Inside the Market’s roundup of some of today’s key analyst actions
Analysts have been busy adjusting price targets - both up and down - on Alimentation Couche-Tard (ATD-T) in the wake of the company’s latest quarterly results which sent the stock price down 3.2% on Wednesday.
Canaccord Genuity cut its price target to C$89 from C$90; CIBC cut its target to C$84 from C$88; Desjardins raised its target to C$85 from C$82; National Bank of Canada cut its target to C$87 from C$89; TD Securities raised its target to C$88 from C$86; and Scotia cut its target to C$85 from C$87.
The average price target is now C$87.90, up from C$85.40 a month ago, according to Refinitiv Eikon data.
The quarterly results were a mixed bag that was aided by strong fuel margins but hindered by declines in same-store sales.
Net earnings for the second quarter were US$819.2 million, up from US$810.4 million a year earlier.
“Merchandise same-store sales growth decelerated in all geographies – with the U.S. posting flat comps and Europe and (especially) Canada showing a more pronounced slowdown. While tobacco continues to be a culprit, we have also seen softness in the consumer. Net/net we have reduced our merchandise comps and raised our fuel margin assumptions; estimates and target are down modestly,” said Scotia analyst George Doumet.
His advice to investors: “We would take advantage of any pullback to add to the shares as longer-term tailwinds should position the company to grow adj. EBITDA by a 12% compounded annual growth rate over the next five years – and there is potential upside to estimates if U.S. fuel margins remain higher for longer. Continued M&A activity remains an important catalyst.”
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RBC analyst Irene Nattel is feeling upbeat about Dollarama Inc. (DOL-T) ahead of its financial results on Dec. 13, saying she’s forecasting another “DOL-lightful” quarter.
She expects earnings per share of 86 cents, in line with the consensus, and sees the consumer name as attractive at a time when consumers are becoming increasingly cost-conscious.
“The business model is “resonating particularly well with consumers against the backdrop of economic uncertainty and consumer wallet pressure. In our view, the stock remains attractive with excellent visibility and sustainability of growth runway, Dollarcity optionality, and perennial return of capital to shareholders through both dividend growth and share buyback.”
She maintained an “outperform” rating, with her price target going up by C$8 to C$113. The average price target is C$102.13, up modestly from C$101.46 a month ago.
“The common theme among the companies that recently reported their results (L, MRU, WMT, CTC) is that although inflation is moderating, wage growth continues to substantially lag CPI, with overall consumer spending further moderated by higher debt service costs, driving enhanced consumer value-seeking behaviour,” she added in a note to clients. “Spending on discretionary items has rolled over, consumer focused on essentials and looking for value, playing directly into DOL’s core positioning.”
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A handful of analysts raised their price targets on Stantec Inc. (STN-T) following the company’s recent equity raise that will help fund future acquisitions.
Atb Capital Markets raised its target price to C$115 from C$110; CIBC raised its target price to C$110 from C$101; National Bank of Canada resumed coverage with an “outperform” rating and C$109 price target; and BMO raised its price target to C$107 from C$104.
The average price target is now $107.91, up from C$98.64 a month ago.
BMO analyst Devin Dodge continues to rate Stantec an “outperform”, saying the stock “is firing on all cylinders, with the company delivering strong revenue growth, margin expansion and free cash flow.”
He added that Stantec’s balance sheet is in good shape and the proceeds from the equity offering add to its capacity to self-fund mergers and acquisitions. “We believe STN continues to represent an attractive risk/reward,” Mr. Dodge said.
On Nov. 20, Stantec entered into an agreement to issue 2.7 million shares from treasury at a price of $92.50/share, about a 4.5% discount to the prior closing price, for gross proceeds of about $250 million. The full over-allotment option was exercised that added another $37.5 million to gross proceeds. Stantec said it intends for the proceeds to fund future acquisition opportunities, growth initiatives and general corporate purposes.
“The acquisition pipeline remains very active and management is evaluating opportunities across all of its sectors. In the interim, the company intends to apply the proceeds to its revolving credit facility,” Mr. Dodge noted.
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National Bank analyst Shane Nagle has cut his price target on Franco-Nevada Corp (FNV-T) in the wake of more bad news for First Quantum’s Cobre Panama mining, for which Franco-Nevada receives royalty streams from.
Earlier this week, Panama’s Supreme Court declared First Quantum’s Cobre Panama mining contract to be unconstitutional. Mining operations were essentially shut down late last week.
“We view a restart at the mine as unlikely before national elections occur in May 2024,” Mr Nagle said in a note to clients. “First Quantum (the mine’s operator) along with FNV initiated arbitration proceedings under the Panama/Canada Free Trade Agreement; however, both parties are hopeful to negotiate a resolution with the Panama Government following elections next May.”
National Bank cut its price target to C$190 from C$205. The average analyst price target is now C$203.75, down from C$212.87 a month ago.
“After incorporating no production from Cobre Panama in H1/24, we maintain our Sector Perform rating, which offsets the company’s stable five-year production growth, more compelling valuation and industry-leading financial strength with uncertainty around long-term operating assumptions at Cobre Panama and a competitive deal environment for new royalties/streams,” Mr. Nagle said.
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Raymond James analyst Stephen Boland downgraded his rating on Quisitive Technology Solutions Inc. (QUIS-X) to “market perform” from “outperform” citing balance sheet pressure, as well as the need for a clearer outlook for its consulting business while it conducts a strategic review. His price target on the Microsoft solutions provider was also cut to 40 cents Canadian from C$1.
Quisitive this week reported revenue of $44.4 million compared with $45.3 million last quarter and Mr. Boland’s estimate of $46.4 million. Adjusted EBITDA was $7.0 million, up from $4.4 million last quarter and below Raymond James’ estimate of $7.2 million.
“Growth across each division has slowed considerably in recent quarters. We now believe it could be late next year before we see a meaningful pickup in revenue. We believe the stock will remain in the current range until there is a clearer outlook for the consulting segment, the end of the strategic review and the balance sheet pressure,” the Raymond James analyst said.
The average analyst price target is 77 cents Canadian, down from 88 cents a month ago.
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A slew of analysts raised their forecasts for Costco Wholesale Corp (COST-Q) after the company reported growth in its same-store sales in November from earlier this fall while noting improvement on the inflation front.
Barclays raised its target price to US$547 from US$510; Citigroup raised its target price to US$585 from US$530; Stifel raised its target price to US$615 from US$595; and Telsey Advisory Group raised its price target to US$625 from US$600.
Commented Citigroup analyst Paul Lejuez: “Nov comps of +4.4% accelerated vs Oct comps of +3.4% and Sept comps of +3.7%. Non-foods turned slightly positive after multiple months of negative results. ... Mgmt believes inflation is back to normal, a little below 2% in Food, Sundries, and Fresh. International comps (Canada +7.9% and Other +8.8%) were strong. Black Friday was within expectations and didn’t deviate from November’s overall trend. We believe COST is well positioned to navigate the current market environment, but trading at ~21x F24 EBITDA we believe the risk/reward is balanced.”
The average analyst price target is now US$600.88, up from US$594.78 a month ago.
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In other analyst actions:
Allied Gold Corp (AAUC-T): National Bank of Canada cuts price target to C$8 from C$8.5
Dundee Precious Metals Inc (DPM-T): Canaccord Genuity raises price target to C$12.5 from C$10.5
Spartan Delta Corp (SDE-T): Stifel cuts target price to C$5 from C$5.5
Thunderbird Entertainment Group (TBRD-X): Canaccord Genuity cuts PT to C$3 from C$3.5; Cormark Securities cuts PT to C$3.5 from C$3.6
Choice Properties REIT (CHP-UN-T): BMO reinstates coverage with outperform rating with PT $15
Crombie REIT (CRR-UN-T): BMO reinstates coverage with outperform rating with PT C$14.5
CT REIT (CRT-UN-T): BMO reinstates coverage with market perform rating with PT C$14.5
First Capital REIT (FCR-UN-T): BMO reinstates coverage with outperform rating with PT C$16
GFL Environmental Inc (GFL-T): National Bank of Canada cuts PT to C$52 from C$54
Green Impact Partners Inc (GIP-X): Cormark Securities cuts target price to C$4 from C$6
Riocan REIT (REI-UN-T): BMO reinstates coverage with market perform rating with PT C$18.5
Rivalry Corp (RVLY-X): Eight Capital cuts PT to C$2.5 from C$3.25
Smartcentres REIT (SRU-UN-T): BMO reinstates coverage with market perform rating with PT C$24
Voxtur Analytics Corp (VXTR-X): Eight Capital cuts PT to C$0.2 from C$0.75 and downgrades rating to neutral from buy
Foot Locker Inc (FL-N): Several analysts raised their price targets aggressively, including Barclays to US$26 from US$17, BofA Global Research to US$31 from US$17, and Morgan Stanley to US$26 from US$20
General Motors Co (GM-N): CFRA raises target price to US$32 from US$30; JP Morgan raises target price to US$56 from US$54; Wedbush cuts target price to US$40 from US$46; Wells Fargo raises target price to US$27 from US$25. The average analyst price target is US$45.84.
Salesforce Inc (CRM-N): At least 20 analysts raised their price targets after the company reported better than expected third quarter results. The average price target is now US$268.17, up from US$254.13.
[More on today’s analyst actions: BMO analyst predicts ‘retail renaissance’ and offers top REIT picks]