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

While Cargojet Inc.’s (CJT-T) third-quarter results fell narrowly below his expectations, ATB Capital Markets analyst Chris Murray sees its “balanced” outlook remaining “intact,” leading him to “remain positive on the name given its market position and secular tailwinds underpinning e-commerce, with an improving cost structure supportive of meaningful operating leverage once volumes recover.”

On Tuesday, the Mississauga-based reported revenue, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted fully diluted earnings per share of $214-million, $70-million and 30 cents, respectively. All missing Mr. Murray’s projections ($216.5-million, $72.5-million and 91 cents).”

“Moderate volume pressure on the Domestic network persisted in Q3/23, but management remained constructive on overall trends heading into its seasonally strong Q4, with growth across the Domestic network expected to return in 2024,” he said. “Margins were negatively affected by timing issues around fuel, masking an improving cost structure that we expect to translate into a stronger margin profile once volumes normalize. CJT stated that the CapEx plan announced at its Investor Day has been reduced by approximately $450-million while maintaining conversion slots, with stronger FCF expected to bolster returns to shareholders. CJT delivered solid results, despite facing headwinds, and issued a constructive outlook for 2024.”

While the results pushed Mr. Murray to trim his full-year 2023 projections, he raised his revenue and earnings expectations for 2024 and 2025, pointing to “a reasonably optimistic outlook for demand conditions heading into Q4/23, a seasonally strong quarter, and 2024.”

“Management’s outlook included expectations for flat to slightly positive volume growth on the domestic network in Q4/23 and mid-single-digit growth in 2024 as price escalators take effect alongside modest year-over-year volume growth,” he said. “The Company highlighted softer conditions in China as a demand headwind for customers but believes that overall volume trends should continue to improve, with on-time delivery trends remaining best-in-class (99.5 per cent reported for Q3/23). ACMI is expected to be relatively flat to current quarters, given the Company’s expanded partnership with DHL. The Company is taking measures to better align capacity with the demand environment, including minimizing contract labour and overtime, training costs through the addition of in-house capability, and adjusting block hours through route and aircraft optimizations, which was evident in the Q3/23 margin profile (ex. fuel) and should support an improving margin profile as demand improves. Fuel is expected to pose less of a headwind in Q4/23, which we expect to support sequential margin expansion into Q4/23 as better cost containment continues to take hold.”

“We see the Company as well situated to benefit from ecommerce-led demand trends and attractive supply/demand dynamics around international air cargo services while maintaining the flexibility (through control of the conversion slots) to add or defer growth CapEx depending on economic conditions during the next 12-18 months. We expect the cancelled 777s and potential sale, dry lease or parting out of four B757 aircraft to support better free cash flow generation going forward, positioning the Company to be opportunistic around returning capital to shareholders.”

Maintaining a “outperform” recommendation for Cargojet shares, Mr. Murray trimmed his target to $125 from $130. The average on the Street is $140.83, according to Refinitiv data.

Others making changes include:

* Scotia’s Konark Gupta to $142 from $136 with a “sector outperform” rating.

“CJT delivered an in-line Q3 EBITDA amidst significant fuel noise, while providing good clarity on fleet plans and asset sales, which caused us to materially improve our FCF outlook,” he said. “The earlier-than-expected NCIB (about 9 per cent) and dividend growth (10 per cent) speak to management’s confidence in cash flow outlook. Q3 revenue and EBITDA came in pretty close to our expectations as cargo revenue turned around on better-than-expected progression in Domestic and continued strength in ad-hoc charters. CJT’s Q4 and 2024 outlook was supportive of our existing EBITDA forecasts with minor puts and takes, while net capex commentary was accretive to our FCF expectations. We reiterate our Sector Outperform rating as valuation remains depressed at 7 times EV/EBITDA on our 2024 estimate vs. 8-14 times pre-pandemic, fundamentals are bottoming and CJT is poised to create shareholder value through share repurchases over the next 12 months.”

* National Bank’s Cameron Doerksen to $109 from $112 with a “sector perform” rating.

“We maintain our Sector Perform rating on Cargojet shares as we continue to expect muted results from the company in the next couple quarters, which drives our short-term neutral view,” he said. “With the stock down almost 26 per cent year-to-date, valuation has become more compelling.”

* Acumen Capital’s Nick Corcoran to $145 from $175 with a “buy” rating.

“CJT continues to navigate a weak macro environment by executing cost controls to maintain margins and right sizing its fleet,” he said.

* CIBC’s Kevin Chiang to $150 from $154 with an “outperformer” rating.


While he expects Stella-Jones Inc. (SJ-T) shares will “settle” following recent price appreciation, National Bank Financial analyst Maxim Sytchev emphasized its fundamentals “remain robust.”

“We upgraded the shares in early October (up 24 per cent since then vs. TSX up 2 per cent) positing that a strong pricing dynamic in Poles will be sustained for longer,” he said. “While peak pricing benefits are likely coming to an end, with upgraded capacity, better volume dynamic should transpire in 2024 and 2025. Management appears quite confident in 16-per-cent EBITDA margins over the forecast horizon, preserving the positive earnings revision dynamic; coupled with a reasonable 14.9 times P/E on 2024E forecasts, we view SJ as a ‘safe’ name to own – visible, utility-driven demand, ok for ties, resi not imploding; we continue to like the structural set-up for SJ shares.”

Shares of the Montreal-based producer of pressure-treated wood products soared 7.4 per cent on Tuesday after it reported revenue of $949-million, up 13 per cent year-over-year and 5 per cent above the Street’s forecast ($905-million). Adjusted earnings per share of $1.91 also easily exceeded the consensus estimate of $1.31 as a EBITDA margin of 20.3 per cent was much higher than anticipated.

Mr. Sytchev thinks Stella-Jones is currently “capitalizing on strong industry dynamics,” seeing its capacity to manufacture poles “expanded significantly” and its rail tie inventories replenished.

“Recent capital expansion initiatives (with the majority of spend now behind us - $30-million remains through end of 2024) has improved SJ’s pole production capacity by 10 per cent to 15 per cent (2024 vs. 2023) while railway tie inventories are now at healthy levels,” he said. “As such, SJ should continue to fully benefit from the extremely strong pricing backdrop for both categories through the end of the year. Operationally, the phaseout of penta is effectively complete in the U.S. and well underway in Canada, and we are confident in SJ’s ability to manage the transition.”

“2024 will bring tougher comps, but Investor Day targets are firmly intact. Management expects significant moderation in pricing for poles (partially due to higher supply) and ties through 2024 as we lap this year’s tough comps. That being said, pricing should still be a net positive for sales through next year, just closer to historical levels. All Investor Day targets are firmly intact, and we believe there is some room for upward revision given recent strength. In addition to resilient ties and poles demand, 2024 resi lumber volumes should continue to recover as lower pricing somewhat offsets consumer affordability concerns.”

While he raised his forecast for the company alongside his upgrade on Oct. 9, Mr. Sytchev now thinks his changes were “too conservative given the magnitude of price increases and cost control.”

“For the upcoming quarter, we anticipate continued momentum of the price hikes in the Poles vertical that started last year; hence, upping the margin profile (will lap at the end of 2023 with the rest of the growth in 2024-2025 to come from mostly volumes and some pricing). We are now imputing 6.6-per-cent CAGR [compound annual growth rate] from 2022 onwards till 2025 (previously at 6 per cent) at 16-per-cent EBITDA margin, in line with guidance (with poles 15-per-cent CAGR).”

With those changes, Mr. Sytchev increased his target for Stella-Jones shares to $87 from $83, reiterating an “outperform” recommendation. The average target is $83.14.

Others making changes include:

* Desjardins Securities’ Benoit Poirier to $94 from $82 with a “buy” rating.

“We are pleased with SJ’s 3Q results,” said Mr. Poirier. “Looking ahead to 2024, based on electrical grid infrastructure spending demand dynamics at play, we see a low probability of any material utility pole pricing pressure. Combined with the 1 million additional ties that will be available for sale, enabling SJ to better serve its non–Class l customers (margin-accretive), we are confident that SJ can deliver margins above at least the 17-per-cent level, with strong potential for further upside.”

“In an environment of increased market volatility, we believe SJ’s return profile is quite compelling for a company with resilient attributes.”

* RBC’s James McGarragle to $91 from $77 with an “outperform” rating.

“While we expect margin to come off Q3′s 20-per-cent level, our view is that margin will trend above targets for 16-per-cent longer term reflecting an increasing pole mix and operating leverage,” he said. “Moreover, we see upside to revenue on the back of the US$42-billion BEAD program, with 80 per cent of BEAD funds expected post H2/24, and from renewable energy infrastructure, which has not benefited results yet. Overall, we do not believe meaningful upcoming operating leverage is reflected in the shares despite the stock’s strong performance year-to-date.”

* TD Securities’ Michael Tupholme to $96 from $83 with a “buy” rating.

“We continue to view SJ as a high-quality company that offers investors a mix of growth potential and defensive characteristics. Although SJ has recently performed very well, we continue to view the stock’s valuation as attractive,” he said.


With industry demand remaining “softer than historical levels,” Stifel analyst Martin Landry thinks Pet Valu Holdings Ltd.’s (PET-T) visibility on same-store-sales growth is “still limited” for 2024 following mixed third-quarter results.

“Pet Valu’s Q3/23 same-store-sales increased by 4.2 per cent year-over-year, lower than our estimates of 6 per cent and consensus of 6.5 per cent,” he said. “Same-store sales growth was driven by a 0.2-per-cent increase in transactions and a 4-per-cent increase in average spend per transaction. According to management, sales of consumables (i.e. food, treats and litter) are growing high-single-digits year-over-year, which suggests that hardlines sales (i.e. toys & accessories) are likely declining mid single digits year-over-year. While the strong consumables sales shows the resilient nature of the pet industry, we question the sustainability of the strong growth rate given it is higher than the historical mid-single-digit-percentage pace and appear largely driven by higher prices. As such, we have reduced our 2024 same-store-sales growth estimates by 170 basis points to 4.3 per cent.”

On Tuesday before the bell, the Markham, Ont.-based company reported revenue of $262.29-million, up 7 per cent year-over-year but below Mr. Landry’s $266.01-million estimate and expectation of 9-per-cent growth. Adjusted earnings per share of 39 cent was a decline of 9.3 per cent but 2 cents higher than the analyst’s projection.

“Pet Valu narrowed its 2023 EPS guidance and reduced its same-store-sales expectations by 250 basis points,” he said. “Consumers continue to show price sensitivity, especially on hardlines, responding to promotional activities. The 3-6.5-per-cent same-store-sales growth in Q4/23 implied by the full year guidance should be supplemented by earlier than expected wholesale revenues from shipments into the Chico network bringing Q4/23 revenues growth around 10 per cent year-over-year. This combined with margins expansion should translate into 20-per-cent-plus EPS growth, which should be well-received by investors as it marks the end of the declining EPS trend seen in the last three quarters.”

“We are increasing our 2023 EPS forecasts by 3 per cent to $1.59 on the back of higher margins assumptions, reflecting Pet Valu’s ability to manage operating costs despite lower demand trends. Our 2024 EPS estimates is reduced by 2 per cent due to lower same-store-sales growth assumptions, which better reflect the current trends. The upside to our forecasts could come from higher than expected wholesale revenues from wholesale services into Chico. The risks to our forecasts could come from lower same-store-sales growth due to a weakening macroeconomic backdrop.”

Emphasizing a “slowing growth profile,” Mr. Landry lowered his target for Pet Valu shares to $33 from $38, keeping a “buy” recommendation, based on lower forecasts and a reduction in valuation multiples. The average target is $37.56.

“With a strong ROIC [return on invested capital], high profit margins, appealing industry characteristics and reasonable valuation, Pet Valu remains a conviction BUY and is included in Stifel’s Select List,” he said.

Elsewhere, others making changes include:

* TD Securities’ Michael Van Aelst to $38 from $41 with a “buy” rating.

“We see solid industry growth, largely driven by the secular trends of humanization and premiumization, although traffic slowing (as more customers purchase larger package sizes and, therefore, shop less often), lower discretionary demand and promotional activity normalizing (to pre-COVID-19 levels) are tempering this in the near term,” he said.

* Raymond James’ Michael Glen to $36 from $38 with an “outperform” rating.

“We would note that SSSG comparables do continue to ease in 4Q and well into 2024, and we now anticipate a stabilization at 4.0 per cent in 2024 (vs 6.5 per cent previously),” said Mr. Glen. “This pace of growth is modestly below the longer-term growth rate for the Canadian industry which sits in the 4.5-per-cent range. As we look farther forward with the business, and think about the industry growth (i.e., mid single digit over the long-term), store growth (35-40 new stores in 2023 and 1,200 long-term store target), and benefits to stem from the company’s supply chain initiatives, we believe an investor with a reasonable investment timeframe will likely make money with the stock.”

* National Bank’s Vishal Shreedhar to $35 from $36 with an “outperform” rating.

“The market remains concerned about a slowing consumer backdrop. We highlight that PET’s sssg, even while slowing, remains superior to most discretionary names in our coverage (except Dollarama). Additionally, our review of Canadian pet retailers during ‘08/09 revealed positive sssg during that time,” said Mr. Shreedhar. “PET is considering share buybacks (not in our model), which would be well received by investors, in our view.”

* CIBC’s Mark Petrie to $31 from $36 with an “outperformer” rating.

* Barclays’ Adrienne Yih to $34 from $35 with an “overweight” rating.


While he thinks Spartan Delta Corp.’s (SDE-T) third-quarter financial release brought few surprises, ATB Capital Markets analyst Patrick O’Rourke is taking a “neutral view” of its shares after a “first gauge of the new business” following the $1.7-billion sale of its Gold Creek and Karr Montney assets to Logan Energy Corp. earlier this year.

Accordingly, he lowered his rating for the Calgary-based company to “sector perform” from “outperform” previously.

“Although SDE management has an excellent track record of long-term value creation (as demonstrated by the recent asset sale, special dividend payment, and spin out of Logan Energy), we have determined that a modestly higher risking factor of our NAV estimates is prudent and appropriate as we evaluate the medium- and longer-term outlook for the assets and business strategy,” said Mr. O’Rourke.

After the bell on Tuesday, Spartan reported production and financial results that largely fell in line with expectations. Production of 37,518 barrels of oil equivalent per day and cash flow per share of 37 cents both narrowly exceeded the Street’s expectations of 37,400 boe/d and 36 cents. Capital expenditures of $27.5-million was lower than the consensus forecast of $27.6-million.

“The company exited Q3/23 with $64.5-million in net debt, and plans to release its formal 2024 guidance before year-end, providing investors with a more fulsome view of the long-term strategy for the business mode,” said Mr. O’Rourke.

Calling it “the first clean quarter” of results since the Montney asset sale, he trimmed his target for Spartan shares by $1 to $5. The average target on the Street is $6.


Touting “encouraging” peer results, National Bank Financial analyst Zachary Evershed sees “compelling value” in Park Lawn Corp. (PLC-T) ahead of the release of its third-quarter results on Thursday after the bell.

The analyst adjusted his estimates for the Toronto-based funeral home operator to account for the recently announced divestiture of legacy assets south of the border, including 72 cemeteries and 11 funeral homes, to Everstory Acquisition Portfolio in a transaction valued at approximately $70-million.

“We remove the estimated contribution of MMG, Saber and Citadel from our model as of year-end (with a minor offset from the addition of Christy-Smith), leaving our 2024 revenue estimate lighter by $54-million and our Adj. EBITDA forecast trimmed by $8.5-million,” he said.

“We view the announcement positively as the company was able to secure an 8 times multiple on a basket of what is likely their least attractive assets, being made up of primarily rural, smaller properties that operate at lower margins, which should set a valuation floor in the stock. Though we note some dilution on the Adj. EPS line at the moment, this should be offset by redeployment of the proceeds into accretive acquisitions.”

Mr. Evershed did not adjust his third-quarter expectations, but emphasized peer results are “promising” thus far.

“Competitor Service Corporation (SCI-N) reported slightly negative Funeral SSSG [same-store sales growth] at down 2.2 per cent year-over-year as the increase in average revenue per service of 4.3 per cent was not enough to offset a volume headwind of 6.2 per cent,” he said. “On a brighter note, Cemetery SSSG came in at up 5.2 per cent year-over-year. With the caveat that deathcare’s highly regional nature can lead to an imperfect readthrough from competitors, we estimate that SCI’s results adjusted for PLC’s funeral/cemetery split would translate to 2-per-cent organic growth for Park Lawn vs. our current Q3/23 estimate of a decline of 6.5 per cent, suggesting upside. We maintain our more bearish forecasts, however, out of an abundance of caution.”

Reiterating an “outperform” rating, Mr. Evershed lowered his target for Park Lawn shares to $22 from $31. The average is $28.44.

“As we modify our estimates for the divestment, we also adjust our valuation methodology to cap our target at a 6-per-cent FCF yield, a level we believe is more defensible given the current opportunity cost of cash investments,” he said. “We therefore move our target to $22 (was $31) on 8.5 times 2025 estimated EV/EBITDA (was 11 times). With the divestiture at 8 times providing a robust valuation backstop as the remaining portfolio is of higher quality, we view current trading levels (7.2 times EV/EBITDA, 7.8-per-cent FCF yield) as an attractive buying opportunity and emphatically reiterate our Outperform rating.”


While its ongoing strategic review continues to create uncertainty for investors, Scotia Capital analyst Himanshu Gupta raised his recommendation for European Residential REIT (ERE.UN-T) to “sector outperform” from “sector perform” previously following the release of in-line third-quarter financial results, pointing to three factors:

* Seeing his rationale for a previous downgrade “now fully played out.”

“In our downgrade note earlier this year, we mentioned that we expect negative FFOPU growth in 2023 and see deeply discounted valuation for European residential names,” he said. “Now, as we end the year, we see positive (albeit modest) FFOPU [funds from operaitons per unit ] growth in 2024 and improved valuation for European peers.”

* Believing the REIT’s “bad news is actually the good news.”

“On the conference call, management mentioned that they are disappointed with the pace of progress on the suite-by-suite privatization,” he said. “We get a sense that one-by-one unit sale will not be the answer going forward. Now, we think, management will have to find a solution either through CBRE sale process or through CAPREIT. Either way, we think ERES unitholders will get rewarded. To us $3.50 looks like the most logical transaction price for all parties – and this implies 60-per-cent total return to current price. Our target is now moved to $3.50 (-$0.50) which is 10-per-cent discount to our Scotia NAVPU of $3.85.”

* It’s valuation “now makes sense both on absolute and relative basis.”

Mr. Gupta’s new $3.50 target is 3 cents higher than the current average on the Street.

Others making changes include:

* RBC’s Jimmy Shan to $3 from $3.50 with a “sector perform” rating.

“Rent growth was 7 per cent,” said Mr. Shan. “Given recent regulatory changes, this should slow to 3-4 per cent and combined with higher interest expense, we expect flat and marginally declining FFO in ‘24 & ‘25. No further update was provided re: strategic review. Portfolio was marked only slightly lower with reported NAV at €3.05 (down 3 per cent quarter-over-quarter). A few small comparable portfolios traded that can provide guidance. It is unclear if or how CAP REIT will be involved in the strategic outcome.”

* CIBC’s Dean Wilkinson to $3 from $3.75 with an “outperformer” rating.


In other analyst actions:

* Citing its recent share price appreciation and current valuation, Goldman Sachs’ Neil Mehta downgraded Imperial Oil Ltd. (IMO-T) to “neutral” from “buy” with a $86 target, matching he average on the Street.

* CIBC World Markets’ Hamir Patel upgraded Conifex Timber Inc. (CFF-T) to “neutral” from “underperformer” with a 75-cent target. The average target on the Street is $1.13.

“With the shares having significantly underperformed peers this year given depressed SPF prices, downside risks have largely played out. We have also moderated our price target to $0.75 (from $1.00) as we roll our valuation year to 2025,” said Mr. Patel. “Although lumber prices are expected to remain somewhat depressed in 2024, we believe the company’s liquidity is adequate to sustain operations into 2025 (when we expect a sharp rebound in profitability for the lumber sector).”

* TD Cowen’s James Schumm initiated coverage of GFL Environmental Inc. (GFL-T) with an “outperform” rating and $55 target, exceeding the $49.11 average.

* TD Securities’ Aaron MacNeil cut his Ballard Power Systems Inc. (BLDP-Q, BLDP-T) target to US$3.50 from US$4 with a “hold” rating. Other changes include: BMO’s Ameet Thakkar to US$3.50 from US$3.65 with an “underperform” rating, Susquehanna’s Biju Perincheril to US$4 from US$5 with a “neutral” rating and National Bank’s Rupert Merer to US$5 from US$7 with a “sector perform” rating. The average is US$5.71.

“BLDP 3Q results showed sequential ytd improvement with respect to revenues, gross margins and cash burn,” said Mr. Thakkar. “BLPD pointing to inflection to full-year positive gross margins in 2025 which lines up with our estimates. However, we were surprised and somewhat disappointed to see a meaningful sequential decline in both 12-month orderbook (down 15 per cent) and order backlog (down 9 per cent). The contraction of the 12-month order book is most pressing, in our view, as we think it may imply downside to consensus FY 2024 revenue estimates of $140-million.”

* Raymond James’ Frederic Bastien raised his Bird Construction Inc. (BDT-T) target to $16, exceeding the $13.59 average, from $13, keeping a “strong buy” rating.

“The firm has delivered several consecutive quarters of improved results, successfully grown combined backlog to a record $6.1-billion, and built a balance sheet that provides M&A optionality,” he said. “Moreover, BDT generates little business from the industry segments most vulnerable to higher interest rates, and benefits from favourable supply-demand dynamics that allow for better risk sharing into contract terms. Yet, its stock continues to trade a full standard deviation off its 10-year average on both a P/E and EV/EBITDA basis. Investors don’t need multiple expansion to do well on this stock; they just need a reversion back to the mean.”

* RBC’s Tom Callaghan lowered his BTB REIT (BTB.UN-T) target to $3.50, below the $3.63 average, from $3.75 with a “sector perform” rating.

“BTB REIT’s Q3 results fell shy of our outlook and Street consensus, largely on the back of lower NOI. While the macro environment remains challenging, the REIT continues to focus on controllables, including leasing initiatives, and advancement of select densification opportunities, which could begin to bear fruit into 2024,” he said.

* BMO’s Alexander Pearce resumed coverage of Cameco Corp. (CCO-T) with a $68 target, up from $42, and an “outperform” rating. The average is $64.20.

“A year on from first announcing the deal, Cameco’s acquisition of Westinghouse is complete,” said Mr. Pearce. “A lot has changed since we last wrote on the stock, with uranium now at decade highs (up 53 per cent) and momentum for low carbon nuclear generation and security of supply increasingly important for utilities and governments. In a sector with a limited number of producers, we think Cameco’s advantageous geographical production base, its position as the largest and most liquid uranium stock, as well as attractive EBITDA growth, should support further upside to its stock price.”

* RBC’s Luke Davis raised his Cardinal Energy Ltd. (CJ-T) target to $9 from $8, keeping a “sector perform” rating. The average is $9.14.

“Cardinal’s Q3 report was punctuated by a strategic shift toward thermal development with management identifying three SAGD projects within the portfolio while building out the technical team to support future growth,” said Mr. Davis. “While we view the move favourably given it should ultimately improve the sustainability and productive capacity of the business, the long-cycle nature of the projects and up front capital outlay impact relative sustainability near-term.”

* Raymond James’ Stephen Boland trimmed his target for Chesswood Group Ltd. (CHW-T) to $6.50 from $8 with a “market perform” rating. The average is $7.25.

“While the Wafra partnership and growth in asset management revenues were notable positives this quarter, the U.S. segment remains challenged. Recent cost-cutting initiatives are helping to contain losses, but delinquencies are still on the rise. We prefer to wait for more signs of U.S. credit conditions stabilizing before becoming more constructive on the stock. We are lowering our estimates as we expect the credit issues in the US to persist longer than previously anticipated,” said Mr. Boland.

* RBC’s Pammi Bir cut his target for CT REIT (CRT.UN-T) to $16 from $17 with a “sector perform” rating. Other changes include: Scotia’s Himanshu Gupta to $17 from $17.50 with a “sector outperform” rating and CIBC’s Sumayya Syed to $16 from $17 with a “neutral” rating. The average is $15.90.

“CRT continues to be go-to income name with distribution yield of 6.5 per cent at 72-per-cent 2024 AFFO payout ratio,” said Mr. Gupta. “We expect 4.4-per-cent year-over-year AFFOPU [adjusted funds from operations per unit] growth in 2024 and won’t be surprised if we see another distribution hike next year (CRT has done annual distribution increases since inception). CRT recently completed 10 years since IPO and reminded us about the exceptional track-record of 5.67-per-cent AFFOPU CAGR and 4.66-per-cent NAVPU CAGR. Given consistent growth metrics, CRT unit price outperformed all retail peers and REIT indices by a wide margin since 2013. While AFFOPU growth has been solid, we also remind that CRT continues to be at the lowest leverage amongst retail peers. CRT’s Net Debt/EBITDA at 6.7 times (vs traditional retail peers at 9 times to 10 times).

“Reiterate our SO rating as we think CRT provides good ‘defense’ and there is downside protection. Pushback on the name – we need better bond markets.”

* CIBC’s Cosmos Chiu reduced his Endeavour Silver Corp. (EDR-T) target to $5 from $6 with a “neutral” rating. The average is $6.39.

* RBC’s Sabahat Khan cut his target for Finning International Inc. (FTT-T) to $50 from $52 with an “outperform” rating. Other changes include: TD’s Cherilyn Radbourne to $40 from $46 with a “hold” rating an CIBC’s Jacob Bout to $47 from $48 with an “outperformer” rating. The average is $49.22.

“We were surprised at the magnitude of the negative share price reaction following Q3 results that reflected Adjusted EBIT/EPS ahead of consensus forecasts (revenue was in line),” said Mr. Khan. “We view the sizable backlog and good Product Support momentum favorably, and believe that the current valuation offers an attractive entry point.”

* National Bank’s Jaeme Gloyn bumped his Goeasy Ltd. (GSY-T) target to $185 from $175 with an “outperform” rating, while Desjardins Securities’ Gary Ho increased his target to $165 from $160 with a “buy” rating. The average is $173.

“While credit cycle risk won’t fade in the near term, we view the current multiple as reasonably attractive risk-reward for a company consistently producing double-digit EPS growth and low-to mid-20s ROE (again the case in Q3-23),” said Mr. Gloyn. “We continue to expect GSY will successfully execute against its three-year guidance including i) demonstrating stable credit performance, and ii) executing on several loan growth initiatives (e.g., product, channel, geographic).”

* Scotia’s Phil Hardie moved his Intact Financial Corp. (IFC-T) target to $232 from $227 with a “sector outperform” rating. The average is $221.10.

* RBC’s Greg Pardy raised his MEG Energy Corp. (MEG-T) target to $33 from $31 with an “outperform” rating. Other changes include: ATB Capital Markets’ Patrick O’Rourke to $32 from $31.50 with an “outperform” rating. The average is $30.46.

“Our bullish stance towards MEG Energy continues to reflect its capable leadership team, solid operating performance, balance sheet deleveraging via absolute debt reduction and rising shareholder returns,” said Mr. Pardy.

* After “soft” first-quarter 2024 results, National Bank’s Rupert Merer cut his Nanoxplore Inc. (GRA-T) target to $4 from $5, below the $6.41 average, with an “outperform” rating.

“While there are some moving parts to the outlook, GRA is well positioned as a leading graphene supplier and innovator in materials markets, including lithium-ion batteries,” he said.

* Canaccord Genuity’s Robert Young increased his target for Pollard Banknote Ltd. (PBL-T) to $37 from $33 with a “buy” rating. The average is $34.50.

“Pollard gross margins began to recover (up 120 basis points year-over-year) as expected in Q3 on the back of contract repricing going as planned, strong iLottery and generally strong trends across all parts of the business,” said Mr. Young. “Looking forward, demand remains strong across the lottery, iLottery and charitable gaming segments. Despite a modest top-line miss in Q3, strong gross margins drove EBITDA 8 per cent above consensus expectations. We expect gross margins to their continue gradual expansion as repriced contracts combined with stabilized raw material prices and reduced freight cost manifest in the results. Despite strong retail demand, Pollard is taking a disciplined approach to incremental work, selecting only higher-margin projects to promote margins expansion. iLottery remains a notable outperformer, with NPi & Michigan revenues up 42 per cent year-over-year to record levels. With no change in demand trends and the outlook on input costs improving, we remain confident in our view that Pollard is at the foothills of a potential multi-year margin expansion opportunity.”

* CIBC’s Sumayya Syed cut her Slate Grocery REIT (SGR.U-T, SGR.UN-T) target to US$9.75 from US$11, keeping a “neutral” rating, while Scotia’s Himanshu Gupta cut his target to US$9.50 from US$11 with a “sector perform” rating. The average is US$10.74.

“Post largely in line Q3 results, our target is reduced .... SGR continues to perform well on the operational front due to a strong leasing environment for grocery-anchored open air centers. However, due to the elevated payout ratio and higher leverage, our target is now based on a small discount to our NAV,” said Mr. Gupta.

* BMO’s John Gibson trimmed his Superior Plus Corp. (SPB-T) target to $12.50 from $13 with an “outperform” rating. The average is $13.50.

“SPB’s Q3/23 results were relatively in line with expectations, driven by another solid contribution from Certarus along with margin improvements in its Canadian/U.S. propane businesses. Typically, Q3 is seasonally low, although SPB did reiterate its 2023 EBITDA guidance of $630-670 million,” he said.

* Canaccord Genuity’s Robert Young raised his target for Thinkific Labs Inc. (THNC-T) to $4.25 from $3.25 with a “speculative buy” rating. The average is $3.88.

* CIBC’s Mark Jarvi raised his TransAlta Corp. (TA-T) target to $18 from $17.50, remaining above the $15.83 average, with an “outperformer” rating.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 12/04/24 0:43pm EDT.

SymbolName% changeLast
Ballard Power Systems Inc
Bird Construction Inc
Btb REIT Units
Cameco Corp
Cardinal Energy Ltd
Cargojet Inc
Chesswood Group Ltd
Conifex Timber Inc
CT Real Estate Investment Trust
Endeavour Silver Corp
European Residential Real Estate Invs. Trust
Finning Intl
Gfl Environmental Inc
Goeasy Ltd
Imperial Oil
Intact Financial Corp
Meg Energy Corp
Nanoxplore Inc
Park Lawn Corp
Pet Valu Holdings Ltd
Pollard Banknote Ltd
Slate Grocery REIT USD
Spartan Delta Corp
Stella Jones Inc
Superior Plus Corp
Thinkific Labs Inc
Transalta Corp

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