Friday’s analyst upgrades and downgrades

Inside the Market’s roundup of some of today’s key analyst actions
Following Thursday’s release of “mixed” third-quarter financial results, RBC Dominion Securities analyst Drew McReynolds is “looking for more timely entry points” into BCE Inc. (BCE-T), reducing his growth and margin assumptions after its 2024 revenue guidance was lowered beyond his expectations.
“Notwithstanding near-term NAV dilution, we believe the Ziply acquisition along with the pause in dividend growth and institution of the DRIP do provide incremental visibility around the balance sheet trajectory and dividend sustainability, and reinforces management’s fibre-first strategy,” he said in a report titled Turning the Page on a Tough Quarter.
“While we continue to believe BCE is well equipped to navigate a slower revenue environment leaning on a scale advantage, FTTH investment and Internet market share gains, cost efficiencies, an extensive array of tactical initiatives across wireless, wireline, and media, and long-term growth in 5G B2B (IoT, MEC, private network, cloud, security), we look for more timely entry points with the closing of the MLSE and Ziply transactions, an associated uptick in revenue and EBITDA growth, and greater progress in tracking towards targeted dividend payout and leverage ratios potential catalysts for the stock.”
Shares of the Montreal-based company slid 2.8 per cent on Thursday after it revised its 2024 revenue guidance downward to reflect sustained competitive wireless pricing pressures. The company said it now expects revenue to decline 1.5 per cent, compared with previously anticipated growth of 0 to 4 per cent.
“As anticipated, management provided updated 2024 revenue growth guidance of approximately down 1.5 per cent year-over-year versus flat to 4.0 per cent previously with the downward revision due to lower mobile device sales volumes reflecting a higher BYOD contribution, the timing of mobile phone and data equipment sales within enterprise, the delayed transition of The Source stores to Best Buy Express and the cumulative impact of competitive wireless pricing,” said Mr. McReynolds. “Management expects the bulk of the revenue headwinds to be transitory, albeit acknowledging that the Canadian telecom industry is maturing alongside the moderation in market expansion given the immigration curbs. Having said this, management does expect sustained positive industry revenue growth overall driven by an inevitable stabilization in pricing, market expansion and new revenue streams alongside the ongoing realization of structural cost-efficiencies underpinning EBITDA and FCF growth.”
Trimming his revenue and earnings expectations through fiscal 2026, Mr. McReynolds lowered his target for BCE shares to $45 from $47, reiterating a “sector perform” rating. The average target is $45.16, according to LSEG data.
Other analysts making adjustments include:
* Scotia’s Maher Yaghi to $45 from $47.50 with a “sector perform” rating.
“BCE’s Q3 results reflected the accumulating pressures that the Canadian wireless and wireline markets have faced over the last year. Management’s decision to look for growth outside Canada provides a clear indication for us that the internal assumption at BCE is that these pricing pressures are likely to continue for a while. While funding for Ziply by recycling capital from MLSE was not burdensome from an EBITDA leakage point of view, any further divestitures (maybe apart from its stake in the Habs) will likely raise the bar on new acquisitions since it will require letting go of FCF and EBITDA in the context of an already levered balanced sheet. Said in another way, taking on a hypothetical Frontier acquisition for example would have required significantly more sacrifices for shareholders to placate bondholders,” said Mr. Yaghi.
* TD Cowen’s Vince Valentini to $39 from $43 with a “hold” rating.
“We do not expect a dividend cut, but we cannot rule that out 100 per cent if management/Board lose faith in the credit they are getting for the payout. Valuation is getting more attractive, especially if one gives long-term DCF credit to Ziply, but we see limited near-term catalysts and thus this could be a value trap for a while,” said Mr. Valentini.
* Desjardins Securities’ Jerome Dubreuil to $43 from $45 with a “hold” rating.
“BCE now offers a dividend yield above 10 per cent, but we still see challenges ahead,” he said. “Our view is driven by the deteriorating wireless growth, a heightened risk profile following the Ziply acquisition announcement and a valuation which remains higher than RCI’s. On a positive note, the company’s margins were the highest reported in more than 30 years and there is ample room for further cost-cutting. We would remain on the sidelines, especially before the company releases its guidance next quarter.”
* Canaccord Genuity’s Aravinda Galappatthige to $37.50 from $41 with a “hold” rating.
* JP Morgan’s Sebastiano Petti to $41 from $47 with a “neutral” rating with a “hold” rating.
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National Bank Financial analyst Vishal Shreedhar summarized Canadian Tire Corp. Ltd.’s (CTC.A-T) third-quarter financial results as “constructive,” featuring an earnings beat “aided by gross margin expansion (mix and lower product costs)” and “cautiously optimistic” commentary from management.
The retailer’s shares rose almost 2 per cent on Thursday after it reported revenue of $4.193-billion, which was narrowly lower than the performance during the same period a year ago ($4.251-billion) as well as Mr. Shreedhar’s $4.253-billion estimate. However, earnings per share rose 63 cents year-over-year to $3.59, topping the expectations of both the analyst ($3.29) and the Street ($3.02), due largely gains on property and insurance recoveries.
“CTC indicated consumer spending and sentiment remains cautious (shift to value/lower spending),” the analyst said. “That said, management noted sequentially improving discretionary performance (down 3.5 per cent year-over-year vs. down 8.0 per cent year-over-year last quarter), and positive sssg [same-store sales growth] among loyalty members (first time in more than1 year). Loyalty sales were higher by 12 per cent at SportChek and 6 per cent at Mark’s (on average, there is $4 spending benefit per $1 of redemption). We expect Triangle to remain a key growth driver; we believe partnerships beyond Petro-Canada are possible.
“CTC expects CTR sales growth in Q4/24, reflecting soft comparables last year and October sales (typically less than 25 per cent of Q4 sales) trending ahead of year-to-date trends. Also, spring/summer inventory declined quarter-over-quarrer and dealer inventory declined 5 per cent ; all else equal, we expect this to be supportive of revenue growth in H1/25. Incremental margin headwinds to 2025 vs. 2024 include F/X and global freight rates.”
Reflecting “expectations for an improving backdrop, amongst other factors,” Mr. Shreedhar raised his 2024 EPS projection to $13.29 from $13.11 and his 2025 estimate to $15.16 from $15.13. That led him to increase his target for Canadian Tire shares to $171 from $169, reiterating a “sector perform” recommendation. The average on the Street is $160.02.
Other analysts making adjustments include:
* RBC’s Irene Nattel to $192 from $188 with an “outperform” rating.
“CTC Q3 results better than expected as management leans into cost/margin management, tailors the offering to essentials-focused consumer spending,” she said. “While the macro environment remains challenging and is likely to be so well into 2025, performance in 2024 underscores the defensive bent to CTR’s offering, its solid owned brands penetration and good/better/best architecture. Despite the solid performance, CTC valuation remains the lowest among hardline retailers in North America, in our view more than reflecting actual and perceived headwinds. F24-26 forecasts largely unchanged, and make no assumptions around timing/ magnitude of potential CTFS transaction.”
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Desjardins Securities analyst Benoit Poirier sees Thursday’s 6.8-per-cent drop in Bombardier Inc.’s (BBD.B-T) share price as a buying opportunity.
“Although some investors were disappointed by BBD’s slight miss (EBITDA and FCF), on the call management quantified certain one-time items (SBC, supply chain issues and impact from bondholder settlement),” he said. “We remain confident in BBD’s ability to deliver significant FCF over the coming years; however, we are building some working capital conservatism into our numbers for 2025 due to the supply chain issues across the A&D industry.”
While the Montreal-based company reiterated its 2024 guidance reiterated, Mr. Poirier emphasized its supply chain “remains challenged” in a research note titled Clear skies but cloudy supply chains.
“While BBD’s US$900-million-plus 2025 FCF target assumes neutral working capital, we now assume an investment of US$197-million, translating into a lower FCF forecast of US$757-milion,” he said. “Nevertheless, we expect the investment to be temporary and believe BBD could achieve close to US$1.0-billion of FCF in 2026 as supply chain issues dissipate. If BBD keeps deliveries relatively flat at 150/ year, this working capital investment should reverse in the future.”
“Adjusted net debt/TTM [trailing 12-month] EBITDA came in at 3.5 times, in line with last quarter and slightly better than our forecast of 3.6 times. Deleveraging is going according to plan, with the company getting closer to its leverage guidance of 2.0–2.5 times by 2025 (which we believe is on the conservative side). With a strong FCF print expected in 4Q, we expect the company to finish the year at 2.9 times and 1.9 times in 2025, slightly better than management’s internal target. While some investments in derivatives and/or defence could be required (within the capex envelope of US$200–300-million), management was vocal that it will strongly consider distributions to shareholders (most likely through share buybacks) or could decide to further pay down debt once it reaches its target.”
After raising his revenue and earnings forecast for fiscal 2025, Mr. Poirier increased his target for Bombardier shares to $145 from $143, keeping a “buy” recommendation. The average is $117.64.
“We believe the current share price provides an interesting entry point for long-term investors,” he concluded.
Elsewhere, other changes include;
* TD Cowen’s Tim James to $130 from $132 with a “buy” rating.
“Lower target entirely due to FX and higher shares outstanding. No change to our bullish thesis. We believe share price weakness presents attractive entry point that won’t last. Q4 looks strong and there are plenty of growth drivers for 2025 and beyond. No reason to believe 2024/2025 guide isn’t achievable,” said Mr. James.
* CIBC’s Kevin Chiang to $131 from $134 with an “outperformer” rating.
“BBD reported solid Q3 results, but stock was down 6 per cent. We chalk this up to two issues – the weaker-than-expected margin print in the quarter and higher FCF usage. We argue the market is overreacting to these items,” said Mr. Chiang
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Desjardins Securities analyst Kyle Stanley admits his conviction toward Dream Residential Real Estate Investment Trust (DRR.U-T, DRR.UN-T) has “waned over the last few quarters as operating results and FFOPU [funds from operations per unit] growth have softened.”
“New supply pressures, which are now more directly impacting DRR’s portfolio, are expected to persist through 2025,” he said. “While we believe downside risk is limited, we fail to see any meaningful near-term positive catalysts to turn the tide, which results in our move to the sidelines.”
Accordingly, following a third quarter that saw same-property net operating income slow both sequentially and from the previous fiscal year, Mr. Stanley downgraded the Toronto-based REIT, which focuses on garden-style multi-residential properties in the U.S. Sunbelt and Midwest regions, to a “hold” rating from “buy” previously.
“The impact of new supply deliveries, particularly in Dallas, continue to weigh on market fundamentals, with management expecting the stabilization period to persist through 2025 as it relates to DRR’s portfolio,” he said. “New supply, which initially weighed on the high-end luxury segment of the rental market, has begun impacting the entire quality spectrum—with more aggressive rent concessions being provided, new build product is now directly competing against DRR’s portfolio. Moreover, DRR noted evidence of affordability thresholds being reached across its portfolio. In response, we have moderated our revenue growth forecast through 2026, which drove the 3-per-cent and 4-per-cent reduction in our 2025/26 FFOPU outlook.
“Where we could be wrong. We see two main risks with our downgrade. The first relates to valuation, with the current 9.9 times 2025 FFO multiple and 40-per-cent NAV discount likely already pricing in the bulk of the downside risk. In addition, DRR’s conservative balance sheet (ND/GBV at 32.7 per cent) offers ample flexibility to execute on a debt-funded external growth program, which would represent upside to our forecast.”
Mr. Stanley’s target slid to US$7.50 from US$8. The average is currently US$9.03.
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In response to recent share price appreciation and a return to his target price that no longer meets his threshold for a “buy” recommendation, TD Cowen analyst Tim James lowered Chorus Aviation Inc. (CHR-T) to “hold” on Friday.
“Chorus reported higher-than-forecast adjusted EBITDA and basic adjusted EPS due to Voyageur outperformance (up 42 per cent year-over-year),” he said. “Growth in Voyageur due to record part sales. We assume Voyageur will achieve its 2025 revenue target of $150 million (more than 20-per-cent year-over-year increase) driven by contract wins and expansion of existing contracts in the defence and surveillance verticals.”
“The slight increase in our forecasts reflects the carry-forward of stronger-than-forecast Q3/24 results and other minor model and economic-related updates. Q3/24 adjusted EBITDA of $53.9 million (TD/consensus: $50.5 million/$50.4 million). Q3/24 basic adjusted EPS of $0.06 (TD: $0.01, or $0.05 normalizing for preferred dividend payment).”
Mr. James said his outlook for the company did not change with the quarterly release, and he now believes its stock “requires additional clarity on long-term EBITDA/cash flow potential of the CPA with Air Canada and/or predictability (for investors) in the Voyageur business to attract a higher valuation.”
“This could evolve over the next 12 months, which biases our target multiple higher,” he said.
“In addition, we believe monetizing additional aircraft assets or business segments could lead to upside beyond our current target. Our current 5.5 times target multiple (2026E EBITDA) equates to a 4.5x multiple on estimated CPA EBITDA and 10.0 times estimated Voyageur EBITDA. We believe the 4.5 times implied CPA multiple is reasonable, given declining earnings profile, limited exposure to air travel growth and the consensus average multiple of 5.0 times for the group of North American and European airlines.”
Mr. James’s target remains $3.50, which is a penny below the average.
Other changes include:
* RBC’s James McGarragle to $3.75 from $3.25 with an “outperform” rating.
“Chorus results came in above expectations this quarter. Key for us was the extension of six leases under the CPA with AC out to 2026, which were set to expire in 2025, thereby increasing out year estimates. Additionally, Voyageur put up another strong quarter of growth which we expect to continue in 2025 at solid margins. We see the company generating solid FCF (9-per-cent yield on our updated 2026E), with potential upside from M&A, organic growth in Voyageur, and further re-leasing of aircraft falling out of the CPA,” said Mr. McGarragle.
* National Bank’s Cameron Doerksen to $4 from $3.85 with an “outperform” rating.
* Scotia’s Konark Gupta to $3.40 from $3.25 with a “sector perform” rating.
* CIBC’s Kevin Chiang to $3.80 from $3.25 with an “outperformer” recommendation.
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A “sound strategy and outstanding execution is paying off” for Russel Metals Inc. (RUS-T), according to National Bank Financial analyst Maxim Sytchev, who sees it poised to benefit from positive sentiment in the U.S. steel market.
“Despite a volatile pricing backdrop, management remains steadfast in its strategy of lifting and de-risking the company’s earnings profile through investment in ‘stickier’ and higher-margin revenues from value-added offerings – which has organically driven incremental market share gains,” he said.
“Implementing improved inventory management practices and rationalizing the footprint of Samuel assets will help close a significant portion of the margin gap to legacy RUS operations which, combined with an expected bottoming in sheet pricing, should result in solid operating leverage for 2025E. Despite the recent share price rally, we continue to see substantial value and expect shares to continue moving higher; investors should heed Reliance Inc. (NYSE: RS; Not Rated) share price movement of 12 per cent [Wednesday] as an excellent indicator around improved U.S. steel sentiment; recall that RUS has 40-per-cent exposure to the U.S..”
Shares of the Mississauga-based metals distribution and processing company jumped 4.7 per cent on Thursday after it reported revenue for its third quarter of $1.089-billion, down 2 per cent year-over-year and in line with the consensus forecast of $1.108-billion. Headline EBITDA on a post-IFRS 16 basis was $67.4-million, a drop of 29 per cent but ahead of the Street’s view of $64.7-million, while adjusted earnings per share slid 40 per cent to 59 cents but matched analysts’ expectations.
Mr. Sytchev thinks the company’s end markets showed resilience despite a “sustained pricing downdraft,” which he thinks should improve in 2025.
“We moderated our margin assumptions slightly to reflect the dilutive impact of Samuel assets (fine-tuned operating and SG&A expenses) and the expected cadence of synergy realization; in addition, we are factoring in higher resulting lease and depreciation expenses going forward. Furthermore, we have built-in the Q4/24E redemption of the remaining 5.75-per-cent notes as the company has simplified its capital structure by retiring legacy high-yield debt in favour of a $600 million bank facility,” he said.
Reiterating an “outperform” rating, Mr. Sytchev raised his target by $2 to $49. The average is $47.67.
Elsewhere, other changes include:
* RBC’s James McGarragle to $45 from $43 with a “sector perform” rating.
“RUS [Wednesday] night reported Q3 results, which we viewed as a positive in the context of a tough operating environment,” he said. “Into Q4 and early 2025, we expect a lower steel price backdrop and a weaker industrial environment to weigh on results versus current consensus expectations. However, we believe this is already built into sentiment and see investors looking past near-term weakness into an inflection in steel prices next year, in addition to upside from the Samuel acquisition. We however remain cautious on the outlook into next year and maintain Sector Perform.”
* Raymond James’ Frederic Bastien to $50 from $48 with an “outperform” rating.
“We maintain our constructive view on Russel Metals after the steel distributor’s 3Q24 results landed on the right side of consensus [Thursday]. There is newfound enthusiasm for the North American steel market in the wake of Donald Trump’s victory in Tuesday’s presidential election, but we remind investors that RUS put in the hard work to improve the business when others weren’t watching. Whether it be exiting low-return cyclical businesses, investing in value-added businesses and equipment upgrades, or using buybacks opportunistically, Russel has structurally and sustainably improved its business model. All of this leaves us to conclude a valuation of 6.6 times forward EBITDA is far too punitive for this high-quality name, especially with the explosive run-up in the shares of industry peers such as Reliance Steel,” said Mr. Bastien.
* Stifel’s Ian Gillies to $53 from $52 with a “buy” rating.
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In other analyst actions:
* CIBC’s Robert Catellier upgraded Superior Plus Corp. (SPB-T) to “outperformer” from “neutral” with an $8.50 target, down from $9.50. Other changes include: TD Cowen’s Aaron MacNeil to $7.50 from $9 with a “buy” rating. Raymond James’ Steve Hansen to $9 from $9.50 with a “market perform” rating, Desjardins Securities’ Gary Ho to $8.50 from $9.50 with a “buy” rating and National Bank’s Patrick Kenny to $6 from $9 with a “sector perform” rating. The average is $9.27.
“The company lowered its dividend by 75 per cent and intends to use the proceeds for share repurchases,” said Mr. Catelier. “Understanding the shares will likely go through a period of adjustment as they likely turn over from dividend investors to those seeking capital appreciation, the return to target and increased financial flexibility cause us to upgrade our rating.”
* CIBC’s Mark Jarvi lowered his Algonquin Power & Utilities Corp. (AQN-N, AQN-T) target to US$5 from US$5.50, which is the current average, with a “neutral” rating. Other changes include: Scotia’s Robert Hope to US$5.25 from US$5.75 with a “sector perform” rating and Desjardins Securities’ Brent Stadler to US$5 from US$4.75 with a “hold” rating.
“Algonquin’s Q3 utility EBITDA was slightly below our estimate, though we believe investors should look through the results and focus on 2025 and 2026 as Algonquin transitions to a pure-play utility. The renewable asset sales remain on track, and we assume they close later this year. A number of high profile rate cases have been filed, or will be filed in the coming months, that should help improve utility returns. That said, the timing of new rates is slightly delayed versus our original expectations, which brings down our 2026 estimates. Our 2024 EPS estimate declines to reflect renewable operations moving to discontinued operations,” said Mr. Hope.
* RBC’s Paul Treiber moved his Altus Group Ltd. (AIF-T) target to $56 from $55 with a “sector perform” rating. Other changes include: BMO’s Stephen MacLeod to $57 from $55 with a “market perform” rating and CIBC’s Scott Fletcher to $52 from $53 with a “neutral” rating. The average is $57.
“Q3 revenue and adj. EPS were marginally short of RBC/consensus estimates on soft non-core CRE Consulting. While CRE Consulting is a headwind to near-term revenue, Analytics bookings rebounded and management’s tone suggests that the CRE market may be starting to improve. Looking to FY25/FY26, the ARGUS Intelligence migration cycle improves visibility to Analytics growth,” said Mr. Treiber.
* RBC’s Michael Harvey raised his target for shares of Arc Resources Ltd. (ARX-T) to $30 from $28 with an “outperform” rating. Other changes include: Desjardins Securities’ Chris MacCulloch to $35 from $34.50 with a “buy” rating and CIBC’s Jamie Kubik to $34 from $33 with an “outperformer” rating. The average is $31.25.
“ARX reported quarterly results which were ahead of Street expectations with Attachie now on-stream and producing at roughly half of nameplate (ramping up). The 2025 budget is largely as anticipated and features a step-change increase in FCF as Attachie capex tapers off; our estimates point to FCF of roughly $1.5 billion in 2025 with the majority allocated to dividends and buybacks. ARX remains one of our top picks and continues to be featured on the RBC Global Energy Best Ideas List ,” said Mr. Harvey.
* TD Cowen’s Steven Green cut his Barrick Gold Corp. (GOLD-N, ABX-T) target to US$26 from US$27 with a “buy” rating, while Scotia’s Tanya Jakusconek lowered her target to US$24 from US$25 with a “sector outperform” rating. The average is US$24.78.
* National Bank’s Mohamed Sidibe raised his Cameco Corp. (CCO-T) target to $87 from $85 with an “outperform” rating with an “outperform” rating. Other changes include: Canaccord Genuity’s Katie Lachapelle to $81 from $78 with a “buy” rating, Raymond James’ Brian MacArthur to $81 from $79 with an “outperform” rating and BMO’s Alexander Pearce to $84 from $78 with an “outperform” recommendation. The average is $77.78.
“CCO provides investors with lower-risk exposure to the uranium market given its diversification of sources. These sources are supported by a portfolio of long-term contracts that provide some downside protection in periods of depressed spot uranium prices, while maintaining optionality to higher uranium prices. In addition, CCO has multiple operations curtailed that could be brought back should uranium prices increase. Although the 2021 tax court decision applies only to the 2003, 2005, and 2006 tax years, we view it as a positive for CCO given we believe it could be relevant in determining the outcome for other years and reduces risk related to the CRA dispute,” said Mr. MacArthur.
* RBC’s Matthew McKellar raised his Cascades Inc. (CAS-T) target to $12 from $11 with a “sector perform” rating. Other changes include: TD’s Sean Steuart to $14 from $12 with a “buy” rating and National Bank’s Zachary Evershed to $12.50 from $11.50 with a “sector perform” rating. The average is $11.92.
“Cascades reported Q324 Adjusted EBITDA of $140-million, which was somewhat above our $131-milion forecast and FactSet consensus (ex-RBC) at $128-million,” said Mr. McKellar. “Stronger Containerboard segment results were the most significant variance versus our estimates. We think management’s planned early 2025 disclosure on its areas of strategic focus could be a potential catalyst for the stock; however, we remain cautious on the company’s exposure to what we expect will be rising OCC costs over the next several quarters (despite recent relief) and see better relative opportunities elsewhere in our coverage for now.”
* Desjardins Securities’ Lorne Kalmar lowered his Choice Properties Real Estate Investment Trust (CHP.UN-T) target to $16.50 from $17 with a “buy” rating. Other changes include: Canaccord Genuity’ Mark Rothschild to $15.50 from $16.50 with a “buy” rating and CIBC’s Sumayya Syed to $15.50 from $15 with a “neutral” rating. The average is $15.75.
“Despite CHP’s strong execution in 2024, including solid 3Q results, it has been one of the weakest of the large-cap retail peers year-to-date,” he said. “We believe CHP’s stable and defensive retail assets are nicely complemented by its industrial portfolio, and see further upside through its development and capital recycling programs. We are calling for 4-per-cent FFOPU growth in 2025 and 2026 which, in conjunction with its 5.4-per-cent distribution yield, should provide investors with a solid total return.”
* TD Cowen’s Mario Mendonca raised his Definity Financial Corp. (DFY-T) target to $59 from $58 with a “hold” rating. The average is $57.10.
“DFY reported Q3/24 positive operating EPS of $0.13 despite record CAT losses. Results were better than our estimate (nil) and consensus (-$0.03), reflecting better top line growth, a lower expense ratio, and higher PYD (similar to IFC). A solid contribution from distribution & investment income also drove the result. BV/share growth was strong driving an increase in our target price,” said Mr. Mendonca.
* National Bank’s Zachary Evershed raised his DRI Healthcare Trust (DHT.UN-T) target to $19.50 from $18.50 with an “outperform” rating, while Canaccord Genuity’s Tania Armstrong-Whitworth increased her target to $19 from $19.50 with a “buy” rating The average is $19.80.
* CIBC’s Nik Priebe raised his ECN Capital Corp. (ECN-T) target to $2.50, which is 2 cents under the average, from $2.25 with a “neutral” rating.
* National Bank’s Jaeme Gloyn moved his Fiera Capital Corp. (FSZ-T) target to $9 from $8.50 with an “underperform” rating. Other changes include: TD’s Graham Ryding to $10 from $9 with a “hold” rating, BMO’s Étienne Ricard to $10 from $9 with a “market perform” rating, Scotia’s Phil Hardie to $11 from $10.50 with a “sector perform” rating, Desjardins Securities’ Gary Ho to $10.25 from $9 with a “hold” rating and CIBC’s Nik Priebe to $11 from $9.50 with a “neutral” rating. The average is $10.
“FSZ reported a strong 3Q beat, driven by a healthy EBITDA margin, which could be sustainable,” said Mr. Ho. “While the payout remains elevated (approximately 96 per cent at 3Q), the modest dividend increase removes the tail risk of FSZ being removed from the S&P/TSX Canadian Dividend Aristocrats Index. Net outflows surprised positively. While one quarter does not make a trend, we are cautiously optimistic that net flows will recover in 2025. We raised our target … but maintain our Hold rating given the limited upside.”
* CIBC’s Cosmos Chiu cut his Franco-Nevada Corp. (FNV-T) target to $235 from $265 with an “outperformer” rating, while Scotia’s Tanya Jakusconek lowered her target to US$151 from US$142 with a “sector perform” rating..The average is $204.07.
* ATB Capital Markets’ Chris Murray raised his GFL Environmental Inc. (GFL-T, GFL-N) target to $75 from $67 with an “outperform” rating. Other changes include: BMO’s Devin Dodge to US$47 from US$43 with a “market perform” rating, Scotia’s Konark Gupta to US$51 from US$50 with a “sector outperform” rating, RBC’s Sabahat Khan to US$52 from US$48 with an “outperform” rating, National Bank’s Rupert Merer to $70 from $66 with an “outperform” rating and CIBC’s Kevin Chiang to $69 from $64 with an “outperformer” rating. The average is $61.70.
“GFL Environmental Inc. reported Q3 results that were in line with consensus (Solid Waste business continues to perform well) and reiterated its 2024 guidance. With results checking all the boxes, investor focus today was on the company’s commentary regarding the Environmental Services (’ES’) auction process (proceeds from the sale expected to be a minimum of $6-billion after taxes). Overall, we remain constructive on GFL shares given strong underlying results, the potential for a “cleaner” story following the sale of the ES business, and a valuation that is still at a discount to peers,” said Mr. Khan.
* TD Cowen’s Sam Damiani raised his Granite REIT (GRT.UN-T) target to $93 from $91 with a “buy” rating, while Raymond James’ Brad Sturges moved his target to $93 from $92 with a “strong buy” rating . The average is $88.89.
“Granite hit a number of key strategic high notes on a number of fronts within its reported 3Q24 results, including: 1) simplifying its trust structure by collapsing the stapled to a traditional REIT structure; 2) refinancing its 2024E and 2025E debt maturities totaling $800-million for new 5-7 year terms at 3.5-4.3-per-cent interest rates; 3) renewing over 90 per cent of 2024E lease maturities at higher average rents psf; 4) increasing its monthly distribution rate for the 14th consecutive year; and 5) delivering solid 3Q24 FFO/unit growth YoY in a relatively slower global industrial leasing demand backdrop,” said Mr. Sturges.
* CIBC’s Paul Holden increased his Great-West Lifeco Inc. (GWO-T) target to $55 from $51 with a “neutral” rating. Other changes include: BMO’s Tom MacKinnon to $52 from $49 with a “market perform” rating, Scotia’s Meny Grauman to $52 from $50 with a “sector perform” rating, RBC’s Darko Mihelic to $51 from $47 with a “sector perform” rating and Desjardins Securities’ Doug Young to $49 from $46 with a “hold” rating. The average is $49.90.
“Q3/24 results reflected higher earnings on surplus across the segments. Europe earnings were strongest versus our estimates, though we model earnings to decline 1 per cent in 2025 due to lower base net investment result,” said Mr. Mihelic. “Our U.S. earnings growth estimate of 30 per cent for fiscal 2024, above GWO’s targeted 15–20-per-cent growth for Empower, is likely to normalize lower. We see the growth rate being closer to mid-single-digit over the medium term, though the rollover capture could prove us wrong longer-term. GWO has solid cash available for deployment that could alter its growth profile.”
* CIBC’s Nik Priebe moved his target for IGM Financial Inc. (IGM-T) to $50 from $47 with an “outperformer” rating, while Scotia’s Phil Hardie raised his target to $56 from $53 with a “sector perform” rating. The average is $46.67.
“We think IGM’s third-quarter results demonstrate that growth is taking hold and the company is well positioned as operating conditions continue to improve,” said Mr. Hardie. “The quarter was characterized by record high AUM and AUA levels, improved sales momentum with only modest outflows, and positive operating leverage. Core EPS rose by double digits and came in 3 per cent ahead of street expectations but in line with our forecast. Stocks of asset & wealth managers such as IGM have enjoyed some renewed momentum as buoyant markets help drive asset levels and earnings, and valuation overhang reflecting the challenging operating environment for retail-oriented firms recedes. With industry-wide mutual fund flows improving following an extended period of redemptions, coupled with IGM’s continued operating momentum we believe the company could revert back to positive net flows in the fourth quarter, with further improvements through 2025. This is likely to support multiple expansion as sentiment improves. That said, following a stronger-than-expected market rally and lingering uncertainties in the market outlook we remain on the sidelines for now.”
* CIBC’s Mark Jarvi cut his Innergex Renewable Energy Inc. (INE-T) target to $11 from $15 with a “neutral” rating. The average is $11.85.
* CIBC’s Hamir Patel raised his Interfor Corp. (IFP-T) target to $23 from $22 with a “neutral” rating, while TD Cowen’s Sean Steuart cut his target to $22 from $23 with a “hold” rating. The average is $25.17.
* TD Cowen’s Derek Lessard raised his Jamieson Wellness Inc. (JWEL-T) target to $42 from $40 with a “buy” rating. Other changes include: Canaccord Genuity’s Tania Armstrong-Whitworth to $39.75 from $36.25 with a “buy” rating and RBC’s Ryland Conrad to $38 from $37 with an “outperform” rating. The average is $39.75.
“JWEL remains one of our top picks given its attractive defensive growth profile,” said Mr. Lessard. “Specifically, we see no signs of Canadian consumer weakness highlighted by LDD% [low-double-digits percentage] POS growth, while growth initiatives in the U.S. and China, still in its early innings, are consistently delivering positive results. Over time, we anticipate these initiatives to provide significant upside to earnings and share price.
* JP Morgan’s Tien Tsin Huang raised his target for Lightspeed Commerce Inc. (LSPD-N, LSPD-T) to US$26 from US$20 with a “hold” rating. Other changes include: TD’s Daniel Chan to US419 from US$15 with a “hold” rating and National Bank’s Richard Tse to US$20 from US$16 with a “sector perform” rating. The average is US$18.20.
* CIBC’s Krista Friesen dropped her target for Linamar Corp. (LNR-T) to $85 from $88 with an “outperformer” rating. The average is $81.50.
* Expecting a third-quarter beat driven by margin gains TD Cowen’s Michael Van Aelst raised his Loblaw Companies Ltd. (L-T) target to $203 from $186 with a “buy” rating. The average is $187.56.
“Loblaw’s leadership positions in food and drug retail, exploitation of alternative profit opportunities (FaaS, media), focus on delivering consistent EPS growth and unswerving return of significant capital to shareholders has pushed valuation to new highs that we believe are sustainable in this environment. Despite the Thanksgiving shift into Q4, we expect L to modestly exceed consensus Q3 EPS,” he said.
* CIBC’s Paul Holden raised his Manulife Financial Corp. (MFC-T) target to $46 from $42 with a “neutral” rating. Other changes include: RBC’s Darko Mihelic to $49 from $39 with an “outperform” rating, BMO’s Tom MacKinnon to $50 from $47 with an “outperform” rating, Scotia’s Meny Grauman to $49 from $48 with a “sector outperform” rating and Desjardins Securities’ Doug Young to $49 from $44 with a “buy” rating. The average is $42.97.
“Manulife delivered another solid earnings release that continued to fuel the stock’s re-rating, a process that is now well underway but still has room to go,” said Mr. Grauman. “It was not a blowout quarter, but as we have been arguing for some time now steady and consistent results is all the market is looking for in order to continue to push the shares higher. In that sense Q3 was ‘mission accomplished’ for MFC despite the fact that the beat was helped by an unusually low tax rate. Manulife delivered year-over-year core EPS growth of 7 per cent, year-over-year BVPS growth of 9 per cent, and a core ROE of 16.6 per cent driven by strong momentum in its key growth pillars of Asia (despite missing our forecast) and GWAM. This quarter was free of any big negative surprises as a relatively modest ACMA charge was offset by marketrelated gains, and a moderating ALDA loss that we think could turn positive next year.”
* CIBC’s Krista Friesen cut her Martinrea International Inc. (MRE-T) target to $17 from $17.50 with an “outperformer” rating. The average is $18.21.
* Ms. Friesen also lowered her NFI Group Inc. (NFI-T) target by $1 to $18.50 with a “neutral” rating, while National Bank’s Cameron Doerksen lowered his target to $19 from $22 with an “outperform” rating. The average is $20.30.
* CIBC’s Cosmos Chiu reduced his Oceanagold Corp. (OGC-T) target to $4.50 from $5.25 with an “outperformer” rating. The average is $5.53.
* National Bank’s Travis Wood increased his target for Ovintiv Inc. (OVV-N, OVV-T) to US$57 from US$55 with an “outperform” rating. The average is US$55.55.
* RBC’s Drew McReynolds lowered his target for Quebecor Inc. (QBR.B-T) to $37 from $38 with a “sector perform” rating. Other changes include: Canaccord Genuity’s Aravinda Galappatthige to $37 from $37.50 with a “buy” rating, TD’s Vince Valentini to $39 from $40 with a “buy” rating, CIBC’s Stephanie Price to $40 from $39 with an “outperformer” rating and Desjardins Securities’ Jerome Dubreuil to $41 from $42 with a “buy” rating. The average is $38.58.
“QBR remains one of the best stories in Canadian telecom, given its long-term opportunity for value creation with its national wireless expansion,” said Mr. Dubreuil. “We now forecast QBR generating middle-of-the-pack EBITDA growth in 2025 as strong wireless is offset by challenged cable. However, the company is not immune to industry headwinds and negative investor sentiment in Canadian telecom. The stock’s significant outperformance despite this context could limit the upside somewhat, in our view.”
* Scotia’s Robert Hope hiked his target for TC Energy Corp. (TRP-T) to $74 from $68 with a “sector outperform” rating. Other changes include: BMO’s Ben Pham to $66 from $55 with a “market perform” rating, RBC’s Maurice Choy to $71 from $67 with an “outperform” rating, ATB Capital Markets’ Nate Heywood to $65 from $64 with a “sector perform” rating and CIBC’s Robert Catellier to $67 from $66 with a “neutral” rating. The average is $66.08.
“Besides another solid set of quarterly results (supporting the directional guidance upgrade for 2024 EBITDA), we believe TC Energy drove home its core messages on seeking to deliver attractive risk-adjusted growth in a financially disciplined manner, with the market likely having better confidence in TC Energy’s deleveraging journey and an improved perception of its capital delivery credentials (particularly with the SGP cost reduction),” said Mr. Choy. “At the upcoming Investor Day, we believe investors can look forward to management’s multi-year growth guidance and strategy on gas and nuclear energy infrastructure, with a reinforced message on prioritizing balance sheet strength.”
* National Bank’s Maxim Sytchev raised his WSP Global Inc. (WSP-T) target to $279 from $271 with an “outperform” recommendation. Other changes include: ATB Capital Markets’ Chris Murray to $265 from $250 with a “sector perform” rating, Canaccord Genuity’s Yuri Lynk to $290 from $275 with a “buy” rating, BMO’s Devin Dodge to $280 from $257 with an “outperform” rating, RBC’s Sabahat Khan to $279 from $261 with an “outperform” rating and Stifel’s Ian Gillies to $295 from $285 with a “buy” rating. The average is $271.14.
“WSP continues on its trajectory of combining organic momentum with Tier 1 capital allocation and subsequent margin improvement = a potent combination,” he said. “Layer on top leadership position in Transport, Buildings, Environment and now, Power. Management tone around further M&A remains very constructive and additional colour will be provided in February 2025 when the company will be unveiling its 3-year rolling Strategy Plan (the company could still be much bigger in the U.S., Europe, UK, Australia and deepen penetration in multiple verticals). We expect more of the same, i.e. visibility on additional compounding amid strong industry backdrop. Political dynamic does not pose risk to the business as we have seen in prior iterations.”