F23 results, we are lowering our Group (avg.) EPS forecast by 2 per cent mainly due to higher expenses. For Canadian banks with U.S. exposure (Canadian P&C very insulated from U.S. regional banking crisis), we factored in NIM pressure (higher deposit beta), modestly lower loan growth, and larger PCLs (from higher reserve builds from performing loans due to macro environment.”

In a research report released Wednesday, Mr. Chan upgraded Canadian Imperial Bank of Commerce (CM-T) to “buy” from “hold” with a target of $61.50, down from $63. The average target on the Street is $64.32, according to Refinitiv data.

He said: “We favour CM for the following relative reasons: (1) U.S. P&C earnings exposure is low at 12 per cent of total earnings ; (2) CM’s U.S. deposit base has exhibited more resilience (Q1/F23: up 2 per cent quarter-over-quarter) aided by commercial deposits; (3) CM deposit cost is peer high at 3.39 per cent in Q1/F23, potentially implying less deposit beta compared to peers going forward; (4) Canadian housing market likely troughed (CM guides for F2023 mortgage growth of low single digits); (5) set up better near term from earnings perspective after ‘kitchen sink quarter’ from Q4/F22 results and above average reserve builds on credit; (6) Q1/F23 adj. EPS results handily beat consensus; (7) CM stock performance has underperformed Big-6 bank peers in every period we track (up to 10 years) with higher probability for some reversion to mean vs. peers; (8) CM shares trade cheapest on P/E (fwd) of 7.9 times (represents 19-per-cent discount to its historical average) vs. peers (avg.) at 9.3 times; (9) CM P/B (F2024E) of 1.0 times compares favourably to our prospective ROE (F2024E) of 12.7 per cent; (10) peer-high dividend yield of 6.0 per cent (not including our expected 2-per-cent dividend raise forecast this quarter); and (11) F2024E payout ratio of 51 per cent but our F2024E adj. EPS estimate is 4 per cent below consensus due to our conservative outlook on CM.”

Mr. Chan also made these target price adjustments:

  • Bank of Montreal (BMO-T, “buy”) to $130 from $130.50. Average: $139.84.
  • Bank of Nova Scotia (BNS-T, “hold”) to $68 from $70.50. Average: $72.09.
  • National Bank of Canada (NA-T, “hold”) to $103.50 from $99. Average: $105.08.
  • Royal Bank of Canada (RY-T, “hold”) to $133.50 from $133. Average: $140.45.
  • Toronto-Dominion Bank (TD-T, “buy”) to $89 from $86.50. Average: $95.61.


The recent underperformance by InterRent Real Estate Investment Trust (IIP.UN-T) “presents a more attractive entry point,” according to Canaccord Genuity analyst Mark Rothschild.

That led him to raise his recommendation for the Ottawa-based REIT to “buy” from “hold” on Wednesday.

“Over the past two months, the REIT’s units have generated a total return of negative 9.2 per cent, compared to the return of, on average, 1.5 per cent for its Canadian residential REIT peers,” he said. “In particular, both CAP REIT and Boardwalk REIT have posted positive returns over this period.”

Before the bell on Tuesday, InterRent reported first-quarter results that largely fell in line with Mr. Rothschild’s expectations. Adjusted funds from operations of 11.3 cents was a decline of 5.8 per cent year-over-year but narrowly higher than the analyst’s 11.1-cent projection.

“InterRent REIT reported robust operating results in Q1/23, as higher rental rates and improvements in occupancy drove internal growth of 11.4 per cent,” he said. “However, cash flow growth in the quarter was offset by higher interest costs, given an increase in the REIT’s weighted average interest rate and a modest uptick in leverage. Going forward, we expect the impact of further increases in interest rates to be relatively muted, as the REIT’s outstanding debt is almost entirely secured at fixed rates, driving our outlook for solid cash flow growth, largely from marking in-place leases to market on turnover.

“Following Q1/23 results, we continue to utilize a cap rate of 4.55 per cent to value the REIT’s portfolio and our NAV estimate is essentially unchanged at $14.96, from $14.95.”

Mr. Rothschild maintained a target of $15.75 per unit. The average on the Street is $15.44.

Elsewhere, TD Securities’ Jonathan Kelcher cut his target to $15 from $16 with a “hold” rating.


“Strong” first-quarter results and a lack of of lump-sum turnkey project surprises from SNC-Lavalin Group Inc. (SNC-T) is “boosting investor sentiment,” according to Desjardins Securities’ Benoit Poirier.

While the Montreal-based integrated professional services and project management firm is best-performing stock in his coverage universe, up 50.4 per cent year-to-date, he thinks its first-quarter execution “provides an interesting entry point as SNC is still trading at a 5 times 2024 EBITDA discount to [peers] WSP and STN.”

“We could see this gap narrow when the LSTK backlog is completed, given the attractiveness of the engineering sector,” said Mr. Poirier.

He was one of several equity analysts on the Street to hike their forecast and target price for SNC following its premarket quarterly release on Tuesday, which sent its shares soaring 12.2 per cent.

“We see significant potential for value creation if SNC can successfully demonstrate the FCF generation potential of its Engineering Services business,” he said.

SNC reported total revenue of $2.023-billion, up 7 per cent year-over-year and above Mr. Poirier’s $1.834-billion estimate. Adjusted earnings per share jumped 34 per cent to 33 cents, topping the analyst’s 26-cent estimate.

“The core Engineering Services business is performing well above expectations — guidance for SNCL Services poised for upward revisions,” said Mr. Poirier. “The most impressive performance in the SNCL Services segment came from Engineering Services, which is off to an excellent start and reported a 17.5-per-cent increase in organic growth for 1Q23, with revenue of $1.344-billion, above our forecast of $1.218-billion. The revenue growth did not come from one particular project but, rather, was driven by a combination of the U.S., the UK, the Middle East and increased volume in Mining & Metallurgy. Management successfully added 1,000 employees in 1Q23, a key driver of organic growth.”

“LSTK backlog decreased sequentially to $0.5-billion and operating loss of $9-million is in line with management’s cost target. Commissioning and testing for the two Ontario projects are on track (largely physically completed) and the REM is progressing well (75-per-cent complete at the end of March). By the end of 2023, we estimate that the Infrastructure LSTK backlog will have been significantly reduced (we forecast $284-million vs $518-million currently) — a clear driver to derisk the story.”

With increases to his forecast for the next two years, Mr. Poirier raised his target for SNC shares to $42 from $38. The average is $39.

Others making changes include:

* ATB Capital Markets’ Chris Murray to $44 from $38 with an “outperform” rating.

“SNC reported better-than-expected results, reflecting strong organic growth in Engineering Services combined with a moderating impact from Ontario-based LSTK projects,” said Mr. Murray. “Management highlighted a positive demand environment across core regions, with book-to-bill trends remaining firm (more than 1.0 times), which could support an upwards revision to organic growth guidance at Q2/23. SNC delivered strong results, highlighted by the consistency and margin profile delivered by Engineering Services, which we believe reflects the future of SNC and supports an upward re-rating closer to design peers.”

* Canaccord Genuity’s Yuri Lynk to $42 from $41 with a “buy” rating.

“We continue to view SNCL Services earnings power in the $2.00 per share range on a standalone basis, which supports long-term value potential in excess of our target,” said Mr. Lynk. “We expect much more predictable and higher bottom-line results, not unlike what we witnessed in Q1/2023, as the two money losing LSTK projects have reached physical completion. With an underlying FCF profile not unlike other professional services companies, we expect SNC to continue to close its valuation gap versus peers as it completes its exit from LSTK.”

* Raymond James’ Frederic Bastien to $40 from $37 with an “outperform” rating.

“The market sent shares of SNC-Lavalin up 12 per cent [Tuesday], after the firm delivered a clean quarter that topped expectations and was void of material LSTK cost reforecasts,” said Mr. Bastien. “While we are not yet convinced we have seen the last of these — after all, we have been disappointed in the past — we continue to see a compelling set-up for the stock given how strong the demand environment for engineering services is, and how hard WSP Global and Stantec have run versus SNC over a multi-year timeframe. The company may not be painted with the same high-quality brush as its Canadian peers for some time, but it is proving the better one to own year-to-date.”

* RBC’s Sabahat Khan to $45 from $39 with an “outperform” rating.

“Overall, SNC’s go-forward business (and the LSTK segment) generated good results for the quarter, which we believe sets up the company well for the remainder of the year. Looking ahead, we expect continued strength in the Engineering Services business, with investor focus shifting to organic and (eventually) inorganic opportunities for this platform,” said Mr. Khan.

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

“Underpinned by strong order intake and a significant expansion of its workforce, the company appears to be executing well against its ‘land & expand’ strategy. Organic revenue growth in its Engineering Services business is likely to lead the industry in 2023. However, we believe SNC’s valuation will continue to be constrained by lower margins (vs. peers), suppressed FCF and limited near-term M&A prospects,” said Mr. Dodge.

* CIBC’s Jacob Bout to $36 from $31 with a “neutral” rating.


National Bank Financial analyst Jaeme Gloyn thinks it’s now “time to buy” Element Fleet Management Corp. (EFN-T) after better-than-expected first-quarter results and a raise to its full-year guidance.

“In his final letter to shareholders, outgoing CEO Jay Forbes spoke of creating ‘a fine timepiece” at Element. Checking the EFN Q1 clock tells us it’s time to buy the stock,” he said. :We expect solid beat and guidance upgrade combined with positive commentary on syndication markets will drive meaningful upward revisions to estimates and price targets (NBF goes to $30 from $28). We believe the shares will follow in kind, up double digits. The one nitpick that could hold the shares back is that FX drove the bulk of the guidance upgrade, a less predictable earnings and FCF driver.”

After the bell on Tuesday, the Toronto-based pure-play automotive fleet manager reported revenue of $304-million for the quarter, up 9 per cent year-over-year on a constant currency basis and exceeding both Mr. Gloyn’s $289-million estimate and the consensus forecast of $283-million. Earnings per share of 31 cents was 15 per cent higher than the 27-cent expectation of both the analyst and the Street.

Mr. Gloyn called the result a “solid” beat, pointing to a 19-per-cent year-over-year gain in free cash flow per share to 37 cents (versus his 34-cent forecast) and revenue growth across all its business lines.

“Crucially, organic growth strategies to increase vehicles under management, penetration and utilization is driving the majority of service revenue growth year-over-year and quarter-over-quarter,” he said.

Element also increased his 2023 guidance, raising its net revenue projection by 8 per cent, EPS by 12 per cent and FCF per share by 9 per cent.

“The upgrade reflects management’s confidence in i) sustained success on organic growth initiatives, ii) waning impact of the pandemic, iii) gradual increase in OEM deliveries, and iv) tailwinds from inflation,” the analyst said.

After increasing his EPS and FCF estimates through 2024, Mr. Gloyn raised his target for Element Fleet shares by $2 to $30, reiterating an “outperform” rating. The average target is $24.

“EFN is a ‘core holding’ we believe every PM needs to own in all environments,” he concluded. “EFN is a low-risk, double-digit FCF and dividend grower, with blue-sky share price potential easily into the $30s over the next two years regardless of the market backdrop. We view growth as de-risked given 1) continued solid execution on an organic growth pipeline of $500 million of revenues (approximately 40 per cent above 2022 levels) to be earned in the next few years, 2) a massive order backlog with high-margin revenues to support that growth in H2 2023 through 2024, and 3) mega-fleet wins not baked into guidance or consensus estimates (see Rentokil in December 2022 and Armada, OXXO and TELUS added in early 2023). In addition, EFN still trades at an FCF Yield of 9 per cent on 2024 estimates, roughly 40 per cent above the yield of Canadian Financials with similar fundamentals (e.g., defensiveness, strong organic revenue growth, expanding profitability, solid FCF generation, low credit risk, and barriers to entry). As EFN executes in 2023, we expect significant yield compression.”

Elsewhere, others making changes include:

* Scotia’s Phil Hardie to $22 from $20 with a “sector perform” rating.

“We expect to see a positive investors’ reaction coming out of the first quarter results,” said Mr. Hardie. “Element started the year out on a strong note, with Adj. EPS coming in ahead of expectations and management raising its guidance for the year. A favourable shift in the exchange rate provided a solid tailwind for earnings growth in the quarter and was a key driver to the revised guidance. That said, this should not overshadow the solid operating momentum demonstrated by the company.”

“EFN stock has lagged over the last six months, however, we believe the risk/reward of owning the stock has improved and we are becoming increasingly constructive on the name.”

* Raymond James’ Stephen Boland to $26 from $24 with a “strong buy” rating.

“Overall, this was another solid quarter. ... Positively, EFN increased its 2023 revenue, adjusted EPS and FCF p/sh guidance from 4Q22. OEM issues continue to impact originations, and management expects the backlog to remain at elevated levels for the balance of 2023. Services again had another strong quarter as higher utilization rates (bolstered by aging fleets) and fuel/parts inflation continues to support growth year-over-year. Syndication volumes remain robust as demand for high quality credit products continues though there is some margin compression. Guidance for origination and syndication volumes were unchanged.

“EFN remains our top pick heading into mid-2023. The higher guidance is positive. Aging fleets are also helping to bolster Service revenue to new highs. The new CEO was present on the call and was participating in the Q&A.”

* RBC’s Geoffrey Kwan to $28 from $27 with an “outperform” rating.

“Very good Q1/23 results + significant 2023 guidance increase demonstrated why we thought EFN’s recent share price weakness was unwarranted (since the end of February 2023, EFN’s share price is down 8 per cent vs. up 2 per cent for S&P/ TSX Composite and up 4 per cent for S&P500),” said Mr. Kwan. “Q1/23 results marked the final quarter of a highly successful tenure for retiring CEO Jay Forbes and we think President and incoming CEO Laura Dottori-Attanasio can help sustain the positive momentum. EFN is delivering excellent fundamentals winning new customers, cross-selling existing clients additional fleet services with 2023 results that should be further bolstered by finally having improved OEM production. EFN is our #1 high-conviction best idea as it has a rare combination of significant growth potential; discount valuation; and substantial FCF generation. At the same time, EFN offers strong defensive attributes and stands to benefit in a recession, high interest rate and/or high inflation environment.”

* Barclays’ John Aiken to $24 from $23 with an “overweight” rating.

“As Jay Forbes bids us adieu in very successful five years at the reins of the transformation, Element caps off his final quarter as CEO with strong earnings and yet another lift to guidance,” said Mr. Aiken.

* BMO’s Tom Mackinnon to $24 from $23 with an “outperform” rating.

* CIBC’s Paul Holden to $22 from $21 with an “outperformer” rating.


National Bank Financial analyst Adam Shine sees TVA Group Inc. (TVA.B-T) “under greater pressure than expected” after a first-quarter EBITDA miss, leading him to move his forecast “materially lower” and downgrade his recommendation for its shares to “underperform” from “sector perform” previously.

After the bell on Monday, the Montreal-based broadcaster reported revenue of $136.1-million, down 5.8 per cent year-over-year but narrowly ahead of the analyst’s $134-million estimate “as upside in Magazines but especially Broadcasting trumped weaker revenues at Film Production & Audiovisual Services and Production & Distribution.” However, an EBITDA loss of $24-million, down 18.6 per cent year-over-year, was well below the Mr. Shine’s projection of a $18.6-million loss.

“The Broadcasting loss of $22.8-million (NBF a loss of $24.3-million) was close to us, but all other segments reverted to losses with MELS [its Film Production & Audiovisual Services segment] ultimately driving most of the miss to our forecast,” he said.

With his estimate reductions, Mr. Shine, currently the lone analyst covering TVA, dropped his target for its shares to 70 cents from $2.


National Bank Financial analyst Maxim Sytchev thinks the 5.6-per-cent drop in share price sustained by Ag Growth International Inc. (AFN-T) following the premarket Tuesday release of “an ok” quarterly release “is actually fair” given the 36-per-cent gain year-to-date.

“At the same time, the longer-term thesis is unchanged as previously questionable capital allocation strategy is now fully channeled into de-leveraging which accrues directly to equity holders, without much risk,” he said. “Assuming the company hits the 17-per-cent EBITDA margin target in 2023, when combined with working capital optimization, our confidence in getting the balance sheet to 3 times net debt to EBITDA remains high.”

The Winnipeg-based company reported revenue of $347-million, up 19 per cent year-over-year and above both Mr. Sytchev’s $312.3-million estimate and the consensus forecast of $326.3-million driven by “robust” growth in Canada from “strong commodity prices and the expectation of high crop production for the 2023 season, which are helping maintain higher overall demand.” Adjusted earnings per share of 25 cents missed expectations (64 cents and 39 cents, respectively) due largely to an $8-million overestimation of forecasted adjusted earnings for the first quarter.

Despite the “messy” EPS result, Mr. Sytchev emphasized “ongoing operational optimization and deleveraging support our ‘simple’ investment thesis.”

“Structural improvements are in progress, despite transient costs in the quarter,” he said. “Corporate costs were elevated in the quarter as AFN continued streamlining legacy Digital operations (expected to be EBITDA positive in 2024), integrating the prior Food vertical into Commercial operations and completing various organizational streamlining initiatives (centralizing materials purchasing consolidating production facilities, etc.). SG&A as a percentage of revenues are also expected to moderate through the remainder of the year. End-market demand remains strong, especially in Canada, India and Brazil (softer farmer sentiment in Q1 is improving). In the latter market, the company optimized its production space to improve capacity and productivity which, combined with an expected record crop in 2023 and structural shortage of on-farm storage capacity, underlines the market’s long-term potential. Management is also confident in gaining market share in India.

“17-per-cent EBITDA margins are in sight for 2023. The above factors, combined with solid progress on product transfers across geographies and a rebuild of the order book in EMEA and the Food segment, suggest that a 17-per-cent margin is a realistic possibility for 2023 (we were modeling 16.7 per cent pre-quarter). Recall that Q2 and Q3 have seasonally higher revenues, so operating leverage will be a major factor in lifting margins from the 13.9 per cent seen this quarter.”

Maintaining an “outperform” recommendation for Ag Growth shares, Mr. Sytchev raised his target to $69 from $67 based on " better-than-expected EBITDA directionality.” The average is $72.20.

Other changes include:

* ATB Capital Markets’ Tim Monachello to $70 from $69 with an “outperform” rating.

“Overall, we continue to believe AFN is well positioned to outperform with a diverse set of low capital intensity brownfield growth opportunities across geographies and business lines as AFN deepens its penetration in existing markets, complemented by an improving cost structure as it reaps the benefits from ongoing restructuring and optimization initiatives over the medium term,” said Mr. Monachello. “In 2023, we believe margin improvement and deleveraging will be primary catalysts for stock appreciation. All told, we view the recent pull back as an opportunity for investors to build or add to positions in AFN.”

* Desjardins Securities’ Gary Ho raised his target to $75 from $74 with a “buy” rating.

“The decline in AFN’s share price [of 5.6 per cent] is unwarranted, in our view,” said Mr. Ho. “While 1Q EBITDA missed consensus (but met our forecast) and margins were weak due to one-time items/seasonality, AFN raised EBITDA guidance by 2 per cent, which shows management’s conviction in its outlook. We remain bullish on the story and margin improvement potential. Despite the weakness [Tuesday], we view it as an attractive buying opportunity.”


In other analyst actions:

* RBC Dominion Securities’ Geoffrey Kwan lowered his Alaris Equity Partners Income Trust (AD.UN-T) target to $18 from $19 with a “sector perform” rating, while National Bank’s Zachary Evershed trimmed his target to $23 from $23.50 with an “outperform” rating. The average on the Street is $21.92.

“Q1/23 results were neutral in our view as normalized EBITDA was slightly below our forecast,” Mr. Kwan said. “Overall portfolio health has weakened in the last few quarters coming off historical highs as Alaris’ weighted-average Earnings Coverage Ratio (ECR) declined to 1.6 times in Q1/23, down from the recent peak of 2.1 times in Q2/22 and at a level not seen in 3 years, but is at a level that is roughly in line with its historical average. Given the weaker macro environment and uncertainty on the degree of its impact on Alaris’ investment partners, we have a more cautious view on the shares, but acknowledge the company has done relatively well at navigating the past few years.”

* National Bank’s Matt Kornack lowered his BTB Real Estate Investment Trust (BTB.UN-T) target to $3.65 from $3.85, below the $4.08 average, with a “sector perform” rating.

* RBC’s Keith Mackey reduced his Calfrac Well Services Ltd. (CFW-T) target to $6 from $7 with a “sector perform” rating. Other changes include: Stifel’s Cole Pereira to $9 from $8.50 with a “buy” rating and ATB Capital Markets’ Waqar Syed to $11 from $11.50 with an “outperform” rating. The average is $10.

“CFW’s share price has declined 34 per cent year-to-date, as commodity price volatility has negatively impacted near-term activity, pricing and earnings visibility across the sector,” said Mr. Pereira. “Ultimately, we believe earnings profiles will be much more resilient than share prices are indicating, and we would highlight Calfrac’s significant equity torque in particular. CFW trades at 2.1 times 2024 estimated EV/EBITDAS, and if the stock re-rated to just 2.5 times it would be worth $5.50 per share or a potential 38-per-cent upside. Re-rating to only 3.0 times would imply an equity value of $7.50 per share, or 88-per-cent potential upside.”

* National Bank’s Cameron Doerksen cut his Chorus Aviation Inc. (CHR-T) target to $4.25 from $4.50 with an “outperform” rating, while Scotia’s Konark Gupta reduced his target to $4 from $4.40 with a “sector perform” rating. The average is $4.37.

“CHR reported a nice Q1 beat but, more importantly, it continued the solid progress on deleveraging, marching toward its goals with an asset-lighter model,” said Mr. Gupta. “It reaffirmed 2023 guidance, 2024 leverage ratio target, and confidence in launching Falko’s Fund III in Q2. With minor changes to our estimates, we continue to expect an EBITDA peak this year and relatively steady EPS between 2023 and 2025 as CHR monetizes assets to drive deleveraging, which would reduce leasing revenue but also reduce depreciation and interest costs.”

* Canaccord Genuity’s Matt Bottomley lowered his target for Cronos Group Inc. (CRON-T) to $4 from $4.25 with a “buy” rating, while CIBC’s John Zamparo cut his target to $2.75 from $3 with an “outperformer” rating. The average is $3.74.

* National Bank’s Shane Nagle raised his Ero Copper Corp. (ERO-T) target to $26.50, below the $28.05 average, from $25.50 with a “sector perform” rating, while Canaccord Genuity’s Dalton Baretto moved his target to $31.50 from $32 with a “buy” rating.

* Canaccord Genuity’s Yuri Lynk raised his Finning International Inc. (FTT-T) target to $47 from $43 with a “buy” rating. Others making changes include: BMO’s Devin Dodge to $47 from $43 with an “outperform” rating, National Bank’s Maxim Sytchev to $42 from $40 with a “sector perform” rating, Scotia Capital’s Michael Doumet to $46 from $45 with a “sector outperform” rating and CIBC’s Jacob Bout to $47 from $45 with an “outperformer” rating. The average is $43.89.

“In our view, FTT is executing very well, demand trends in its territories are favourable, and the company has meaningful market share growth opportunities in product support and Chilean mining,” said Mr. Dodge. “The streamlining of its overhead costs provides further evidence of the improved cost discipline across the business. Heightened concerns over an economic pullback may keep a lid on the shares in the very near term, but we believe FTT has significant torque to a positive shift in investor sentiment.”

* CIBC’s Mark Petrie cut his George Weston Ltd. (WN-T) target by $1 to $209, above the $195.86 average, with an “outperformer” rating, while RBC’s Irene Nattel trimmed her target to $214 from $215 with an “outperform” rating.

* Raymond James’ David Quezada reduced his Innergex Renewable Energy Inc. (INE-T) target to $21.50 from $24 with an “outperform” rating. The average is $19.04.

“We remain constructive on Innergex based on our view of the stock’s attractive valuation, significant portion of long-life hydro assets and solid growth outlook,” said Mr. Quezada. “While 1Q23 results came in below consensus, we maintain our positive bias on the company’s development activities which advanced well in the quarter. We have reduced our target price reflecting quarterly changes to our model.”

* RBC’s Robert Kwan raised his Keyera Corp. (KEY-T) target to $38 from $36 with an “outperform” rating. Other changes include: BMO’s Ben Pham to $34 from $33.50 with a “market perform” rating, CIBC’s Robert Catellier to $37 from $36 with an “outperformer” rating, Stifel’s Cole Pereira to $38.50 from $36 with a “buy” rating and Canaccord Genuity’s John Bereznicki to $35 from $34 with a “hold” rating. The average is $35.64.

“With KAPS being placed into service, Keyera is ‘reaching a cash flow inflection point’, and we positively view the company’s capital allocation messaging,” said Mr. Kwan. “We like Keyera’s leverage to growing WCSB gas and NGL volumes with the path to share price appreciation likely being linked to Keyera’s follow through on capital allocation, including: (1) maintaining a strong balance sheet; (2) pursuing ‘smaller size’ projects with returns in Keyera’s target range being fully underpinned by long-term, take-or-pay contracting; and (3) returning capital to shareholders via a growing dividend and possibly share buybacks.”

* BMO’s Jackie Przybylowski raised her Kinross Gold Corp. (KGC-N, K-T) target to US$7, above the US$5.89 average, from US$6.50 with an “outperform” rating.

* National Bank’s Rupert Merer cut his Lion Electric Co. (LEV-N, LEV-T) target to US$2.75 from US$3 with an “outperform” rating. Other changes include: Desjardins Securities’ Benoit Poirier to US$4 from US$5.50 with a “buy” rating and Raymond James’ Michael Glen to US$2 from US$2.50 with a “market perform” rating. The average is US$4.11.

“Ongoing capacity expansion should benefit LEV in the long run, but we believe its order book and its telegraphed need for further capitalization are driving negative investor reaction,” said Mr. Poirier. “That said, we view LEV as ideally positioned to succeed given its product offering and governments’ push to decarbonize. We are maintaining our Buy rating but have lowered our target, reflecting a higher discount rate.”

* BMO’s Étienne Ricard raised his MCAN Mortgage Corp. (MKP-T) target by $1 to $19 with a “market perform” rating.

“Drivers of value to MKP shareholders remain constructive, underpinned by margin discipline, credit quality and conservative leverage,” he said. “We see potential for ROE to move above management’s 13-15-per-cent long-term objective, helped by a mix shift toward highermargin construction loans. We raise our target to $19 and maintain our Market Perform rating considering greater total return potential across our coverage (EQB).”

* National Bank’s Vishal Shreedhar lowered his target for Pet Valu Holdings Ltd. (PET-T) to $41 from $47 with a “sector perform” rating. Other changes include: Barclays’ Adrienne Yih to $41 from $45 with an “overweight” rating and CIBC’s Mark Petrie to $44 from $48 with an “outperformer” rating. The average is $44.14.

* Scotia Capital’s Michael Doumet raised his Russel Metals Inc. (RUS-T) target to $40 from $38, keeping a “sector perform” rating, while Stifel’s Ian Gillies bumped his target to $42.50 from $42 with a “buy”rating. The average is $39.90.

“We came away from RUS’ strong quarter with increased confidence given the constructive outlook and improved capital allocation optionality,” said Mr. Gillies. “We believe the next catalyst is M&A. The balance sheet can easily fund bolt-on acquisitions and could withstand very large acquisitions with current liquidity in place of $768 mm and our estimated capacity of roughly $1.0 bn. In our view, the stock’s valuation still screens attractively given its 2024E P/E and EV/EBITDA lag the peers by 1.4 times and 1.3 times at 9.3 times and 4.6 times. FCF yield in 2024 of 11.7 per cent is highest amongst the steel distributor peers.”

* TD Securities’ Brian Morrison increased his Sleep Country Canada Holdings Inc. (ZZZ-T) target to $33 from $30 with a “buy” rating, while CIBC’s John Zamparo raised his target to $30 from $29 with an “outperformer” rating. The average is $30.33.

* RBC’s Greg Pardy cut his Suncor Energy Inc. (SU-T) target to $52, below the $52.94 average, from $54 “on the back of lower downstream estimates” with an “outperform” recommendation.

“With a recharged leadership team under the direction of new CEO Rich Kruger now in place, Suncor is poised to reestablish operating and financial momentum in the months to come,” said Mr. Pardy. “This improved performance will not come easily, but with success should translate into relative share price appreciation over time.”

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