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

National Bank Financial analyst Shane Nagle expects to see negative guidance revisions from several Canadian base metal companies during the coming earnings season as operational challenges and inflationary pressures continue to weigh on results.

In a research report released Tuesday, he noted production guidance is “back-half weighted” for most companies, “which doesn’t help to offset inflationary pressures throughout H1 and companies are at risk of having to revise and/or miss annual guidance in the latter half of the year.”

“Companies continue to highlight challenges in getting operations back to full speed following the pandemic,” said Mr. Nagle. “In general, mines remain behind on development, mills are behind on scheduled maintenance, and workforce availability remains a significant issue in select region.”

“Copper prices averaged 9 per cent lower than provisionally priced sales as of March 31st and were down 17 per cent throughout June. Historically, Consensus doesn’t tend to be conservative enough when accounting for these impacts on reported revenue in volatile periods - we could see some disappointing top line numbers as a result.”

Mr. Nagle is projecting increased cost guidance for many companies, including several that had “previously messaging ‘top end of the range’ as inflation pressures persist.” He blamed higher diesel and other consumables, which did not take effect until March and April.

With that view, he downgraded his recommendation for a pair of companies:

* Copper Mountain Mining Corp. (CMMC-T) to “sector perform” from “outperform” with a $2.25 target, down from $2.75. The average target on the Street is $4.33.

“While we continue to expect an updated LOM [Life of Mine] plan at Copper Mountain Mine to showcase longer-term optionality of the portfolio, we would be remiss if we didn’t recommend caution ahead of what we believe to be weak Q2 financial results and potentially negative near-term guidance revision,” he said.

* Hudbay Minerals Inc. (HBM-T) to “sector perform” from “outperform” with a $7.75 target, falling from $8.50. The average is $11.45.

“While the company’s growth outlook and valuation remain attractive, it is dependent on development of Copper World. Even with several options to monetize a portion of the project and advance development without equity dilution the market will remain reluctant to reward names with increasing leverage and high-capex projects in a period of depressed copper prices,” he said.

Mr. Nagle said his estimates are “materially” below the consensus on the Street for Copper Mountain as well as two other companies, leading him to lower his targets for their shares. They are:

* Capstone Copper Corp. (CS-T, “sector perform”) to $4 from $4.50. Average: $7.36.

“We continue to model elevated costs for the company’s cathode business and account for maintenance downtime at Pinto Valley,” he said.

* Taseko Mines Ltd. (TKO-T, “sector perform”) to $1.75 from $1.85. Average: $2.74.

“We continue to account for lower grades and recoveries at Gibraltar throughout Q2,” he said.

Mr. Nagle’s other target reductions are:

  • Ero Copper Corp. (ERO-T, “sector perform”) to $16 from $16.50. Average: $22.36.
  • First Quantum Minerals Ltd. (FM-T, “outperform”) to $32.50 from $35. Average: $38.34.
  • Sherritt International Corp. (S-T, “sector perform”) to 60 cents from 75 cents. Average: $1.04.
  • Trevali Mining Corp. (TV-T, “sector perform”) to 55 cents from 65 cents. Average: $1.08.


In his earnings preview, Barclays analyst Matt Murphy made a series of rating changes.

He upgraded a pair of stocks:

* First Quantum Minerals Ltd. (FM-T) to “equal weight” from “underweight” with a $20 target, down from $27. The average is $38.34.

* Hudbay Minerals Inc. (HBM-T) to “overweight from “equal weight” with a $6 target, down from $9 and below the $11.45 average.

Conversely, he cut Franco-Nevada Corp. (FNV-N, FNV-T) to “underweight” from “equal weight” with a US$112, falling from US$130 and under the US$155.18 average.

“Copper equities are reflecting better value at these levels. We still see headwinds on both macro and fundamental levels, but are becoming less negative and upgrade FM to EW and HBM to OW. We reduce our valuation multiples across all names, and downgrade FNV to UW,” the analyst said.

He also made these target reductions:

  • Agnico Eagle Mines Ltd. (AEM-N/AEM-T, “overweight”) to US$62 from US$70.Average: US$73.34.
  • Barrick Gold Corp. (GOLD-N/ABX-T, “overweight”) to US$25 from US$28. Average: US$27.17.
  • Ero Copper Corp. (ERO-T, “overweight”) to $16 from $21. Average: $22.36.
  • Kinross Gold Corp. (KGC-N/K-T, “overweight”) to US$6 from US$7. Average: US$6.88.
  • Lundin Mining Corp. (LUN-T, “equal weight”) to $9 from $11. Average: $12.46.
  • Oceanagold Corp. (OGC-T, “equal weight”) to $2.50 from $3.50. Average: $3.56.
  • Teck Resources Ltd. (TECK.B-T, “equal weight”) to $42 from $50. Average: $57.15.


Expecting “mixed” second-quarter results from senior gold companies, Scotia Capital analyst Tanya Jakusconek predicts investor focus will be on costs, “particularly 2022 guidance, given the higher fuel price and other input costs in addition to capital costs updates on expansion/development projects.”

“Heading into reporting, given the inflationary environment, streamers are recommended given they are isolated from inflationary pressures,” she said in a note. “TFPM is recommended as it has pre-released Q2 revenue/sales and provided updated 2022 guidance. We are also comfortable recommending GOLD and AEM; GOLD has pre-released its Q2/22 operating estimates (including re-iterating 2022 guidance), hence we believe there is limited downside risk. AEM is expected to have a better Q2 over Q1 (our EPS are above consensus estimates) and we believe the Detour mine plan (to be released) will be in line with our expectation. We are cautious on NEM; although we are expecting a stronger operating quarter, we are below consensus on EPS and believe there is risk on cost guidance given various updates to come (has outperformed peers by 4 per cent).”

Ms. Jakusconek made these target adjustments:

  • Agnico Eagle Mines Ltd. (AEM-N/AEM-T, “sector outperform”) to US$76 from US$85. Average: US$73.34.
  • AngloGold Ashanti Ltd. (AU-N, “sector perform”) to US$22 from US$27. Average: $20.66.
  • Buenaventura SAA (BVN-N, “sector underperform”) to US$7 from US$10. Average: $10.91.
  • Eldorado Gold Corp. (EGO-N/ELD-T, “sector perform”) to US$12 from US$14. Average: US$13.28.
  • Franco-Nevada Corp. (FNV-N/FNV-T, “sector perform”) to US$179 from US$180. Average: US$155.18.
  • Barrick Gold Corp. (GOLD-N/ABX-T, “sector outperform”) to US$28 from US$31.50. Average: US$27.17.
  • Iamgold Corp. (IAG-N/IMG-T), “sector perform”) to US$2 from US$2.50. Average: US$2.27.
  • Kinross Gold Corp. (KGC-N/K-T, “sector outperform”) to US$7 from US$8.50. Average: US$6.88.
  • Newmont Corp. (NEM-N/NGT-T) “sector perform”) to US$77 from US$80. Average: US$76.11.
  • Royal Gold Inc. (RGLD-Q, “sector perform”) to US$154 from US$159. Average: $150.92.
  • Triple Flag Precious Metals Corp. (TFPM.U-T/TFPM-T, “sector outperform”) to US$19 from US$19.50. Average: US$22.52.


While National Bank Financial’s Gabriel Dechaine sees the shares of Canadian life insurance companies as “cheap,” he does not thinks second-quarter earnings season will bring a rebound.

The equity analyst expects results to be “very weak,” predicting “a mix of factors weighing on EPS generation, the negative impact of rising rates on LICAT ratios and book values (diluting ‘defensive’ characteristics), and ongoing questions surrounding the impact of IFRS 17 (e.g., future earnings volatility).”

“Lifeco stocks are down 15 per cent on average this year, underperforming the S&P/TSX by close to 300 basis points,” said Mr. Dechaine. “Valuations have become glaringly cheap, with the sector’s forward P/E multiple of 7.6 times at a 17-per-cent discount to the 5-year average and the sector’s 1.1 times price-to-book multiple 16 per cent below average (both metrics heavily skewed by MFC).

“From a short-term trading standpoint, we see no appealing opportunities heading into earnings season. From a longer-term perspective, we continue to favour IAG for its lower risk profile and cheaper relative valuation. IAG also expects a neutral to near favourable impact on EPS/BVPS from IFRS 17 at transition, which is an added positive.”

The analyst lowered his earnings per share estimates for the quarter by an average of 4 per cent, leading him to drop his full-year projection by 3 per cent for both 2022 and 2023.

With that view, he also reduced his target prices for the four companies in his coverage universe by 3 per cent.

They are:

* Great-West Lifeco Inc. (GWO-T, “sector perform”) to $37 from $38. The average on the Street is $37.33.

“GWO quantified the impact of IFRS 17 transition on June 28th, 2022,” he said. “Surprisingly, given a business mix that is relatively short duration and a relatively low amount of New Business gains booked by the company over the years, a book value hit of 10-15 per cent was quantified. The stock reaction was relatively muted, though, as GWO had already been underperforming and previous “surprise” disclosures by peers dulled the market reaction. Credit investors, though, will be keeping a close eye on pronouncements by rating agencies with regard to the treatment of the Contractual Service Margin.”

* IA Financial Corp. Inc. (IAG-T, “outperform”) to $78 from $80. Average: $82.78.

“After four quarters of reporting EPS at or above its target range, IAG’s Q1/22 EPS came in below guidance,” he said. “The miss was partly due to a sharp increase in Group mortality/morbidity claims, along with negative policyholder behaviour in Individual Insurance. Higher expenses as a result of tight labour markets were an additional headwind. Going forward, IAG could see challenges in meeting its FY2022 EPS guidance of $8.70-9.30 in light of falling equity markets and cost inflation. We note that our Q2/22E EPS of $2.06 is below the low end of IAG’s $2.20-2.35 target range for the quarter. Consensus currently sits at $2.14.”

* Manulife Financial Corp. (MFC-T, “sector perform”) to $25 from $26. Average: $27.07.

“Investors often ask if reported or core EPS matters more in the interpretation of MFC’s results,” he said. “While we argue that reported EPS is ultimately the most relevant, we can also argue that the spread between the two metrics is almost as important (tighter = better). This quarter, we see several factors that will weigh on core EPS, including negative market performance affecting the Wealth business, lockdowns in Asia, policyholder experience etc. We also see several factors that will weigh on reported EPS, including market sensitivities to lower equity markets and higher bond yields. However, MFC’s fixed income trading activities could yield a material (and positive) offset. MFC, like other Canadian life insurers, records spread pick-up in its investment activities during any given quarter. Some of these activities are included in MFC’s $100-million after-tax core investment experience, with amounts above that threshold included in reported EPS. Widening corporate bond spreads can materially influence this figure. We note the last time we saw material spread widening was in Q1/22, and MFC reported $97-million of net direct gains from markets (mainly equity and fixed income) that quarter, which included $351-million of gains from fixed income.”

* Sun Life Financial Inc. (SLF-T, “sector perform”) to $67 from $68. Average: $69.46.

“SLF’s asset management business is set to deliver a weak quarter, which is unsurprising given the market backdrop,” he said. “We note that MFS’ AUM fell 13 per cent during the quarter. Each percentage point reduces profitability by $5-million, meaning a drag of $65-million from the AUM decline alone. Moreover, MFS’ operating margins tend to be weaker during H1s, typically seeing a 4 percentage point decline compared to Q4s. We expect a 5 percentage point decrease in margins, reducing profitability by another $25-million.”


IA Securities analyst Gaurav Mathur sees Plaza Retail Real Estate Investment Trust’s (PLZ.UN-T) portfolio as “priming for gains.”

However, he warned macro headwinds are likely to slow growth in the near term, leading him to resume coverage of Fredericton-based REIT with a “hold” recommendation on Tuesday.

“Through the ensuing COVID-19 pandemic, we have read headlines about store closures and favourite neighbourhood shops shutting their doors,” said Mr. Mathur. “While things have looked bleak for a while, in our view, this hasn’t meant that retail as an asset class is dead. Based on our conversations with CRE brokers and investors, demand for high-quality retail assets – grocery-anchored centres, primary market enclosed malls, and some strip centres – has been strong. However, given the current and upcoming headwinds – future rate hikes, persistent inflation levels, labour market shortage, eroding consumer finances, constricting buyer pool, compression in development margins, etc. – we= caution investors that a further level of clarity is required when considering these assets.”

Whike he thinks Plaza has “positioned itself well in terms of a robust tenant base,” which includes essential, necessity-based services and quick service restaurants, the analyst expects a “focus on declining spending power” to affect the broader sector moving forward.

“The REIT has a robust pipeline of developments that should help counter the macro headwinds to some degree,” said Mr. Mathur. “The REIT’s operating model is to identify, develop, and redevelop outdated retail assets into modern relevant properties. In essence, the REIT looks for properties that are 60-65-per-cent occupied and can be turnaround plays. We note that strong demand from necessity-based tenants and quick-service restaurants has helped rein in vacancy rates in the REIT’s portfolio.”

“Keeping an eye on the macroeconomic picture, we expect a decline in spending power and household savings rates to offset the strong gains across the REIT’s portfolio. Based on our conversations with CRE brokers, while commodity prices have recently begun to recede, price inflation for construction materials remains a key concern, so much so that it has caused development timelines and cost considerations to be considerably overrun. We note that these concerns are not idiosyncratic to the REIT itself and are headwinds for the entire sector.”

After “strong” first-quarter results, including funds from operations per diluted unit growth of 5 per cent year-over-year, and calling its strip centre portfolio “attractive,” he set a target of $4.50 for Plaza units. The average on the Street is $5.04.

“The REIT has built a portfolio of defensive and value focused tenants which combined with the development pipeline, healthy earnings, and NAV growth, allow for its valuation to be well-supported going forward,” he concluded. “The macroeconomic conditions affect the sector as a whole and are not idiosyncratic in nature to the REIT. However, they cannot be ignored and hence on a relative risk-adjusted return basis to its peer set, we rate the units as HOLD with a $4.50 target price based on a 5-per-cent discount to our NAV estimate, that implies a 11-12 times multiple on our 2023 AFFO/unit estimate.”


Desjardins Securities analyst Benoit Poirier callls Arcadis NV’s agreement to acquire IBI Group Inc. (IBG-T) for $19.50 per share “a fair price for a solid asset.”

Expressing confidence a deal will be finalized and seeing a “strong rationale” for the transaction, he moved Toronto-based IBI to “tender” from “buy,” believing investors are “fairly compensated” by the Dutch firm’s offer and seeing a low probability for a higher bid.

“IBG’s solid market position in Canada and the U.S., as well as its digital solution expertise and the strong potential for cost synergies ($15-million annual cost savings expected, 3.5 per cent of IBG’s revenue) give us confidence that the transaction will be finalized. IBG offers strong geographic and business complementarity and will add significant scale to Arcadis’s North America business, specifically with regard to filling its void in the attractive Canadian market. IBG will also improve Arcadis’s EBITDA margin profile from day 1, with IBG’s margins being 200 basis points higher.

“Regulatory approval should not be an issue, in our view. Arcadis has a substantial presence in the U.S. and Brazil, but a very minimal one in Canada. Arcadis previously generated 34 per cent of its revenue from the Americas; this deal will bump that percentage up to 43 per cent. We expect the transaction, which is to be completed through a plan of arrangement, will need approval through the Hart–Scott–Rodino antitrust act in the U.S. due to Arcadis’s presence there; however, the market is fragmented and IBG is a relatively small player.”

Mr. Poirier’s target rose from $18 to $19.50 to match the offer. The average on the Street is $18.88.

“We have maintained our bullish stance on IBG over the past year as the company was clearly undervalued, in our view, trading at a discount to its peers. We are pleased with the proposed transaction from Arcadis,” he concluded.

Elsewhere, others making recommendation changes include:

* Stifel’s Ian Gillies to “hold” from “buy” with a $19.50 target, up from $17.

“In our view, we would tender shares into this deal as it is a solid purchase price multiple and provides immediately liquidity. Moreover, management has received an offer for a share price not seen since prior to the financial crisis and up from a low of $0.61 in 2013,” he said.

* TD Securities’ Michael Tupholme to “tender” from “buy” with a $19.50 target, up from $17.50.


While Cineplex Inc. (CGX-T) is showing “signs of recovery” with improving box office results recently, National Bank Financial analyst Adam Shine said the impact of the COVID-19 pandemic continues to “linger,” leading him to make notable reductions to his estimates for the second quarter ahead of its Aug. 11 earnings report.

“After Omicron impacted Q1, April and May faced tough 2019 comps but June, as Cinemark noted, delivered the best monthly box office results in over two years,” he said in a note. “AMC said that momentum continued into July with the second weekend up 14 per cent over its 2019 counterpart. Blockbuster franchise sequels are performing very well and the box office is recovering after pandemic shutdowns, albeit with some spotty dynamics. The studios are still occasionally moving a film destined for theatres to a streamer and a number of movie releases have been postponed to later in 2022 or 2023 due to COVID outbreaks during post-production. This has prompted material revisions to our forecast.”

Mr. Shine said he expected Cineplex to get credit agreement amendments this summer, however he now thinks “may have to wait a bit longer if the Q2 and Q3 results possibly offer less of a cushion to covenants.”

He lowered his revenue forecast for the quarter to $351-million from $400-million. His adjusted EBITDA after leases estimate slid to $35-million from $51-million.

Keeping an “outperform” rating, Mr. Shine cut his target for Cineplex shares to $15.50 from $19. The current average is $17.75.

“We’d expect a pullback in CGX shares heading into Aug. 11 as Street expectations reset, with a better buying opportunity likely presenting itself post-Q2 reporting,” he said.


Citi analyst Stephen Trent thinks Air Canada (AC-T) “looks well positioned for long-term growth, as flight operations normalize, global economic activity stabilizes and international long haul travel regains its luster.”

However, he thinks patience is necessary for investors.

“Relative to its U.S. peers and to fellow off-index Star Alliance sister carrier Copa Airlines, Neutral-rated Air Canada’s ops appear to require some catchup before the carrier recovers a more stable earnings profile,” said Mr. Trent in a note released Tuesday.

He reduced his full-year earnings per share estimate for 2022 to a loss of $3.05 from a loss of $2.14. His 2023 and 2024 projections slid to profits of $1.18 and $4.71, respectively, from $2.06 and $5.71.

“Forecast adjustments for Air Canada include the incorporation of lower, expected cargo revenue, slightly stronger, forecasted passenger yields and a weaker, expected sales mix into our model,” he said. “(Yield, the airline industry’s price point, measures the amount of ticket revenue per passenger mile flown). We also increase our target multiple on the stock from 12.25 times to 16 times - or from a 5-per-cent discount vs. U.S. discount airline multiples to a. ca. 20-per-cent premium. As Air Canada appears to be in an earlier phase of its pandemic-era operational recovery, airline stocks often trade at higher multiples during these periods.”

Reaffirming a “neutral” rating, Mr. Trent reduced his target for Air Canada shares to $19 from $25.50. The average is $27.61.

“We rate AC at Neutral primarily on uncertain short-medium term profitability due to severely depressed passenger volumes stemming from COVID-19 and the related government restrictions on travel from some of its key neighboring nations,” said Mr. Trent. “Valuation looks full, in our view, relative to recent historical trading levels and compared to its large U.S. network carrier peers. Given the higher uncertainty in North American aviation markets, we prefer to have more earnings visibility before getting more aggressive with Air Canada shares.”


A group of analysts on the Street raised their target prices for PrairieSky Royalty Ltd. (PSK-T) after its financial and operating results for the second-quarter blew past expectations.

After the bell on Monday, the Calgary-based company reported record average royalty production of 25,992 barrels of oil equivalent per day, up 9 per cent from the previous quarter and 32 per cent year-over-year. The Street had expected approximately 24,200 barrels.

Those making changes include:

* RBC’s Luke Davis to $24 from $23 with a “sector perform” rating. The average is $23.30.

“PrairieSky’s record quarter was driven by robust payor activity with stronger than expected volumes driving a material cash flow beat,” said Mr. Davis. “We expect the stock to perform well on the back of the release, though we have left our SP recommendation unchanged for now driven by relative valuation, implied return, and RoC given a continued focus on debt reduction.”

* BMO’s Mike Murphy to $25 from $23 with an “outperform” rating.

“The beat on production was meaningful and primarily driven by elevated activity levels and a strong contribution from Q1 drilling. We continue to see debt reduction as the priority for free cash flow, although we expect the company to be active on the buyback front with a potential dividend increase within the next 6 months. On our revised 2022/2023 estimates, we are increasing our target price,” said Mr. Murphy.

* CIBC’s Jamie Kubik to $26 from $24 with an “outperformer” rating.

“PrairieSky posted a very strong Q2 update, including better-than-expected production volumes, leading to cash flow that easily topped our estimates and consensus,” said Mr. Kubik. “While Q3 is likely to see volumes moderate with the reduced drilling activity seen in Q2, leasing activity likely sets PSK up for growth in Q4/22, and our estimate revisions are net favorable on the back of this print. We increase our price target ... and continue to see the stock as providing attractive energy exposure, given its operational torque to a strong commodity tape, and defensive qualities in an inflationary environment.”

* National Bank’s Travis Wood to $26 from $25 with a “sector perform” rating.

* Stifel’s Robert Fitzmartyn to $24 from $23.75 with a “buy” rating.


National Bank Financial analyst Vishal Shreedhar expects Saputo Inc.’s (SAP-T) first-quarter 2023 results to “improve meaningfully sequentially,” leading to maintain his “favourable view on this restructuring story.”

Previewing the Aug. 4 earnings release, he predicts “slight” year-over-year earnings per share growth, “reflecting strength in Canada, acquisitions in Europe, quarter-over-quarter improvement in the U.S., and growth in International, partially offset by higher D&A.”

“(1) In the U.S., we anticipate flattish/slightly more favourable year-over-year market factors (higher cheddar prices, more favourable inventory realization, flattish year-over-year milk-cheese spread). Pricing initiatives are expected to be favourable. (2) In Canada, we anticipate continued solid performance; pricing initiatives are anticipated to benefit. (3) In Australia, we expect rising milk costs (opening farm gate prices at record levels) and challenged intake, partly offset by favourable year-over-year international market prices. We anticipate continuing solid performance in Argentina. (4) In Europe, we anticipate continued progress with pricing initiatives, plus acquisition contribution,” he said.

Mr. Shreedhar is projecting revenue of $4.002-billion, up from $3.488-billion a year ago but narrowly below the consensus on the Street of $4.112-billion. He’s estimating EBITDA will growth 9.7 per cent to $318-million.

After raising his full-year 2023 and 2024 forecast, Mr. Shreedhar hiked his target for Saputo shares to $35 from $30, reiterating an “outperform” rating. The current average target is $35.38.

“While global dairy markets remained challenged, particularly in the important USA sector (milk-cheese spread still negative), over the longer term, we expect conditions to normalize, coupled with emerging benefits from SAP’s efficiency and pricing initiatives,” he said.

“In addition, valuation remains attractive with SAP trading at 17.8 times our NTM EPS [next 12-month earnings per share] vs. the 5-year average of 20.4 times.”


In other analyst actions:

* In a research report previewing earnings season for the North American waste sector, RBC Dominion Securities analyst Walter Spracklin reduced his targets for GFL Environmental Inc. (GFL-N/GFL-T, “outperform”) to US$37 from US$44 and Waste Connections Inc. (WCN-N/WCN-T, “outperform”) to US$147 from US$153. The averages are US$43.71 and US$146.43, respectively.

“Share prices in the waste sector have held in extremely well (relatively speaking), as the sector’s defensive characteristics and strong pricing power have led it to be a safe haven for many investors amidst economic uncertainty,” he said. ”Our (upward) revisions for Q2 are minor, and we expect most companies to likely increase guidance on the back of first-half results that have been above guidance trends. The key question will be to what extent guidance will be raised, given the uncertainty around the economic backdrop (which is why we have left our own estimates intact for now). That said, we have taken our target multiples down on rising rate impact on valuations. In addition to the magnitude of guidance increases, key area of focus will be pricing growth, labor availability, volume trends, and the M&A climate in the back half of the year. Finally, we flag GFL as the most attractively valued, with economic uncertainty and rising rates having impacted its valuation most (year-to-date down 34 per cent vs. peers down 7-9 per cent).”

* Scotia Capital’s Michael Doumet cut his AutoCanada Inc. (ACQ-T) target to $40 from $50 with a “sector outperform” rating. The average is $52.01.

“While higher rates and softening demand will dampen GPUs (particularly in used), we see continued tailwinds from pent-up demand, parts and service recovery, and capital allocation that should provide upside surprises in 2022 and cushion earnings in 2023,” he said. “Further, we continue to highlight ACQ’s unwarranted underperformance year-to-date (down 40 per cent versus down 5 per cent) and discount (down 15 per cent) versus its U.S. peers as its GPU normalization should be much milder. While we appreciate the risks associated with the Canadian consumer, we believe ACQ’s share price underappreciates the significant structural changes made to the business in the last several years and the potential upside from capital deployment and its used digital strategy.”

* MKM Partners analyst William Kirk reduced his target for shares of Curaleaf Holdings Inc. (CURA-CN) to $13 from $14, below the $18.70 average, with a “buy” rating.

“Despite two months of wildly successful New Jersey recreational sales, we are lowering our numbers and now expect less year-over-year growth than Curaleaf saw in 1Q22 (approximately 20 per cent),” he said.

“2Q22 marks an uninspiring twelve months when run-rate net sales have barely moved, despite some incremental year-over-year M&A benefit and two months of NJ recreational sales. Pricing pressure from existing states appears to be fully offsetting the highly profitable new recreational market. That said, year-to-date stock performance of negative 38 per cent seems to already reflect contracting same-state sales and declining like-for-like profit margins.”

* Raymond James’ Brad Sturges initiated coverage of Dream Residential REIT (DRR.U-T) with a “market perform” rating and $13 target. The average is US$13.44.

“DRR may generate solid same-property revenue growth year-over-year that is driven mainly by rising AMRs year-over-year,” he said. “Currently, we expect DRR to generate annualized same-property rental income (SP-NOI) growth year-over-year in the mid-to-high single-digit range. As DRR is trading well below its $13.00 per unit IPO issue price, we view DRR’s discounted relative valuation to partly reflect its external management structure and low trading liquidity. For the time being, we hold a preference for larger market cap multifamily stocks that also trade at wide NAV discounts while offering similar growth prospect.”

* IA Capital Markets analyst Chelsea Stellick cut her Neighbourly Pharmacy Inc. (NBLY-T) to $38 from $40, keeping a “buy” rating. The average is $33.22.

“Following a fourth quarter in line with expectations, NBLY approaches Q1/F23 reporting feeling the effects of a tight labour market but also benefiting from a normalizing retail and prescription environment,” she said. “We are keeping an increasingly close eye on the Company’s human capital as a short-term headwind on margins, this is providing an opportunistic entry point in the stock without changing NBLY’s intrinsic value as costs will eventually flow through to consumers. We believe Neighbourly’s successful M&A strategy and operational excellence will overcome this temporary challenge and position it to capture market share as the Company’s highly scalable platform expands its network. We maintain our Buy recommendation and based on a reduced anticipated percentage growth rate following the large Rubicon acquisition update our target price.”

* Jefferies’ Owen Bennett lowered his Organigram Holdings Inc. (OGI-T) target to $2.60 from $3.34 with a “buy” rating. The average is $2.56.

* Canaccord Genuity’s Robert Young initiated coverage of Toronto-based Pluribus Technologies Corp. (PLRB-X) with a “buy” rating and $5 target. The average is $4.75.

“ Pluribus is a consolidator of small, profitable cloud software companies operating within the e-learning, ecommerce, healthtech, and digital enablement segments,” he said. “Pluribus went public through an RTO in January 2022 and raised $25-million in the process. We believe Pluribus’ strategy of acquiring companies with less than $10-million revenue and 20-30-per-cent EBITDA margins for 4-6 times trailing EBITDA can generate IRR of at least 15 per cent, following an integration process enabling cross-sell, new product development, and integrated sales and marketing. We believe the company, led by an experienced management team, has a strong acquisition pipeline with four acquisitions already completed year-to-date. While we acknowledge near-term pressure on small-cap stocks, particularly those that may need to raise capital, we view this as an attractive entry point into a profitable, FCF-generating name that trades at 5.0 times EV/2023E EBITDA vs. tech consolidator peers at 9-10 times.”

* TD Securities’ Vince Valentini lowered his target for Rogers Communications Inc. (RCI.B-T) to $78 from $80, remaining above the $76.07 average, with a “buy” rating.

* CIBC World Markets’ John Zamparo cut his Sleep Country Canada Holdings Inc. (ZZZ-T) target to $35 from $37, keeping an “outperformer” rating. The average is $37.71.

“We have reduced our Q2 estimates, but still expect 7-per-cent same-store sales growth on top of strong results last year. For the year, we forecast EBITDA growth of 14 per cent (and 6 per cent in 2023). We attribute the stock’s recent run—up 15 per cent since July 6—mostly to the company’s withdrawal from presenting at a recent conference, which may feed investor speculation of a potential announcement,” he said.

* JP Morgan’s Phil Gresh raised his Suncor Energy Inc. (SU-T) target by $1 to $56, above the $55.53 average, with a “neutral” rating.

* BMO Nesbitt Burns’ Étienne Ricard lowered his TMX Group Inc. (X-T) target to $147 from $151, below the $150.43 average, with a “market perform” rating.

* Raymond James’ Craig Stanley initiated coverage of Vizsla Silver Corp. (VZLA-X) with a “market perform” rating and $2.65 target. The average is $4.12.

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