Inside the Market’s roundup of some of today’s key analyst actions
Scotiabank analyst Divya Goyal upgraded Softchoice Corp. (SFTC-T) to “sector outperform” from “sector perform”, saying that the company is “at a unique inflection point” and well-positioned to capitalize on growth opportunities across its growing end markets.
Adding that the company’s cost optimization efforts and operating leverage will help drive further margin expansion, she raised her price target to C$24 from C$20.
Softchoice recently reported third quarter results which came in above both Scotiabank’s and the Street’s expectations, primarily driven by robust momentum within the Software & Cloud and Services segments, both of which saw double-digit year over year growth.
Softchoice’s hardware business, which has been impacted by sector-wide doldrums, received a major uplift from a large purchase order within the enterprise channel. Additionally, the company benefited from its ongoing investments in salesforce and technical capabilities, which resulted in accelerated customer growth, especially across small and mid-sized business and commercial clients, the analyst noted
“Given the company’s recent performance, we believe Softchoice is now well-positioned to benefit from the increased workplace digitization through its proven Software & Cloud business model alongside its growing Services business further strengthened by the recently launched SAM+ Hub, a self-serve centralized and intelligent subscription software management tool helping enterprises optimize their software spend,” Ms. Goyal said in a note.
“While Hardware spending continues to stay muted as enterprises potentially await updated end-user devices, we believe the segment will stabilize by H2/25 with devices approaching end-of-life alongside Microsoft ceasing support for Windows 10 and AI-enabled applications gaining prevalence,” she added.
The average analyst price target is C$24.06, according to LSEG data.
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National Bank Financial has dropped its price target on Rogers Communications Inc. (RCI-B-T) to C$67 from C$77 after making accounting updates to its model to account for the structured equity financing and MLSE deals. It still rates Rogers as an “outperform.”
Rogers announced Oct. 24 that it aims to finalize in the fourth quarter a $7-billion structured equity financing with a leading global financial investor that the Globe and Mail reported was Blackstone. No other financial details were provided.
“We initially assumed annual distributions of $400M, but we’ve now opted to more conservatively use a 7% return for a $490M distribution in 2025 that should scale steadily higher. We’re using a $7B entry to Minority Interest amid the related proceeds. We await more clarity around the accounting when the deal closes in coming weeks,” National Bank analyst Adam Shine said in a note to clients.
The financing was announced after Rogers’ $4.7-billion purchase of Bell’s 37.5% interest in MLSE, expected to close next year after approvals.
The average analyst price target on Rogers is C$68.10.
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Desjardins Securities analyst Alexander Leon lowered his price target on Inovalis Real Estate Investment Trust (INO-UN-T) to 85 Canadian cents from C$1 following disappointing third quarter results. He reiterated a “hold-above-average risk” rating.
“A significant decrease in operating cost recoveries from reduced occupancy led to a more than three-cent shortfall in net operating income vs our estimate as well as negative funds from operations,” Mr. Leon commented.
“This also caused a material deterioration in our FFOPU [funds from operations per unit] forecast; as a result, our target derivation is now based entirely on a discount to net asset value, which we increased to 55–60% to reflect the increased risk given its higher negative cash flow profile,” he added.
Mr. Leon is the only analyst who covers the stock, according to LSEG data.
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RBC analyst Irene Nattel raised her price target on Loblaw Companies Ltd. (L-T) to C$205 from C$183 as part of a preview of third quarter results from Canada’s grocers.
She reiterated an “outperform” rating on Loblaw while noting that her “highly constructive thesis is playing out as Loblaw delivers consistent, predictable earnings growth.”
Ms. Nattel rolled forward her estimates from fiscal 2025 to fiscal 2026. She’s now forecasting fiscal third quarter EPS of $2.42 (+7.1% Y/Y), which is in-line with consensus of $2.45. She’s forecasting Q3 same-store sales to rise 0.5%.
Loblaw reports earnings on Wednesday. Her target is now above the Street average of C$190.
To reflect the new price target on Loblaw, her price target on George Weston Ltd. (WN-T) went to C$253 from C$230.
Ms. Nattel also raised her price targets on Canada’s other two grocers as she rolled forward her estimates..
For Empire Company Ltd. (EMP-A-T), her target went to C$46 from C$42 and she reiterated a “sector perform” rating.
She’s forecasting Q2/F25 EPS of 67 cents, down 6.2% from a year earlier and matching consensus. Empire reports Dec. 12. “Importantly, we forecast a $28 MM swing sequentially and Y/Y in other income and share of earnings from investments due to timing that represents $0.09/share. On a constant basis, our FQ2E EPS would be up +6% Y/Y,” she wrote in a note to clients.
For Metro Inc. (MRU-T), her target went to C$90 from C$84 and she reiterated a “sector perform” rating.
She’s forecasting Q4/F24 EPS of $1 (+0.8% Y/Y), in-line with consensus. Metro reports Nov. 20. “Grocery: FQ4E SSS +2.5% consistent with prior quarter, underpinned by strong market positioning, effective merchandising, maturation of Metro’s cross-banner Moi Rewards program in partnership with RBC live in Quebec (May 2023) and Ontario (October 2024) likely boosting near-term SSS. Rising industry square footage in discount in the province of Quebec is a modest headwind, in our view,” she wrote.
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BMO analyst Ben Pham raised his target price on South Bow Corp. (SOBO-T) to C$36 from C$31. Even though the TC Energy spinoff’s third quarter results were a slight miss to his expectations, sector sentiment has been positive and shares are doing better than he thought they would.
He reiterated a “market perform” rating while raising his target multiple to 10x EBITDA from 9.5x.
“Since shares spun off on Oct. 1, performance has surprised to the upside on what we attribute to the combination of lower interest rates, U.S. election results, and generally positive sector sentiment,” Mr. Pham said in a note. “The highly contracted business mix and stability of cash flows support the inaugural dividend, with modest organic growth driving gradual deleveraging.”
Mr. Pham noted that Sow Bow’s inaugural quarterly dividend of US$0.50/share, payable to all shareholders of record on Dec. 31, 2024, will be payable in U.S. dollars, instead of initial messaging for Canadian dollars. All subsequent dividends are expected in U.S. dollars, which is in line with previous guidance.
Last week South Bow reported Q3/24 adjusted EBITDA of C$357 million, which was a slight miss to BMO’s C$365M estimate. “The variance to us was driven by lower liquids marketing margins following startup of TMX, which more than offset higher volumes on the USGC section of Keystone,” the analyst said.
There are 11 analysts who cover South Bow, according to LSEG data. The majority rate it as a hold, and the average price target is C$32.53.
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In other analyst actions:
Definity Financial Corp. (DFY-T): Raymond James raises target price to C$55 from C$53 and downgrades rating to “market perform” from “outperform”. Similar to Scotiabank’s view on Monday, Raymond James was concerned with Definity’s valuation.
Power Corporation of Canada (POW-T): BMO raises target price to C$49 from C$42. BMO said this reflected increased price targets on Great-West Lifeco and IGM Financial and higher future value estimates on Wealthsimple.
First Quantum Minerals Ltd. (FM-T): Barclays raises to “overweight” from “equal-weight” as the bank raises its long-term copper price forecast to US$5 a pound - a price it believes is required to incentivise new copper mining projects.
American Hotel Income Properties REIT LP (HOT-UN-T):Scotiabank ups price target to C$0.80 from C$0.60
Canaccord Genuity Group Inc. (CF-T): Cormark Securities ups price target to C$12.50 from C$11.50
ECN Capital Corp. (ECN-T): Cormark Securities raises PT to C$3.50 from C$2.25
First Mining Gold Corp. (FF-T): H.C. Wainwright cuts target price to C$0.35 from C$0.80
Pan American Silver Corp. (PAAS-T): National Bank of Canada ups PT to C$44.25 from C$40.75
Nvidia Corp. (NVDA-Q): Mizuho raises target price to US$165 from US$140
Russel Metals Inc. (RUS-T): TD Cowen raises target price to C$50 from C$46
Walmart Inc. (WMT-N): Morgan Stanley raises target price to US$89 from US$82