Thursday’s analyst upgrades and downgrades

Inside the Market’s roundup of some of today’s key analyst actions
While IA Financial Corp. Inc. (IAG-T) posted “strong” third-quarter financial results, RBC Dominion Securities analyst Darko Mihelic thinks its “solid” upside is already largely recognized in its stock.
Accordingly, seeing a limited potential return, he lowered his recommendation for the Quebec City-based insurance and wealth management group to “sector perform” from “outperform” previously on Thursday.
“We believe IAG will drift higher into a better valuation multiple as it improves upon its ROE [return on equity] over time and EPS growth remains solid,” said Mr. Mihelic. “Furthermore, lifecos have enjoyed an impressive opportunity to “reset” after IFRS 17 and capital advantages/optimization have been solid so far, but probably nearing an end. We believe that there are, however, many reasons to approach the stock with a little more caution now that it has rallied as much as it has this past year (up 48 per cent year-to-date): (1) It’s still a lifeco where earnings power can sometimes be opaque, so conservative EPS estimates should endure; (2) Capital deployment (and timing of deployment) is critical and there is always a chance of misstep through acquisition (though IAG’s track record is relatively impressive); (3) Buybacks are becoming ‘expensive’ as its valuation rises.”
After the bell on Tuesday, IAG reported core earnings per share of $2.93, exceeding Mr. Mihelic’s estimate by 40 cents, which he attributed to “strength across the board, but on a segmented basis, Insurance Canada, Wealth Management, and U.S. Operations were strongest relative to our estimates.” That led him to increase his EPS projections to $12.45 (was $12.01) for 2025 and $13.40 (was $13.14) for 2026.
“We believe IAG has solid capital and its deployment may be key to the investment thesis. Capital available for deployment is $1.0 billion (14 per cent of total equity),” he said. “Total solvency ratio at the holding company level is 140 per cent, down 1 percentage point quarter-over-quarter, in line with our estimate. IAG expects capital available for deployment to increase $700 million on January 1, 2025 if the AMF’s proposed revisions on CARLI for lifecos are adopted, under which iA Financial Corporation would no longer be subject to the intervention target ratios (IAG expects immaterial impact on its solvency ratio).”
With his estimate changes, Mr. Mihelic hiked his target for IAG shares to $137 from $105. The average target on the Street is $132.13, according to LSEG data.
“IAG’s Q3/24 core EPS was $0.40 higher than expected, and it increased its quarterly dividend by 10 per cent,” he concluded. “There was a positive impact from repricing actions and core expenses decreased QoQ. IAG expects $700 million in additional capital available for deployment if the AMF’s updated CARLI guideline is approved; we think this could bring IAG’s aspirational ROE target up to the 17-per-cent range versus its current target of 15 per cent plus. IAG deserves a higher valuation multiple but even after applying one (against conservative estimates), we see limited upside potential.”
Elsewhere, other analysts making target adjustments include:
* Desjardins Securities’ Doug Young to $135 from $115 with a “hold” rating.
“A decent beat; management suggested this is repeatable, so not an abnormally good quarter. We increased our estimates and raised our target price,” said Mr. Young.
* Scotia’s Menny Grauman to $143 from $126 with a “sector outperform” rating.
“Any time you see a stock move by 16 per cent on the back of an earnings release you have to ask yourself how much is too much,” he said. “IAG certainly delivered a very impressive Q3 result as we highlighted in our First Look, but with the stock going parabolic on earnings day we do need to stop and ask if the move makes sense, and then just as important, is there any more upside left? We believe that the answer to both is yes, and the reason for that is not just the sustainability of IAG’s impressive ROE expansion to date, but the realization that it has room to move even higher. The move up to the 16.6-per-cent annualized core ROE that IAG delivered in Q3 is not a fluke and has upside especially now that IAG’s main regulator, the AMF, is taking steps to harmonize its holdco capital rules with OSFI. That should free up $700-milion in additional deployable capital for the lifeco, and even more importantly allow IAG to increase leverage at the holdco over time to better align with peers.”
* CIBC’s Paul Holden to $133 from $120 with an “outperformer” rating.
* BMO’s Tom MacKinnon to $140 from $126 with an “outperform” rating.
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The performance of Manulife Financial Corp.’s (MFC-T) Wealth Management business was impressive in the third quarter, according to National Bank analyst Gabriel Dechaine, who sees further growth ahead.
That division, alongside “strong” results from its Asian segment, drove underlying earnings per share of $1.00, exceeding both Mr. Dechaine’s 92-cent forecast and the consensus estimate of 94 cents. He attributed the beat to higher insurance earnings and a lower tax rate offset by lower investment income.
“Excluding a one-time tax gain, [Wealth & Asset Management] earnings rose 20 per cent, translating into a Core EBITDA margin of 28 per cent (i.e., the highest ever),” he sai.d “Considering the recent market rally, and the fact that the U.S. generates close to half of Global WAM profits, we believe this momentum can be maintained. Turning to sales, net inflows of $5-bilion marked a turnaround from flat flows during Q2/24 (which were skewed by tax changes in Canada). As an aside, 30 per cent of net WAM flows were generated in Asia.”
“[In Asia] 17-per-cent Core earnings growth year-over-year exceeded the 15-per-cent mark we believe MFC needs to deliver in this segment in order to build confidence in the 18 per cent by 2027 ROE target. If we adjust for the Global Minimum Tax, which isn’t yet allocated to the segments, we put growth at closer to 10 per cent, weighed down by a modest amount of negative lapse experience. Finally, sales in the Asia segment rose 64 per cent year-over-year, led by Hong Kong (up 173 per cent).”
Also seeing “strong” share buyback activity consistent with targets, Mr. Dechaine increased his forecast to reflect higher WAM earnings, leading him to raised his target for Manulife shares by $2 to $47 with an “outperform” rating. The average is $41.64.
Elsewhere, TD Cowen’s Mario Mendonca raised his target to $48 from $45 with a “buy” recommendation.
“Results were good this quarter, with key growth segments (Asia and WM) delivering strong double-digit growth,” said Mr. Mendonca. “WM earnings were well above our estimate. Asia delivered strong new business growth and WM EBITDA margins improved 90 basis points year-over-year, two key drivers of MFC’s 18-per-cent stretch ROE target. Very strong WM earnings were supported by a $70-milion tax gain.”
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National Bank Financial analyst Maxim Sytchev believes Ag Growth International Inc.’s (AFN-T) operational improvements support its margin profile despite pressure on its U.S. Farm business, but he thinks it needs to “do a better job on expectations management.”
“Surprisingly, shares are up 5 per cent on [Wednesday] which is likely related more to positioning of investors having lowered their expectations while ag equipment numbers were all weak couple of days ago,” he said.
“That being said, we still take issue with guidance management and hope for a more conservative approach to 2025. At least FCF is looking better. It’s really difficult to say with precision when an upturn in U.S. Farm will take place; we are in year three of bad farm incomes; it’s rarely four but who knows where the wind (literally)/El Niño/La Niña will blow in 2025? On the other hand, the order book in Commercial is filling up nicely, especially in the International segment.”
Before the bell on Wednesday, the Winnipeg-based company reported consolidated revenue of $613-million, down 17 per cent year-over-year (and 24 per cent organically) and falling 5 per cent below the $644-million estimate of both the analyst and Street. Adjusted EBITDA of $78.3-million and earnings per share of 25 cents also fell below the projections of both Mr. Sytchev ($78.4-million and 32 cents) and the Street ($82-milion and 32 cents).
“U.S. Farm headwinds are persistent,” he said. “A combination of low crop prices and declining farmer incomes have created a surplus of inventory in the supply chain, especially with grain handling equipment (recall portable handling offerings are the highest margin product in the portfolio). While we do expect inventories to eventually normalize, this will take longer than initially expected and order bookings in the segment remain weak for the time being.
“Margins have stepped up to structurally higher levels. Management is signaling 2025E EBITDA margins in the 19-per-cent range; broadly flat year-over-year despite the shift in sales mix as lower margin Commercial revenues accelerate (International markets are seeing the strongest growth). The business is now much more operationally efficient, with further manufacturing streamlining initiatives implemented in Brazil (the dominant growth driver in LatAm) and EMEA and further planned product transfers including digital solutions and conveyor technologies; product transfers are a highly accretive initiative given minimal incremental capex requirement.”
Keeping an “outperform” rating for Ag Growth shares, Mr. Sytchev cut his target to $72 from $74. The average target is $73.88.
Other analysts making target adjustments include:
* Desjardins Securities’ Gary Ho to $72 from $70 with a “buy” rating.
“AFN reported a 3Q miss, but revised 2024 guidance implies a robust 4Q, driven by large Commercial projects,” he said. “We now turn our attention to 2025 when we expect continued momentum in International markets, with a robust Commercial order book providing 1H visibility, offset by US Farm softness, with a gradual recovery toward normalized inventory levels in 2H25. We model buybacks of 1.2m shares, which would be accretive to our valuation and drives our target higher.”
* RBC’s Andrew Wong to $75 from $80 with an “outperform” rating.
“U.S. Farm weakness pressured AGI results over the past 6 months; however, International Commercial demand continues to build, evidenced through the growing order book via product transfers and market share wins while we see structurally elevated margins supporting through-the-cycle FCF. We think U.S. Farm could take time to recover due to high dealer inventory levels and challenged farmer economics, but purchase deferrals and strong crop yields could set up solid demand in late 2025. We think shares are supported by favourable valuation and buybacks that could put a floor on valuation,” said Mr. Wong.
* CIBC’s Jacob Bout to $70 from $75 with an “outperformer” rating.
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Stifel analyst Martin Landry thinks Premium Brands Holdings Corp. (PBH-T) is “testing investors’ patience” following disappointing quarterly results and the removal of its 2024 financial guidance.
“PBH’s EPS had been flat or declining for the last seven quarters and Q3/24 was supposed to be the inflection point where EPS would return to a growth mode,” he said. “Hence, the decline in earnings disappointed and investors reacted by sending PBH’s shares down 8 per cent on the day. Part of the shortfall is explained by delays in onboarding new customers, combined with weak volume at a key customer. As a result, management suspended its annual guidance on limited visibility into the year-end. Despite this setback management exhibited confidence heading into 2025, expecting strong revenue growth. However, given the three consecutive years of earnings shortfall vs. guidance, PBH has become more of a ‘show-me story’ than before. Hence, shares could be range bound near-term despite depressed valuation.”
Shares of the Richmond, B.C.-based specialty food manufacturing and distribution company closed down 7.7 per cent on Wednesday after it reported quarterly revenue of $1.667-billion, up 1 per cent year-over-year but below Mr. Landry’s $1.719-bilion estimate and the consensus estimate of $1.738-billion. The miss was blamed on volume contraction at Specialty Foods and delays in new customer onboarding. Adjusted earnings per share of $1.11 was a drop of 12 per cent from the same period a year ago and also below expectations ($1.43 and $1.38, respectively).
“Management cited weak volumes at a large customer, uncertainties around the timing of its recovery, and delays in onboarding new customers until 2025 as reasons for the decision [to remove its full-year guidance],” said Mr. Landry. “For context, sales to this large customer were down 6% Y/ Y and constituted 12 per cent of PBH’s Q3/24 total revenue. Regarding new customer onboarding, management attributed delays to the sheer size of these new customers and expected progress on the matter.”
After cutting his 2025 estimates “mainly on lower revenue assumptions reflecting limited visibility around the Sandwich group” and introducing his 2026 projections, which estimate 6-per-cent revenue growth, Mr. Landry dropped his target for Premium Brands shares to $101 from $106, keeping a “buy” rating. The average is $105.33.
Other changes include:
* Ventum Capital’s Devin Schilling to $109 from $112 with a “buy” rating.
“Q3 was below expectations, but we see the recent stock price weakness as providing an attractive entry point for the patient investor given expectations for a much stronger 2025,” he said. “We view PBH as a best-in-class opportunity for generating long-term shareholder value with the Company’s record pace of investment into the U.S. market setting the stage for accelerating organic growth and margin expansion in 2025 and beyond.”
* Desjardins Securities’ Chris Li to $95 from $106 with a “buy” rating.
“Sales challenges at a major QSR customer drove the 3Q EBITDA miss ($159-million vs our estimate/consensus of $167/173-million) while the new sales pipeline remains strong,” he said. “PBH also withdrew its 2024 outlook. While trading will remain volatile until sales visibility improves, we believe the risk is at least partially reflected in PBH’s trough valuation. PBH remains well-positioned for long-term growth. We expect solid EBITDA growth next year and FCF inflection to drive valuation improvement but patience is required.”
* RBC’s Ryland Conrad to $96 from $100 with a “sector perform” rating.
“Despite the more challenging operating and macro environment with value-seeking consumers trading down and/or shifting to discount banners where Premium Brands is under-indexed, poor lobster fishery conditions and ongoing headwinds for a major customer that are expected to weigh on results, we believe management continues to execute on U.S. growth initiatives including significant capacity expansions, new customer wins and a healthy sales pipeline. While we remain on the sidelines given the more challenging operating/macro backdrop, we continue to see value in the shares reflecting the potential for organic revenue growth acceleration and adjusted EBITDA margin expansion in 2025/2026 with any macro improvement being an incremental tailwind,” he said.
* TD Cowen’s Derek Lessard to $120 from $129 with a “buy” rating.
“While we do acknowledge waning investor patience, we remain convinced that PBH is on the cusp of more materially benefiting (i.e., $700-million -$1,000-million in incremental U.S. revenue in 2025) from its multi-year investment cycle (in capacity/automation/ innovation). We would be more aggressive buyers at these levels,” he said.
* BMO’s Stephen MacLeod to $94 with an “outperform” rating.
“While the Q3 and 2024E guidance miss are disappointing, the stock is down approximately 20 per cent in the last three weeks. We see attractive risk-reward (9.9 times 2025E EV/EBITDA) and believe a sales re-acceleration would be positive for the stock,” he said.
* CIBC’s Mark Petrie to $90 from $103 with a “neutral” rating.
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Citing its current valuation, CIBC World Markets analyst Paul Holden downgraded Intact Financial Corp. (IFC-T) to “neutral” from “outperformer” despite a “solid earnings beat and a generally positive outlook.”
“Growth in personal lines is accelerating while growth in commercial lines is slowing,” he said. “We expect strong margins will continue and there is potential upside from an acquisition. However, the stock has performed very well over the last year (more than 30 per cent) and the valuation multiple is near the upper end of its historical range. With an implied return to price target ($280) of 7 per cent, we are downgrading IFC.”
His $280 target falls short of the average of $281.14.
Other changes include:
* Scotia’s Phil Hardie to $283 from $281 with a “sector outperform” rating.
“Despite headwinds from severe weather events, Intact surprised investors by delivering healthy 3-per-cent sequential growth in BVPS and solid year-over-year improvement in its underlying loss ratio (ex-cats and PYD),” he said. “That said, the bar appeared to be set relatively high given valuation levels. We think implications from U.S. election results are likely fuelling some tactical repositioning, and potential near-term profit-taking drove the stock weakness rather than any fundamental concerns.”
* BMO’s Tom MacKinnon to $290 from $275 with an “outperform” rating.
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With its quarterly results, Desjardins Securities analyst Jerome Dubreuil thinks CGI Inc. (GIB.A-T) “gave investors what they were looking for—stability and predictability.”
“In addition to its strong underlying business, the company has ample dry powder to better position itself ahead of the recovery of IT service demand—however, this is not expected to be around the corner,” he said.
“Similar to what most comparable peers have been saying lately, CGI is warning that an inflection point in SI&C [systems integration and consulting] is not imminent, with management guiding that the “next couple of quarters” will be relatively soft. With the recent weakening of the Canadian dollar, we believe consensus already reflects a very slow improvement in top-line growth. Assuming no further M&A and no change in FX, organic growth implied by consensus is 1.5 per cent year-over-year in FY25, which we believe is achievable at this time.”
Mr. Dubreuil and his peers also emphasized a “more favourable” M&A environment for the Montreal-based information technology consulting and software development company moving forward.
“The silver lining of the delayed recovery in SI&C is that some potentially attractive targets have more reasonable valuations,” he said. “Management stated it is in active dialogue with a larger number of targets now. Not only would M&A provide CGI with more value-creation opportunities, but it would also signal confidence in the potential recovery of the sector. We estimate the company’s low leverage of 0.6x would enable CGI to realize $7-billion of acquisitions (assuming a price of 9x pre-synergies EBITDA) before reaching still reasonable leverage of 2.5 times.
“The US federal government is CGI’s most important client and represented 14 per cent of the company’s revenue in FY24. Management highlighted that governments’ changing priorities often require IT investments. It is too early for us to assess the potential impact of the government transition on the company (more clarity on policies will help), but the strong US federal LTM [last 12-month] book to bill of 113 per cent should help smoothen the transition period for CGI in Washington.”
While he made modest reductions to his revenue and earnings expectations through 2026, Mr. Dubreuil raised his target to $178 from $176, keeping a “buy” recommendation. The average is $168.36.
Other analysts making changes include:
* RBC’s Paul Treiber to $178 from $170 with an “outperform” rating.
“CGI returned to positive organic growth fiscal Q4 (Sept-qtr), with headline results largely in line with RBC/consensus. Improved organic growth is likely a tailwind to growth in FY25. Additionally, we believe that M&A, which has been relatively modest the last several years, may increase in 2025. Maintain Outperform, as we see CGI consistently creating shareholder value over the long-term,” said Mr. Treiber.
* Raymond James’ Steven Li to $180 from $171 with an “outperform” rating.
“With continued softer SI&C bookings, we believe organic growth next couple quarters could remain sluggish for GIB. We have updated our model and roll forward our estimates and target price,” he said.
* Canaccord Genuity’s Robert Young to $175 from $170 with a “buy” rating.
“We believe that CGI’s diversified business, with its large global footprint and end-to-end offering across digital transformation and cost reduction, provide the company with a very steady, low risk business,” said Mr. Young.
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In other analyst actions:
* Scotia’s Konark Gupta raised his Andlauer Healthcare Group Inc. (AND-T) target to $44 from $43 with a “sector perform” rating, while TD Cowen’s Tim James increased his target to $54 from $53 with a “buy” rating. The average target on the Street is $47.50.
“AND delivered mixed Q3 results,” he said. “Relatively weaker trends continued in consumer health products and U.S. truckload business, although we are encouraged to see a slight sequential improvement in U.S. EBITDA trends. Going forward, management appears more constructive on consumer health products and U.S. operations, while expecting continued organic growth in other areas, aided by ongoing investments in Canada. The company also continues to evaluate M&A opportunities selectively (focus on accretive, smaller deals) that offer strategic fit, supported by its solid balance sheet (0.7 times leverage ratio) and continued healthy FCF generation (mid-single digit yield). We have slightly improved our revenue and margin forecasts, which drives our target up.”
* Canaccord Genuity’s Mike Mueller raised his Arc Resources Ltd. (ARX-T) target to $31 from $29 with a “buy” rating. Other changes include: ATB Capital Markets’ Patrick O’Rourke to $30 from $29 with an “outperform” rating, TD Cowen’s Aaron Bilkoski to $31 from $30 with a “buy” rating and National Bank’s Travis Wood to $32 from $31 with an “outperform” rating. The average is $31.02.
“The catalyst we had been waiting for has arrived. ARC announced first production at Attachie – and it came a month earlier than we had expected. 2025 guidance has lower capex and higher volumes than we had previously modeled. This drives higher-than-expected FCF in 2025E (12-per-cent FCF yield) with virtually all of that being returned to equity holders via the increased dividend and buybacks,” said Mr. Bilkoski.
* RBC’s Sabahat Khan cut his ATS Corp. (ATS-T) target to $48 from $52. Other changes include: Stifel’s Justin Keywood to $52 from $58 with a “buy” rating, Raymond James’ Michael Glen to $48 from $52 with an “outperform” rating and National Bank’s Maxim Sytchev to $46 from $52 with an “outperform” rating. The average is $51.29.
“ATS’s FQ2 results were below consensus while FQ3 revenue guidance was also below Street expectations,” said Mr. Khan. “The Transportation (EV) business is in transition (leading to lower revenue/negatively impacting margins); however, we believe the worst of it is largely behind us. Going forward, our focus is on the core business (i.e., Life Sciences + F&B + Energy), which is relatively stable through the cycle. We view [Wednesday’s] share price weakness as a buying opportunity as we would expect a recovery from current levels as the company reverts toward its historical ‘staples-like’ exposure.”
* CIBC’s Jacob Bout lowered his target for Bird Construction Inc. (BDT-T) to $29.50 from $31 with a “neutral” rating. Other changes include: ATB Capital Markets’ Chris Murray to $36 from $35 with an “outperform” rating, Stifel’s Ian Gillies to $38 from $37 with a “buy” rating and National Bank’s Maxim Sytchev to $29 from $28 with a “sector perform” rating. The average is $34.31.
“The company continues to execute well, no question there; the current backdrop also appears to be supportive of the company’s 2027E ambitions,” said Mr. Sytchev. “What’s interesting, of course, is the cognitive dissonance we get from the equipment space which, in all fairness, benefited from unsustainable pricing power during COVID — that cohort is now under pressure, and we do believe lower immigration intake in Canada is bound to trickle down, eventually, to the construction industry. Yes, of course, we are still catching up to years of underinvestment but in the world of linear projections, budgets can swing from one year to the next. The entire space is trading like it’s 2006 / 2007. We remain patient and opportunistic, where we have conviction.”
* National Bank’s Matt Kornack dropped his Boardwalk REIT (BEI.UN-T) target to $90 from $96 with an “outperform” rating. Other changes include: Scotia’s Mario Saric to $81.75 from $84.75 with a “sector perform” rating, BMO’s Michael Markidis to $84 from $87 with an “outperform” rating, Desjardins Securities’ Kyle Stanley to $91 from $95 with a “buy” rating, TD Cowen’s Jonathan Kelcher to $95 from $100 with a “buy” rating and RBC’s Jimmy Shan to $90 from $98 with a “outperform” rating. The average is $89.08.
“Boardwalk met expectations in Q3/24 and raised its guidance for the third consecutive quarter. While slowing, fundamentals remain healthy enough to drive continued above avg earnings/NAV growth through our forecast period. We have modestly reduced our estimates and target price owing to a softening macro environment but view the 21-per-cent decline in the share price since mid-Sept as overly punitive,” said Mr. Kelcher.
* National Bank’s Patrick Kenny increased his target for Brookfield Infrastructure Partners LP (BIP.UN-T) to US$35 from US$34 with a “sector perform” rating, while TD Cowen’s Cherilyn Radbourne raised his target to US$50 from US$49 with a “buy” rating. The average is US$39.64.
* RBC’s Keith Mackey bumped his CES Energy Solutions Corp. (CEU-T) target to $11 from $10 with an “outperform” rating, while ATB Capital Markets’ Tim Monachello nudged his target to $10 from $9.75 with an “outperform” recommendation. The average is $10.25.
* National Bank’s Zachary Evershed increased his Dexterra Group Inc. (DXT-T) target to $11 from $9.50 with an “outperform” rating. The average is $8.78.
* Berenberg’s Richard Hatch mainained a “buy” rating and $36 target for Endeavour Mining PLC (EDV-T) following the premarket release of its third-quarter results, while Stifel’s Andrew Breichmanas trimmed his target for its LSE-listed shares to 2,535p from 2,550p with a “buy” rating. The average is $42.69.
“Overall, there were some puts and takes in this release, with guidance adjustments and hedging losses an incremental negative, which may nudge the shares lower, but overarching this is FCF generation, which is a major positive for the equity story, we think,” said Mr. Hatch.
* BoA Securities’ Michael Feniger raised his GFL Environmental Inc. (GFL-T) to $67 from $57 with a “neutral” rating. The average is $58.01.
“GFL reported a solid set of Q3 results: adj EBITDA of $626-million increased 18 per cent year-over-year on a 7-per-cent revenue gain. EBITDA was broadly in line with expectations (consensus $624-million) and GFL reiterated its 2024 guidance metrics. While this may be viewed as underwhelming relative to ‘raises’ from waste peers, GFL did notably raise its FY guidance in FQ2,” he said.
* National Bank’s Gabriel Dechaine bumped his Great-West Lifeco Inc. (GWO-T) target to $50 from $49 with a “sector perform” rating. The average is $48.20.
* CIBC’s Mark Jarvi lowered his target for Innergex Renewable Energy Inc. (INE-T) to $11 from $11.50 with a “neutral” rating, while Scotia’s Robert Hope trimmed his target to $11.50 from $12.50 with a “sector outperform” rating. The average is $11.85.
“Innergex reported Q3 results that slightly beat our expectations, though we note that we brought down our estimates coming into the quarter on the back of weak generation. Management has reiterated its 2024 guidance ranges, despite generation continuing to come in below long-term averages. Our estimates do not materially move following the quarter. Clarity on bidding activity in B.C. and Saskatchewan should be received in the coming months, which could help backfill the near-term growth profile. We move down our target price by $1 to $11.50 to reflect some moderation of wind/solar valuation multiples in part due to increased uncertainty in the U.S. growth pipeline,” said Mr. Hope.
* Stifel’s Martin Landry raised his Kits Eyecare Ltd. (KITS-T) target to $15 from $14 with a “buy” rating, while Ventum Capital Markets’ Devin Schilling increased his target to $15 from $13.50 with a “buy” rating. The average is $15.50.
“KITS reported strong Q3/24 results, which were in-line with the previously pre-released numbers communicated on October 3rd. More importantly, the company introduced an impressive Q4/24 financial guidance calling for revenue to growth 36-42 per cent year-over-year, and EBITDA margins of 3-5 per cent. Q4/24 revenue guidance of $43-45 million was higher than our expectations and consensus of $40 million. KITS continues to rapidly gain market share adding new customers and up-selling higher-priced products to its existing customers. New product introductions, successful marketing and new partnerships with insurance providers contributed to the company’s recent successes. As a result we have increased our forecasts for Q4/24 and 2025 to reflect recent sales momentum,” said Mr. Landry.
* RBC’s Greg Pardy cut his MEG Energy Corp. (MEG-T) target by $1 to $34, exceeding the $32.93 average, with an “outperform” rating, while Raymond James’ Michael Barth nudged his target to $28.50 from $28 with a “market perform” rating.
“Our bullish stance towards MEG reflects its capable leadership team, solid operating performance, strong balance sheet and abundant shareholder returns. We are maintaining an Outperform recommendation on MEG and trimming our one-year price target by $1 (3 per cent) to $34 per share. MEG is our favorite intermediate producer and on our Global Energy Best Ideas list,” said Mr. Pardy.
* CIBC’s Cosmos Chiu cut his Oceanagold Corp. (OGC-T) target to $4.50 from $5.25 with an “outperformer” rating. The average is $5.53.
* BMO’s John Gibson increased his Source Energy Services Ltd. (SHLE-T) target to $16 from $14 with a “market perform” rating. The average is $16.50.
“SHLE delivered a solid Q3/24 beat, driven by another quarter of record proppant volumes and strong growth in logistics revenue. The commencement of SHLE’s transloading facility along with its recently acquired trucking assets should further support growth in sand volumes and last-mile logistics. Post quarter, we are increasing our target price,” said Mr. Gibson.
* TD Cowen’s Graham Ryding lowered his target for Sprott Inc. (SII-T) by $1 to $73 with a “buy” rating. The average is $64.75.
“The EPS beat was due to unexpected realized carried interest. Base EBITDA was a slight miss on lower than forecast management fees. AUM growth and flows are solid however. We see Sprott as a niche asset manager given its emphasis on precious metals and critical minerals, with a strong track record of organic flows and AUM growth. We see potential for further margin expansion,” said Mr. Ryding.
* National Bank’s Maxim Sytchev lowered his target for Stella-Jones Inc. (SJ-T) to $90 from $99 with an “outperform” rating. Other changes include: Scotia’s Jonathan Goldman to $85 from $95 with a “sector perform” rating, Desjardins Securities’ Benoit Poirier to $93 from $107 with a “buy” rating, CIBC’s Hamir Patel to $83 from $99 with a “neutral” rating and RBC’s to $81 from $97 with a “sector perform” rating. The average is $96.13.
“On our below consensus pre-quarter numbers for 2025, SJ is now trading at 9.7 times EV/EBITDA and 12.1 times P/E,” said Mr. Sytchev. “We are of course kicking ourselves for not getting off the trade when the shares got close to $100, hoping for perhaps the Poles issues to be pushed out into 2025. This did not happen, and it’s too late to downgrade now after a -15% haircut. The positive earnings revision dynamic is gone, which we think should be counter-balanced by better FCF as the capacity investment cycle is behind us; NCIB will provide incremental support. It is interesting that power names today are weak in the U.S. (the likes of Quanta, Mastec) on potentially higher rates due to deficit spending that might constrain utilities’ capacity to spend. Maybe… or maybe the overall higher economic growth could lift most boats.”
* CIBC’s Scott Fletcher raised his Stingray Group Inc. (RAY.A-T) target to $11 from $10.50 with an “outperformer” rating. Other changes include: Desjardins Securities’ Jerome Dubreuil to $10.75 from $10.50 with a “buy” rating and RBC’s Drew McReynolds to $11 from $10 with an “outperform” rating. The average is $10.96.
“Against the backdrop of an evolving global music and video landscape, we believe management continues to execute on identifying and capitalizing on new revenue growth opportunities that include retail media, SVOD, FAST channels, and connected cars,” said Mr. McReynolds. “While macro uncertainty could increasingly weigh on advertising and be a renewed headwind for radio, we believe these opportunities have enhanced the company’s revenue visibility and provide attractive growth runways through the medium term. We expect these revenue growth opportunities combined with mid-30-per-cent adjusted EBITDA margins and 60-per-cent EBITDA-to-FCF conversion to translate to steady NAV growth, and we therefore see further upside in the shares from current levels.”
* Canaccord Genuity’s Mike Mueler raised his Tourmaline Oil Corp. (TOU-T) to $75 from $74 with a “buy” rating, while ATB Capital Markets’ Patrick O’Rourke lowered his target by $1 to $79 with an “outperform” rating. The average is $77.76.
* TD Cowen’s Michael Tupholme cut his Wajax Corp. (WJX-T) target to $24 from $30 with a “buy” rating. The average is $23.75.
“[Wednesday’s] 17-per-cent sell-off in WJX has led to an asymmetrical risk/reward set-up, in our view,” he said. “WJX trades at 7.0 times our revised 2025E EPS (a level the stock has rarely traded below since mid-2020) and offers a 6.8-per-cent dividend yield. Our PT falls to $24 (was $30), but we maintain our BUY rating. We see attractive long-term value in WJX, although a lack of near-term catalysts means patience may be required.”