Inside the Market’s roundup of some of today’s key analyst actions
Following Wednesday’s “blockbuster” third-quarter financial update and the achievement of its $8.0-billion net debt target, Desjardins Securities analyst Chris MacCulloch upgraded Suncor Energy Inc. (SU-T) to a “buy” recommendation from “hold” previously, touting the “sunrise on a new era of operational performance.”
“We were gobsmacked by SU’s remarkable 3Q24 operational performance, which included beats across every reporting segment and performance metric in a true masterpiece of a quarter,” he said. “SU has made considerable progress toward targeted operational improvements outlined at the May investor update by demonstrating its ability to improve upgrader and refinery utilization, with focus now shifting to the addition of low-cost production through debottlenecking projects. Accordingly, we have further trimmed our cost assumptions while slightly increasing our upstream production forecast to reflect expectations for higher run rates and incremental capacity expansions.
“While most of the low-hanging fruit has now been picked from a cost perspective, we believe there is scope for further improvements in efficiencies, which could lay the foundation for the next round of positive estimate revisions with the upcoming 2025 guidance release. Either way, longer-term structural impediments to the story have become easier to manage given support from a strengthened balance sheet and improved cost of capital, including the eventual replacement of Base Mine volumes through asset development or M&A. Suffice to say, there are several attractive opportunities in the Canadian oil & gas sector these days, and we would humbly suggest that SU is one of them.”
Mr. MacCulloch said the Calgary-based company has “clearly delivered upon most key operational performance metrics while providing evidence that recent asset reliability enhancements are structural in nature, which should drive continued support for the stock moving into 2025.”
Accordingly, after increasing his financial expectations through 2025, the analyst raised his target for Suncor shares to $66 from $61. The average target on the Street is $60.69, according to LSEG data.
Elsewhere, other analysts making target adjustments include:
* Raymond James’ Michael Barth to $56 from $52 with a “market perform” rating.
“SU broke a handful of internal records this quarter in both the Upstream and Downstream segments, and continues to surprise us to the upside. We’ve revised our estimates higher as a result, and our target moves to $56.00/share. We’ve clearly underestimated the magnitude of improvement happening with some of these assets, but believe our revised estimates leave very little room to continue surprising to the upside to any notable degree. On the back of strong share price performance, the current share price remains roughly in-line with our revised target. In our view, embedded market expectations reflect all (or most) of the positive developments we’re seeing. As such, we see better ideas elsewhere and reiterate our Market Perform rating,” said Mr. Barth.
* RBC’s Greg Pardy to $66 from $64 with an “outperform” rating.
“The culture of success that has taken root at Suncor is stunning and a central driver behind the company’s operational/financial momentum,” said Mr. Pardy. “While the turnaround at Suncor is occurring much faster than we envisioned, it does not come as a surprise given Rich Kruger’s track record of repositioning Imperial Oil in the 2013-19 timeframe. We are reaffirming an Outperform recommendation on Suncor and have raised our one-year target price by $2 (3 per cent) to $66 per share. Suncor is our favorite integrated in Canada and on our Global Energy Best Ideas list.”
* National Bank’s Travis Wood to $76 from $73 with an “outperform” rating.
“Suncor delivered another strong quarter, showcasing its growing prowess in operational excellence, leveraging integration and identifying and executing meaningful reliability improvements,” said Mr. Wood. “The upstream segment achieved its best third-quarter of production, bolstered by strong overall asset performance and increased W.I. in Fort Hills. The strong results were further amplified by effectively leveraging its interconnectivity to minimize turnaround impacts, with Syncrude a standout this past quarter with record utilization of 104 per cent, increasing the output of higher value SCO (record Q3 of 514 mbbl/d, partly due to reduced maintenance activity). The improvement in asset integration has supported holding flat absolute OS&G costs year over year despite production growth of 20 per cent (130 mbbl/d) versus Q3/23, more than offsetting the impact of softer realized prices (down 12 per cent on average). The downstream segment also recorded robust results, with record overall utilization and throughput levels.”
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National Bank Financial analyst Maxim Sytchev thinks AutoCanada Inc. (ACQ-T) is “righting the ship in time for an (eventual) macro rebound.”
Following the release of “much better than feared” third-quarter financial results and seeing its “streamlining initiatives moving in full force,” he raised his recommendation for the Edmonton-based company to “outperform” from “sector perform” previously, believing the “worst feels like it’s behind us” and a catch-up to U.S. peers could be “aggressive.”
“We were pondering our positioning into the quarter, with any material downdraft creating an opening,” said Mr. Sytchev. “We did not get exactly that, but a cleaner quarter suffices to provide a light at the end of the tunnel when it comes to sentiment (note that we stepped away from the name in May 2022 when shares were trading at $29.86; they have since declined 49 per cent). For shares to materially re-rate, we need to see a soft landing in Canada. In the meantime, tactically, U.S. auto dealers (ex Carvana) are up 14 per cent year-to-date vs. ACQ at down 34 per cent (TSX at up 19 per cent and S&P 500 at up 26 per cent). Yes, U.S. peers have shown better fundamental performance, but we also saw what can happen when “‘good enough’ trades take hold à la Aecon/Quanta in 2024, and we don’t want to stand in front of that dynamic.”
After the bell on Wednesday, AutoCanada, which is the country’s sole publicly traded auto dealership group, reported revenue of $1.628-billion, exceeding the analyst’s $1.444-billion estimate and the Street’s forecast of $1.539-billion. Adjusted EBITDA, including IFRS 16, of $53.2-billion was “significantly” higher than projections ($28.1-milllion and $31.1-million, respectively).
“In addition to revenues contracting much less than we (and the Street) expected, a 3.5-per-cent decrease in operating expenses helped mitigate the impact of negative operating leverage,” said Mr. Sytchev. “Canadian operations did most of the heavy lifting, again, while U.S. business is still EBITDA-losing, $8-million in Q3/24 vs. $2-milion last year; it’s hard to see how sub-scale U.S. presence could be competitive in the long term. Net leverage ex. IFRS stood at 4.5 times vs. 2.2 times at the end of Q3/23.”
“The inflationary pressures of recent years combined with higher rates continue to pressure consumers, which has shifted the sales mix towards smaller and cheaper offerings in the sales mix. ACQ is also seeing a shift in consumers choosing to finance and lease new vehicles through OEM offerings from bank-provided options, compounding pressure on F&I margins as customers are also choosing to purchase in cash given higher financing costs. OEMs are now offering rising incentives for new vehicles and management has seen inventory levels stabilize at about 96 days’ supply, broadly in line with a three-month target level. Sourcing cheaper used vehicles is also proving challenging, especially in the U.S. where the company’s business lacks scale”
With the company targeting an annualized $100-million reduction in annual operating costs, Mr. Sytchev raised his forward margin projections and sees “slight” top-line growth in the next fiscal year.
“A decrease in CAD interest rates should help with consumer affordability going forward, translating into higher demand (also helped by falling used car pricing). Lower interest rates and cost savings also help with EPS growth in 2025E due to cheaper floorplan financing,” he added.
His target for AutoCanada shares rose to $21 from $17. The average target on the Street is $18.96
Elsewhere, other changes include:
* BMO’s Tamy Chen to $19 from $19.50 with a “market perform” rating.
“Several metrics from Q3/24 suggest demand for vehicles is holding in better than we expected. We believe the heightened focus on opex should deliver savings over the coming quarters. Valuation is undemanding should execution remain more consistent going forward than recent historical. ACQ trades at 7 times our revised 2025E EBITDA and 5 times our revised 2026E EBITDA. We look for some further data on how vehicle demand and unemployment rate trends, as well as some more consistent q/q results. For now, remain Market Perform,” said Ms. Chen.
* Canaccord Genuity’s Luke Hannan to $15 from $14 with a “hold” rating.
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While National Bank analyst Vishal Shreedhar thinks Loblaw Companies Ltd. (L-T) is “delivering on [its] financial plan,” he removed his “top pick” designation from its shares in response to recent strength.
“We remove L from our Top Pick following strong share price appreciation and significant outperformance (L up 49 per cent, MRU up 14 per cent and EMP up 4 per cent over [the last 12 months]),” he said. “That said, we continue to recommend L as our preferred grocer.”
On Wednesday, Loblaw slipped 2.4 per cent after the premarket release of its third-quarter results that included a revenue miss ($18.538-billion, versus Mr. Shreedhar’s $18.589-billion estimate and the consensus forecast of $18.654-billion) as a slowdown in the demand for its non-essential goods persisted. However, EBITDA of $2.069-billion and earnings per share of $2.50 both topped expectations ($2.049-billion and $2.064-billlion and $2.44 and $2.45).
“L indicated Q4/24 FR sssg [food retail same-store sales growth] improved sequentially quarter-to-date, adjusted for a calendar shift,” the analyst said. “Consumers maintain a preference for discount over conventional; we expect this to benefit L’s sales growth given discount store conversions/new openings (20 new Maxi/No Frills expected in Q4/24). DR [drug retail] front store sssg is expected to be impacted by 1 per cent in 2024/2025 given further electronics category exits.
“NBF models Q4/24 FR sssg of 3.0 per cent, Rx sssg of 3.5 per cent and DR front store sssg of negative 1.5 per cent. Gross margin expansion is expected in Q4/24+ (less than Q3/24; opportunity in shrink reduction, particularly in DR front store) and a flattish Q4/24 SG&A rate. The financial framework (8-10-per-cent year-over-year EPS growth; NBF is 9 per cent) was maintained for 2025, despite a new DC [distribution centre] coming online, higher store opening target year-over-year, among other factors.”
After raising his 2024 and 2025 EPS projections to $8.56 and $9.32, respectively, from $8.52 and $9.31, the analyst increased his target for Loblaw shares to $195 from $188, maintaining an “outperform” recommendation. The average target is $192.67.
“Our estimates are updated, mostly reflecting pressured Drug Retail front store sssg (sales headwind from the exit of electronics categories), gross margin improvements from shrink reduction, the impact from a new DC coming online, among several other changes,” he said.
Elsewhere, others making changes include:
* Desjardins Securities’ Chris Li to $190 from $172 with a “hold” rating.
“3Q results reinforced L’s consistent and solid execution despite navigating through some transitory headwinds (temporary softness in food and front-store SSSG),” he said. “Given L’s premium valuation and strong 2024 performance, we believe the pullback (2.4 per cent) was mainly due to expectations for slightly lower EPS growth in 2025, partly as a result of higher DC and new store opening costs. Despite the incremental cost pressures, L has other levers to achieve its financial framework of 8–10-per-cent EPS growth next year.”
* TD Cowen’s Michael Van Aelst to $202 from $203 with a “buy” rating.
“With large year-to-date returns and record valuations, it was not surprising to see L shares dip more than 2 per cent [Wednesday] after earnings growth was supported by $37-million of asset sale gains,” he said. “But this does not change the fact that Loblaw has been delivering consistent quarterly profit growth while returning significant capital to investors, or that its leadership in Food and Drug position it well to continue delivering.”
* CIBC’s Mark Petrie to $206 from $189 with an “outperformer” rating.
“Q3 included noise stemming from sales mix and timing shifts, as well as real estate gains, but we would call it operationally in line. Little changes in our overall view on Loblaw – a market leader that is investing and leveraging assets to deepen its moat. Our estimates are tweaked, and we increase our target EV/EBITDA multiple to 11 times (from 10 times),” said Mr. Petrie.
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RBC Dominion Securities analyst James McGarragle thinks the last quarter marked an “important turning point” for CAE Inc. (CAE-T).
“FQ2 results came in above and F25 guidance was maintained (also above) despite the negative impact from OEM delays,” he said. “Key in our view was indication that defense margin improvement continues to progress under the leadership of Nick Leontidis. Not only was this a positive in the quarter, but also gives us increased confidence in CAE’s ability to execute on the company’s longer-term defense targets, which would represent upside to consensus expectations and in our view would favourably impact valuation. We came away positive from the quarter and see increasing line of sight to meaningful operating leverage looking ahead.”
Shares of the Montreal-based aviation training company surged 11.9 per cent on Wednesday on the announcement chief executive officer Marc Parent is set to step aside after a 15-year run as well as better-than-anticipated second-quarter 2025 financial results. CAE reported adjusted earnings per share of 24 cents and adjusted operating income of $149-milllion, topping both Mr. McGarragle’s estimates (19 cents and $134-million) and the Street’s projections (20 cents and $130-million on stronger-than-expected margins in both Civil and Defense.
“CAE’s progress in improving margins in Defense was a key positive from the quarter,” the analyst said. “The early success by Mr. Leontidis gives us increased confidence in his ability to drive further improvement more in line with CAE’s longer-term double-digit margin target. Moreover, we believe continued execution in defense will drive a re-rate in valuation, which has been under pressure recently given recent issues in the segment. Key is that CAE’s valuation has come off meaningfully in recent years, with the company trading 1.8-turns below its trailing 5-year average. Importantly, each turn in valuation represents $4 on the share price (versus the shares trading at $29 [Wednesday]).”
Increasing his revenue and earnings estimates for both fiscal 2025 and 2026, Mr. McGarragle hiked his target to $34 from $27, reiterating an “outperform” rating. The average is $30.58.
Other changes include:
* Desjardins Securities’ Benoit Poirier to $32 from $28 with a “hold” rating.
“Although we see the positive market reaction to the earnings beat and management change as warranted (and view the planned timeline as positive, conveying a clear sense of thoroughness), we believe some risk remains as CAE is now without a permanent CEO and CFO, and there is uncertainty related to how investors will react to the eventual selections,” said Mr. Poirier. “With the shares trading at 21.7 times our FY26 EPS (approaching the five-year average of 23.5 times), we prefer to stay on the sidelines as we await greater clarity.”
* National Bank’s Cameron Doerksen to $34 from $30 with an “outperform” rating.
“Although CAE continues to face some near-term headwinds in its Civil segment, we believe that the company will enjoy a multi-year period of growth supported by global growth in pilot training demand and increased aircraft deliveries that will drive strong simulator sales,” said Mr. Doerksen. “Additionally, we believe investors will come to ascribe more value to CAE’s Defense segment once the company demonstrates the sustainability of the positive margin trends.”
* TD Cowen’s Tim James to $34 from $33 with a “buy” rating.
“Our bullish investment thesis is unchanged. Strong results, Defense margin momentum, and increased confidence in ability to hit F2025 Civil growth guide to drive shares higher, in our view,” said Mr. James.
* Scotia’s Konark Gupta to $32.50 from $30 with a “sector perform” rating.
“Our estimates have slightly improved, more for F2025-F2026 than F2027. However, we remain on the sidelines, pending more visibility on Civil training recovery and conviction in Defense’s 10-per-cent margin potential. In addition, we are now monitoring CEO succession as Marc Parent has decided to step down in August 2025. Valuation is not overly demanding at 10.7 times EV/EBITDA and 21.2 times P/E on calendar 2025 estimates, despite a 31-per-cent increase in the share price over the past three months,” said Mr. Gupta.
* CIBC’s Kevin Chiang to $33 from $30 with an “outperformer” rating.
“Investors generally have a favourable view on CAE’s growth pipeline and competitive positioning as a global leader in pilot training. However, inconsistent execution has been a headwind for the share price though over the past couple of years,” said Mr. Chiang.
* Canaccord Genuity’s Matthew Lee to $30 from $28 with a “hold” rating.
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Following weaker-than-anticipated third-quarter results that sent its shares plummeting 9.1 per cent on Wednesday, RBC Dominion Securities analyst Sabahat Khan is “looking for sequential improvement in trends and less impact from recent headwinds” for Finning International Inc. (FTT-T) heading into the fourth quarter and 2025.
After the bell on Tuesday, the Vancouver-based industrial equipment dealer reported consolidated net revenue of $2.539-billion, up 4.2 per cent year-over-year but below the consensus estimate on the Street of $2.557-billion. Adjusted earnings before interest and taxes (EBIT) dropped 19.4 per cent to $203-million, missing the Street’s expectation of $239.8-milllion.
“While we expect the ‘significant items’ from this quarter to be transitory (e.g., severance costs related to headcount reductions should lower SG&A by $25-million in 2025, loss on receivables related to a customer being put in receivership is a onetime event), we expect some of the margin headwinds to continue over the near-term (albeit with moderating impact over the coming quarters),” said Mr. Khan. “Margin headwinds in Q3 included the continued sales mix shift toward New Equipment, softer-than-expected PS sales, and continued Equipment pricing/Rental utilization normalization (in line with commentary from CAT at Q3 reporting). With that said, most of the weakness stems from Canada, while South America continues to perform well (added 200 technicians in the region since Q2) and the operating backdrop in the U.K. & Ireland is largely unchanged (still soft).
“Overall, we expect sequential improvement looking ahead, driven by the non-recurrence of some of the headwinds that impacted Q3 (i.e., $150-million of inventory sold at lower margins) and a moderation in the impact of others (i.e., mix shift toward New Equipment, etc.).”
With management removing its 2025 Product Support projection based on a soft operating backdrop, Mr. Khan cut his earnings expectation, leading him to lower his target for Finning shares to $46 from $50 with an “outperform” recommendation. The average is $47.67.
“While our valuation multiple is below the long-term average multiple, we believe it fairly reflects the operating backdrop in Western Canada and South America, which includes a supportive commodity price environment (for WTI and copper) and continued momentum for Product Support revenue. Our price target and the implied return support our Outperform rating,” he said.
Other changes include:
* Raymond James’ Steve Hansen to $50 from $52 with an “outperform” rating.
“We are trimming our target on Finning International (FTT) ... following this week’s light 3Q24 print, including an unexpected ‘gut punch’ in Canada margin, and downward commensurate revisions to our estimates. Notwithstanding these adjustments, we reiterate our Outperform rating based upon our constructive view of the company’s: 1) outstanding SAM fundamentals/performance; 2) impressive backlog & robust order flow; 3) ramping FCF; 4) consistent buyback; 5) prospects for accelerating product support growth in 2025; &; and 6) discounted (compelling) valuation,” said Mr. Hansen.
* BMO’s Devin Dodge to $46 from $50 with an “outperform” rating.
“While Q3/24 results came up shy of expectations and reflected challenges in its Canadian business, we believe the more than 9-per-cent sell-off seems overdone. The stock is trading near trough levels (10 times) on trailing EPS and earnings are expected to push higher in 2025. In our view, the risk/reward skews very favourably, though some patience may be required for the upside to be realized. We rate FTT Outperform,” said Mr. Dodge.
* CIBC’s Jacob Bout to $48 from $50 with an “outperformer” rating.
“FTT reported a Q3/24 miss driven by a decline in EBIT margin and is now dropping its 2023 investor day target of more than 7-per-cent product support revenue CAGR through 2025. While FTT expects re-acceleration of product support growth in 2025 with good visibility in South America, Canada outlook is mixed. We like that FTT continues to work on operational efficiencies. We lower our 2024/25 estimates,” said Mr. Bout.
* Canaccord Genuity’s Yuri Lynk to $51 from $53 with a “buy” rating.
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In other analyst actions:
* Scotia Capital’s Mario Saric raised his Artis REIT (AX.UN-T) target to $7.50 from $7 with a “sector perform” rating. The average is $7.25.
* ATB Capital Markets’ Martin Toner cut his target for Bitfarms Ltd. (BITF-T) to $6.50 from $7 with an “outperform” rating. The average is $5.92.
* RBC’s Drew McReynolds lowered his Boat Rocker Media Inc. (BRMI-T) target to $1.50, below the $1.81 average, from $2.50 with an “outperform” rating, while TD Cowen’s Vince Valentini cut his target to $1.50 from $1.75 with a “buy” recommendation.
“Q3/24 results were below our forecast while 2024 adjusted EBITDA guidance of $10-million was reiterated,” he said. “Despite an uptick in activity across certain content segments post-U.S. guild strikes, we believe the timeframe for a full rebuilding of the content pipeline is now pushed out to 2025/2026. Factoring in this more prolonged timeframe, our price target decreases.”
* National Bank’s Jaeme Gloyn bumped his Element Fleet Management Corp. (EFN-T) target to $39 from $37 with an “outperform” rating. Other changes include: Raymond James’ Stephen Boland to $34 from $30 with a “strong buy” rating, TD Cowen’s Graham Ryding to $33 from $32 with a “buy” recommendation and Scotia’s Phil Hardie to $32 from $33 with a “sector outperform” rating. The average is $32.09.
“This is exactly what we were looking for,” Mr. Gloyn said. “Q3-24 EPS beat the street and the 2025 guidance reaffirmed our favourable outlook. We reiterate our view that EFN is a ‘core holding’. We see continued upside for the shares through 2025 with catalysts from the details of a three-year plan expected in 2025. Our Price Target goes to $39 (was $37), slightly stronger FCF/share and the stronger USD.”
* RBC’s James McGarragle raised his Exchange Income Corp. (EIF-T) target to $71, exceeding the $69 average, from $65 with an “outperform” rating.
“Last week we had the opportunity to present to Exchange’s Board of Directors in Arizona and received updates from key business leaders on the company’s strategic direction,” said Mr. McGarragle. “Overall, we came away positive on the company’s outlook, especially in Aviation, reflecting the strong pipeline of contracted growth and numerous upside opportunities, in addition to solid execution. While we remain cautious on the manufacturing outlook despite commentary from mgmt they are seeing early signals the backdrop is improving, we view the segment as having significant operating leverage when macro inflects. Continue to flag Exchange as a top idea in Aerospace.”
* National Bank’s Zachary Evershed moved his target for GDI Integrated Facility Services Inc. (GDI-T) to $41.50 from $38.50 with a “sector perform” rating. The average is $42.10.
* National Bank’s Vishal Shreedhar trimmed his target for Maple Leaf Foods Inc. (MFI-T) to $26 from $28 with an “outperform” rating, while TD Cowen’s Michael Van Aelst lowered his target to $34 from $35 with a “buy” rating. The average is $30.
“Our upside/downside review suggests opportunity, although we recognize that MFI’s restructuring/track record underscore uncertainty,” Mr. Shreedhar said. “Optimistically, assuming normalized multiples and the midpoint of MFI’s 14-16-per-cent EBITDA percentage target by 2028, we calculate a stock price of $37 today (more than 70-per-cent upside). Conversely, assuming the 5-year historical low valuation and a 2028 EBITDA margin rate equal to Q3/24, we calculate a stock price of $17 today (22-per-cent downside).
“MFI’s spin-off is expected around mid-2025 (tax-free; prospectus in Q1/25). Assuming an EV/EBITDA multiple of approximately 6 times for NewCo and 11 times for RemainCo, we calculate more than 30-per-cent upside, all else equal. Notwithstanding a possible re-rate, we view better execution to be the key value driver for MFI (better ROIC, higher margins and consistent performance).”
* CIBC’s Krista Friesen cut her Martinrea International Inc. (MRE-T) target to $14.50 from $17 with an “outperformer” rating, while BMO’s Tamy Chen dropped her target to $13 from $15 with an “outperform” recommendation. The average is $16.25.
“Relative to our forecasts, North America earnings in Q3/24 were better than feared. Our operating earnings forecasts for 2025E and 2026E have not materially changed but the higher tax rate led to a reduction in our EPS estimates. Relative to the Street, it appears management’s outlook for Q4/24E and H1/25E margins were below expectations, and we believe today’s stock reaction (down 11 per cent) reflects these developments,” said Ms. Chen.
* CIBC’s Dean Wilkinson lowered his target for Minto Apartment REIT (MI.UN-T) to $20 from $21, keeping an “outperformer” rating. Other changes include: BMO’s Michael Markidis to $18 from $18.50 with an “outperform” rating, Raymond James’ Brad Sturges to $19 from $18.75 with an “outperform” rating, Scotia’s Mario Saric to $17.75 from $18.75 with a “sector perform” rating, RBC’s Jimmy Shan to $20.50 from $21.50 with an “outperform” rating and Desjardins Securities’ Kyle Stanley $19 from $21 with a “buy” rating. The average is $19.55.
“MI could be a little more exposed given pressure points are at the high end of market and condo deliveries in Toronto,” said Mr. Shan. “However, with improvement in its Toronto occupancy and stable turnover spread, we are still calling for 3-4-per-cent SP NOI growth in 2025. Valuation discount looks excessive at 5.65-per-cent implied cap, 15 times AFFO. Moreover, we are fairly confident there are no private market trades for high-quality urban assets at its implied $290K/suite. Once the rotation out of CDN apartments (and REIT sector) is played out, we will not be surprised by an outsized re-rate upwards.”
* TD Cowen’s Graham Ryding raised his Power Corp. of Canada (POW-T) target to $49 from $44 with a “buy” rating. The average is $50.71.
“The reaction to the quarterly miss appears overdone in our view (shares off 5 per cent intraday). The quarterly EPS miss was largely due to non-cash charges at GBL and standalone businesses (LMPG and Lion). However, this should be offset by FV gains in Q4/24 (sale of Peak). NAV/share growth was solid in Q3/24 (up 15 per cent quarter-over-quarter). Buybacks remain healthy, and are expected to persist into 2025 (Peak proceeds),” said Mr. Ryding.
* Scotia’s Himanshu Gupta raised his Slate Grocery REIT (SGR.U-T, SGR.UN-T) target to US$10 from US$9 with a “sector perform” rating. The average is US$10.70.
* Jefferies’ John Aiken increased his Sun Life Financial Inc. (SLF-T) target to $94 from $90, exceeding the $85.83 average, with a “buy” rating. Other changes include: BMO’s Tom MacKinnon to $92 from $88 with an “outperform” rating and Scotia’s Meny Grauman to $96 from $85 with a “sector outperform” recommendation.
“After weeks of speculation that Sun Life would boost its medium-term ROE target at its November Investor Day, that is exactly what we got,” said Mr. Grauman. “With the stock up 22 per cent over the past three months alone, including 7 per cent over the past month, it is very clear that this expectation was already making its way into the share price, yet the lifeco’s updated financial targets suggest that there is even more upside ahead. A simple PB/ROE regression suggests that SLF shares could trade at 2.3 times book if the company hits its new ROE objective. That implies a $96 target price based on our forecast for SLF’s book value by the end of 2025. A 20-per-cent ROE target does not just put Sun Life ahead of all of its Canadian lifeco peers, but also well ahead of all the Canadian banks we cover as well. And yet, it is important to put Sun Life’s ROE expansion story in the broader context of an insurance sector that is seeing ROE expansion across the board. In fact, Sun Life’s increased target comes a few months after Manulife boosted its own ROE target to 18%+, and follows on speculation that both IAG and GWO will boost their own targets when they host Investor Days in February and April, respectively.”
* Canaccord Genuity’s Aravinda Galappatthige raised his Verticalscope Holdings Inc. (FORA-T) target to $17 from $14 with a “buy” rating. Other changes include: RBC’s Drew McReynolds to $16 from $15 with an “outperform” rating, National Bank’s Adam Shine to $13 from $11.50 with an “outperform” rating, TD Cowen’s Vince Valentini to $17 from $16 with a “buy” rating, CIBC’s Todd Coupland to $10 from $9 with a “neutral” rating and RBC’s to $16 from $15 with an “outperform” rating. The average is $14.72.
“Q3/24 financial results were slightly ahead of our forecast while MAUs were well ahead. Following upward revisions to our digital advertising and MAU estimates and incorporating slightly lower but still healthy 40-per-cent-plus EBITDA margins, our price target increases,” said Mr. McReynolds.