Inside the Market’s roundup of some of today’s key analyst actions
CIBC is out with a second quarter earnings preview for the diversified financials sector, and it’s highlighting Goeasy Ltd. (GSY-T) as a name with surprise upside potential.
“The company is poised to deliver the best quarter of loan growth in its history, and we foresee potential to either achieve the top end of the guided range or exceed it,” CIBC analysts led by Nik Priebe said in a note to clients.
“Since the growth outlook improved in late 2021/early 2022 (i.e., when spending patterns began to normalize and consumers drew down on excess savings that were built up throughout the pandemic era), goeasy has either achieved the high end of its ‘intra-quarter’ guidance range for loan growth - or exceeded it - in nine of the past ten quarters,” CIBC said.
Mr. Priebe added that he also foresees a possible positive revision in guidance. “Even in a scenario where goeasy delivers on loan growth within its target range for Q2, we believe that the company has flexibility to adjust its three-year commercial targets higher when it reports Q2 results. ... A beat on Q2 loan growth guidance would only further solidify or strengthen the prospect of a positive revision to the three-year commercial targets,” he said.
CIBC has a C$230 price target on Goeasy shares and rates the stock “outperformer”. CIBC made some modest upwards revisions to the company’s earnings estimates for this year and next.
Meanwhile, CIBC made some price target changes to other stocks it covers in the diversified financials space. They were:
Brookfield Asset Management (BAM-N): Raises price target to US$49 from US$47. “We are raising our price target slightly to reflect the growing likelihood of a U.S. rate cutting cycle and persistence of a risk-on environment.” It rates the stocks “outperformer”.
Fiera Capital Corp (FSZ-T): Raises target price to C$9 from C$7.25. “Fiera Capital shares have re-rated quite materially since management announced that it will acquire the 7% interest from Desjardins (for reasons that still elude our understanding). We are revising our price target higher accordingly. Our $9.00 price target is based on a ~7.5x P/E multiple applied to our two-year forward EPS estimate, which implies no re-rating from the current multiple.” It rates the stock “neutral”.
Guardian Capital Group Ltd (GCG-A-T): Cuts target price to C$47 from C$54. “We are revising our price target lower to reflect a decline in NAV estimate, but also a slight tweak in methodology. We previously derived a price target based on our sum-of-the-parts value estimate. However, this implicitly assumed that the discount to NAV would vanish over the subsequent 12- to 18-month period (which it never has, at least not completely). Our revised target is based on a 10% discount applied to the mid-point of our NAV estimate at ~$52.50.” It rates the stock “neutral”.
TMX Group Ltd (X-T): Raises target price to C$43 from C$40. “We are nudging our price target higher to reflect the recent re-rating in the shares. Our methodology remains unchanged, applying essentially the same target multiple (24x P/E) to our two-year forward EPS estimate as the shares currently trade.” It rates the stock “neutral.”
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Several analysts have raised their price targets on Netflix Inc. (NFLX-Q) after the streaming giant reported earnings after the close on Thursday. Among the moves: Bernstein raised its target price to US$625 from US$600; Deutsche Bank raised its target to US$590 from US$575; Evercore ISI raised its target price to US$710 from US$700 and Piper Sandler raised its target to US$650 from US$600.
The average price target is now US$674.33, up from $654.60 a month ago, according to LSEG data.
Netflix said it added more than 8 million subscribers in its second quarter. While the subscriber gains topped analyst predictions, Netflix also cautioned that third-quarter subscriber gains would be lower than the comparable period in 2023 when the password-sharing crackdown had just started.
The company reported diluted per-share earnings of US$4.88, compared with consensus forecasts of $4.74 a share, according to LSEG. Revenue for the quarter reached $9.56 billion, in line with estimates.
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At least seven analysts cut their price targets on Domino’s Pizza Inc. (DPZ-N) following the restaurant operator’s earnings on Thursday. Among them: Bernstein cut its target to US$460 from US$510; Jefferies went to US$455 from US$512; and Stifel went to US$480 from US$565.
The average price target is now US$523.03, down from $553.80 a month ago.
Domino’s Pizza forecast sequentially slower third-quarter comparable sales and trimmed its target for new international store openings.
The company’s target of opening more than 925 international outlets for the year is expected to fall short by about 275 after its Australia-based master franchisee said earlier this week it was closing low-volume stores in Japan and France.
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UBS analyst Kevin McVeigh initiated coverage on CGI Inc. (GIB-N) with a “neutral” rating and US$112 price target, which suggests a 7% upside for the Canadian-based IT company over the next 12 months.
“Durable growth from SaaS, Managed Services and internationally with EBIT margin leverage amid Gen AI,” was how UBS summarized Mr. McVeigh’s initiation.
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National Bank Financial analyst Rupert Merer is maintaining an “outperform” rating and nudging up his price target on Brookfield Renewable Partners L.P. (BEP-N) as he looked ahead to the firm’s second quarter results.
His target was raised to US$33 from US$32, even as he suggested the second quarter could be a “soft” one.
“We forecast lower proportionate generation of 9,176 GWh, driven by weak hydro production in North America and Colombia, as well as softer solar production related to known outages. With this and partial offsets from higher expected other income, we forecast adj. EBITDA of $651 mln (was, $678 mln, consensus at $650 mln) and funds from operations per unit of $0.52 (was $0.55, cons. $0.54). Our forecasts for 2024E are impacted by the changes and FX, but are relatively unchanged,” he said in a note to clients.
BEP will release results in the morning on Aug. 2.
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CIBC analyst Stephanie Price cut her price target on Open Text Corp. (OTEX-Q) to US$33 from US$36 while retaining a “neutral” rating.
“As we near the eighteen month anniversary of the Micro Focus (MCRO) transaction, we believe it is worthwhile to go back and look at Open Text’s initial targets post deal versus current consensus (adding back the AMC divestiture) to assess whether the acquisition has performed as expected. Our takeaway is that Open Text’s initial targets appear optimistic amid a weaker IT spending environment and continued investments. Consensus expects Open Text to come in at the bottom end or below most of the initial guidance ranges it had set post Micro Focus and also expects adjusted EBITDA margins to be significantly below prior expectations as the company invests in R&D and FCF remains below pre-Micro Focus levels. We expect F2028 aspirations released next year should start to see renewed growth given the expected cloud bookings ramp, and we see upside if Open Text can reaccelerate growth sooner than expected. In the interim, we see Open Text as relatively fairly valued at these levels,” Ms. Price said in a note to clients.
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Desjardins Securities analyst Jerome Dubreuil cut his price targets on Canada’s big three telecoms on Thursday afternoon as he looked ahead to second-quarter results. For details, see Thursday’s analyst upgrades and downgrades report.
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In other analyst actions:
Agnico Eagle Mines Ltd (AEM-T): Stifel raises target price to C$114 from C$104
Altagas Ltd (ALA-T): JP Morgan raises target price to C$36 from C$33
Barrick Gold Corp (ABX-T): Stifel raises target price to C$28.5 from C$27
Canada Goose Holdings Inc (GOOS-T): Wedbush initiates coverage with outperform rating and price target C$21
Discovery Silver Corp (DSV-T): BMO initiates coverage with “outperform” rating; price target C$2
Eldorado Gold Corp (ELD-T): Stifel raises target price to C$25 from C$19.5
First Quantum Minerals Ltd (FM-T): JP Morgan cuts target price to C$18 from C$20; BMO raises target price to C$22 from C$21
IAMGOLD Corp (IMG-T): Stifel raises target price to C$6 from C$5.25
Kinross Gold Corp (K-T): Stifel raises target price to C$14.5 from C$11.5
Prairiesky Royalty Ltd (PSK-T): ATB Capital Markets raises target to C$30 from C$28.5
Teck Resources Ltd (TECK-B-T): BMO cuts target price to C$80 from C$85
Wheaton Precious Metals Corp (WPM-T): BMO raises target price to C$67 from C$63 while Stifel downgrades rating to “hold” from “buy” and raises target price to C$90 from C$80