July 2, 2022

Contained in the Market’s roundup of a few of at present’s key analyst actions

Reacting to “outsized” current share worth appreciation, Raymond James analyst Steve Hansen lowered his advice for shares of Canadian Pacific Railway Ltd. (CP-T, CP-N) on Wednesday.

“CP shares have strongly outperformed its closest friends over the previous a number of weeks, seemingly drawing power from the corporate’s wholesome publicity to key bulk commodities reminiscent of wheat, coal, and potash, all that are having fun with extraordinary pricing strikes in gentle of the continuing battle between Russia-Ukraine,” he mentioned in a analysis notice launched earlier than the bell.

Transferring CP to a “market carry out” advice from “outperform” beforehand, Mr. Hansen expressed concern over current site visitors tendencies.

“Regardless of this optimism, CP’s more moderen trafffic sample tells a extra cautious story, in our view, with QTD RTMs [quarter-to-date revenue ton miles] at the moment monitoring down 11.0 per cent year-over-year, largely owing to weight emanating from three major classes, together with: Grain (down 22 per cent, weak Canadian harvest final fall), Coal (down 21 per cent, Teck contract change), and ECP (down 15.5 per cent, slim diffs),” he mentioned. “Whereas we’ve noticed rising power in choose classes reminiscent of Intermodal, Potash, and Met/Min, they continue to be modest on a relative foundation.”

“As our estimates recommend, we do basically consider CP will get pleasure from wholesome site visitors tailwinds by means of 2H22, notably with the arrival of what we hope can be a really sturdy fall harvest for Canadian farmers. Sadly, this gained’t happen till mid 3Q22. We’ll proceed to watch accordingly.”

Mr. Hansen maintained his monetary projections and $105 goal for CP shares. The typical goal on the Avenue is $106.69, in keeping with Refintiv information.

“As instructed in prior missives, we stay massive followers of the CP workforce, community, and development outlook, notably within the context of its pending STB merger approval,” he mentioned. “We additionally acknowledge that the continuing Russia-Ukraine disaster has put a highlight on key commodities that CP strikes in substantive quantity, together with grain, potash, and coal. Nonetheless, we’re additionally aware that the service’s site visitors headwinds are anticipated to persist by means of the stability of 1H22 given Canada’s weak harvest final yr and residual supply-chain bottlenecks. On this context, we’ll search for a extra engaging entry level to renew our constructive score.”


Scotia Capital analyst Michael Doumet thinks there’s not “sticker shock” in Clearlake Capital Group LP’s US$2.6-billion deal to amass Intertape Polymer Group Inc. (ITP-T).

Shares of the Montreal-based packaging firm soared 76.2 per cent on Tuesday in response to the premarket announcement of the deal, which sees the U.S. non-public fairness agency pay $40.50 a share in money, representing an 82-per-cent premium to its Monday closing worth.

“For a while, we believed ITP shares have been basically undervalued … The acquisition worth displays an EV/EBITDA a number of of 10.1 instances on our 2022 estimates (or 9.4 instances utilizing Adjusted EBITDA). We consider such a a number of, which is roughly in-line with its peer group, is justified given its superior fundamentals,” mentioned Mr. Doumet, who lowered his score for Intertape to “sector carry out” from “sector outperform” in response to the deal.

“Intertape has come a really great distance over the past 10 years with this administration workforce. Its gross margins greater than doubled within the turnaround (c. 2010-2016) and EBITDA doubled within the development section (c. 2017-2021). By the interval, Intertape grew gross sales in its core product strains, expanded into high-growth verticals, specifically wovens and ecommerce, decreased prices, and drove steady plant efficiencies. All-in, ITP grew EBITDA per share at a 15-per-cent CAGR [compound annual growth rate] (and 15 per cent over the past 5 years), the best development price amongst its plastic packaging friends, whereas decreasing leverage. But, shares remained at a perennial low cost to friends, which we now have lengthy argued was unwarranted. Our views (and people of its shareholders) have been validated by the introduced take-out.”

Calling it “a good worth for a best-in-plastics firm,” Mr. Doumet raised his goal to $40.50 from $38 to mirror the sale worth. The typical on the Avenue is $39.63, in keeping with Refinitiv information.

“Regardless of its success, the corporate’s buying and selling a number of compressed beneath pre-pandemic ranges, reflecting unwarranted low cost versus its friends (on considerations that its EBITDA would reasonable). We consider the corporate and administration workforce had bigger development aspirations that required extra environment friendly entry to capital – that the capital markets have been unwilling to offer on the proper worth,” he added.

Different analysts making score modifications embody:

* BMO’s Stephen MacLeod to “market carry out” from “outperform” with a $40.50 goal, up from $38.

“Clearlake’s proposed acquisition of Intertape at $40.50 per share represents a worth that we predict extra precisely displays the elemental enhancements within the enterprise over the previous two years,” he mentioned.

* PI Monetary’s Ben Jekic to “tender” from “purchase” with a $40.50 goal, up from $39.50.

“ITP beneficial properties an proprietor with ample operational and monetary sources to deploy into M&A, in addition to make investments into innovation, and market enlargement,” Mr. Jekic mentioned. “The transaction can be put to a vote at a shareholders assembly in Might, when additional particulars can be communicated on how the negotiations developed additional time, and the way aggressive the method was.”

* CIBC World Markets’ Hamir Patel to “tender” from “outperformer” with a $40.50 goal, up from $36.

“Whereas the transaction a number of Intertape is being acquired at is a bit decrease than current plastic packaging M&A comps, we consider the valuation is honest given ITP’s enterprise combine and pricing mechanisms (at will pricing vs. formal pass-throughs). We don’t count on one other bidder to emerge,” mentioned Mr. Patel.

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Nuvei Corp.’s (NVEI-Q, NVEI-T) “stable momentum continues,” mentioned RBC Dominion Securities analyst Paul Treiber following the discharge of better-than-anticipated fourth-quarter outcomes and a increase to its 2022 steerage.

“Nuvei’s outlook seems conservative and assumes 30-35-per-cent natural development (above medium-term greater than 30-per-cent goal), bearing in mind macroeconomic uncertainty and assumed 50% contraction in its crypto vertical,” he mentioned in a analysis notice.

TSX-listed shares of the Montreal-based world cost expertise agency soared 13.6 per cent on Tuesday after it introduced fourth-quarter 2021 income grew 83 per cent to US$212-million, above its steerage vary (US$204-US$210-million) and exceeding each Mr. Treiber’s US$210-million forecast and the consensus estimate of US$209-million. Adjusted earnings per share of 47 US cents topped the 45-US-cent projection from each the analyst and the Avenue.

Nuvei additionally revealed better-than-anticipated 2022 steerage, together with 30-35-per-cent year-over-year income development (to US$940-US$980-million) and adjusted EBITDA beneficial properties of 28-34 per cent (to US$407-million-US$425-million). Each beat the Avenue’s expectations (US$943-million and US$412-million, respectively).

“The outlook seems conservative and achievable, contemplating the outlook: 1) incorporates macroeconomic uncertainty; 2) assumes 50-per-cent contraction in crypto-related income; 3) new disclosures present broad-based momentum in 2021; 4) cohort and web income retention suggests excessive visibility to near-term development; and 5) Nuvei’s new buyer pipeline ‘has by no means been stronger,’” he mentioned.

“New disclosures validate Nuvei’s success with its land-and-expand technique, new buyer momentum, and significance of its APM worth proposition. 2019 cohort clients expanded 38 per cent year-over-year FY21 and web income retention improved from 101 per cent FY20 to 146 per cent FY21. The 2021 cohort is 72-per-cent bigger than 2020, implying sturdy new buyer momentum. Modular Know-how income rose 138 per cent FY21, exhibiting differentiated software program is driving momentum. APM transactions rose 285 per cent year-over-year FY21 and have been 26 per cent of FY21 transactions, up from 12 per cent FY20.”

Whereas he sees Nuvei’s present valuation as disconnected from its 30-per-cent natural development, Mr. Treiber reduce his goal for its shares to US$100 from US$145 “given the fabric valuation a number of contraction in high-growth cost friends.” The typical is US$104.75.

“Nuvei is buying and selling at 13 instances calendar 2023 estimated EV/EBITDA, which is beneath high-growth cost friends at 19 instances , regardless of quicker development (32 per cent vs. 19 per cent),” mentioned Mr. Treiber, holding an “outperform” advice. “Valuation can be on the low-end of Nuvei’s historic vary. We consider Nuvei’s low cost to friends will slim additional time, on better consciousness of Nuvei’s aggressive benefits and the sustainability of Nuvei’s development momentum.

“We consider Nuvei is effectively positioned to maintain greater than 30-per-cent income development. With Nuvei’s valuation beneath friends, we consider the inventory is engaging.”

Different analysts making goal changes embody:

* Citi’s Ashwin Shirvaikar to US$63 from US$68 with a “impartial” score.

“Nuvei offered incremental disclosure about its enterprise combine, and so on., – clearly a step in the best route…that is information we now have requested for a while although we consider the inventory can profit if the corporate gives this on an ongoing foundation (e.g., at the very least the flexibility to again into natural development quarterly and vertical information yearly),” he mentioned. “The quarter itself straddled consensus and our expectations – notice we stay optimistic on sturdy quantity tendencies for Nuvei. We agree with the necessity to make investments in expertise and other people however consider that is prone to be ongoing in nature given the aggressive nature of the trade. This ends in greater volumes however decrease EBITDA in our ahead mannequin.”

* Scotia’s Paul Steep to US$74 from US$107 with a “sector outperform” score.

“We count on Nuvei will proceed to develop by means of a mixture of natural and purchased initiatives and that the corporate’s major focus will stay on increasing its shopper base in new and current verticals,” he mentioned. “We consider the agency will stay lively in evaluating acquisitions that additional improve its product/service capabilities.”

* CIBC’s Todd Coupland to US$80 from US$76 with an “outperformer” score.

“Nuvei’s This fall outcomes and outlook for Q1/22 and 2022 got here in barely above expectations and proceed to verify that the corporate’s mid- and long-term targets are achievable, with the opportunity of being overachieved. Whereas Nuvei’s inventory worth has but to get better from its current sell-off, the corporate is positioned to learn from the alternatives in its core markets. We consider its shares are engaging and needs to be bought,” mentioned Mr. Coupland.

* Credit score Suisse’s Timothy Chiodo to US$95 from US$125 with an “outperform” score.


InterRent Actual Property Funding Belief (IIP.UN-T) is “beginning the yr from a place of power,” in keeping with Desjardins Securities analyst Michael Markidis.

On Tuesday, shares of the Ottawa-based REIT, which focuses on multi-family residential properties in high-growth, city markets, rose 2.4 per cent with the premarket launch of its fourth-quarter monetary outcomes. Funds from operations per unit of 14 cents topped the analyst’s estimate by 1 cent.

“The 4Q21 same-property NOI improve of 9.5 per cent marked a fabric enchancment vs the two–3-per-cent development price in 2Q21 and 3Q21,” mentioned Mr. Markidis. “In gentle of considerations over opex inflation, buyers needs to be inspired by the momentum established on the highest line. Similar-property income was up 7.8 per cent. Occupancy enchancment will probably be the largest driver of year-over-year beneficial properties in 1H22 (December emptiness loss was 3.8 per cent, down 130 foundation factors vs September and down 440 foundation factors vs December 2020). The burn-off of incentive amortization ought to turn out to be a extra vital contributor in 2H22.”

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After a “report yr” for acquisitions, together with $213-million within the fourth quarter, Mr. Markidis count on InterRent administration to be “eager to maintain including scale in its 4 core markets.” Nonetheless, he expects quantity will decelerate this yr.

As a substitute, he expects 2022 to be “very busy on the refinancing entrance.”

“IIP’s web debt elevated $550-million final yr,” he famous. “Truthful worth beneficial properties ($330-million) helped maintain debt to gross guide worth in test (37per cent at quarter-end); nevertheless, on our numbers, ahead D/EBITDA elevated by greater than two and a half turns to 12.6 instances. Almost one-third ($460-million) of IIP’s whole mortgage debt matures this yr. The weighted common price of two.0 per cent is beneath present marketplace for CMHC-insured financing. It is a partial driver of the modest revisions to our 2022–23 FFOPU outlook.”

Trimming his 2022–23 outlook to “mirror the anticipated impression of upper charges on near-term mortgage maturities and G&A inflation,” Mr. Markidis reduce his goal for InterRent models by $1 to $20, holding a “purchase” score. The typical is $19.71.

“Regardless, the FFOPU development potential over the following two years is spectacular (estimated two-year FFOPU CAGR [compound annual growth rate] of 11 per cent) and the inventory continues to commerce at a reduction to our spot and one-year-forward NAVPU,” he mentioned.

Others making changes embody:

* Scotia’s Mario Saric to $19.50 from $20 with a “sector outperform” score.

“It’s not usually {that a} high-quality REIT like IIP trades at a reduction to NAV (regardless of 14-per-cent NTM [next 12 month] NAVPU development) and our $20.00-$21.00 NAVPU road-map in 2023 is unbroken,” he mentioned. “Assuming no antagonistic regulatory updates within the Federal Funds (we predict in subsequent 2-3 weeks) and Ontario Election (June 2nd), we predict IIP unit worth can actually get better (i.e. 15 per cent plus) and outperform by means of the summer time. We suggest due diligence in March with a bias so as to add post-Funds.”

* BMO’s Joanne Chen to $20.25 from $20 from with an “outperform” score.

“We proceed to consider that IIP.UN’s stable platform and engaging repositioning program will drive constant NAV development. Moreover, the power of IIP.UN’s stability sheet additionally gives it with enhanced flexibility to capitalize on any acquisition/improvement alternatives,” she mentioned.

* CIBC’s Dean Wilkinson to $18.50 from $19.50, sustaining a “impartial” score.

“Whereas IIP has many beneficial attributes, we consider that investor focus may proceed to gravitate in the direction of macro financial points, notably that of rising charges and relative spreads thereto. Valuations have turn out to be extra compelling, nevertheless, implied spreads to benchmark bond yields have solely expanded marginally. In our view, this has been a mirrored image of investor apprehension in the direction of the embedded convexity of cap charges within the condo sector total and never an organization concern per se, and this might proceed to weigh on sentiment within the near-term. Furthermore, the present rate of interest atmosphere may current a re-financing drag given practically a 3rd of IIP’s mortgages are scheduled to roll over in 2022,” mentioned Mr. Wilkinson.


CIBC World Markets analyst Paul Holden made a sequence of goal modifications to Canadian banks in his protection universe on Wednesday.

“The banks posted better-than-expected FQ1 earnings and positives included extra than simply sturdy capital markets outcomes,” he mentioned. “We stay constructive on earnings development premised on sturdy mortgage development, NIM enlargement, working leverage self-discipline and regulatory capital ratios. Continued financial enlargement stays our base case, supporting our expectation for doubledigit returns for the sector. TD and BNS are our high picks.”

  • Financial institution of Montreal (BMO-T, “impartial”) to $156 from $160. The typical on the Avenue is $167.97.
  • Financial institution of Nova Scotia (BNS-T, “outperformer”) to $105 from $103. Common: $97.72.
  • Nationwide Financial institution of Canada (NA-T, “impartial”) to $108 from $110. Common: $110.91.
  • Royal Financial institution of Canada (RY-T, “impartial”) to $151 from $152. Common: $151.15.


Jefferies analyst Christopher LaFemina raised his targets for a gaggle of TSX-list gold miners on Wednesday.

His modifications embody:

  • Barrick Gold Corp. (GOLD-N, ABX-T) to US$24 from US$23 with a “maintain” score. The typical on the Avenue is US$26.53.
  • First Quantum Minerals Ltd. (FM-T) to $53 from $50 with a “purchase” score. Common: $39.16.
  • Kinross Gold Corp. (KGC-N, Ok-T) to US$6 from US$5.50 with a “maintain” score. Common: US$7.68.
  • Sierra Metals Inc. (SMT-T) to $2.15 from $1.80 with a “maintain” score. Common: $2.79.


Evertz Applied sciences Ltd. (ET-T) is rebounding from a pandemic-driven slowdown, mentioned Canaccord Genuity analyst Robert Younger, pointing to “a backlog that continues to develop to report ranges, pushed by bigger tasks, software program shift and pent-up demand.”

On Tuesday after the bell, the Burlington, Ont.-based developer and producer of digital programs for the published and movie trade reported third-quarter 2022 reveniue of $120.6-million, up 30 per cent year-over-year and simply topping the estimates of each the analyst and Avenue ($106-million and $104.8-milion, respectively). Adjusted EBITDA of $30.9-million additionally beat expectations ($25.3-million and $26.2-million) due largely to greater gross margins.

“The corporate’s backlog hit a high-water mark once more at $176-million (from $162-million in FQ2; $151-million in FQ1), owing to longer-duration infrastructure contracts and robust demand dynamics for IP and cloud merchandise,” mentioned Mr. Younger. “Word that a big $10-million buyer order press launched on March 1 is included within the backlog. The February cargo determine at $25-million was decrease quarter-over-quarter as a consequence of seasonality. This, mixed with the sturdy backlog, nevertheless, gives help to our elevated FQ4 estimates, which can show conservative if the pandemic restoration continues. The mixed determine is 190-per-cent protection of our FQ4 income estimate of $105.9-million, on the excessive finish of current information. On the much less optimistic aspect, Evertz continues to face provide chain constraints and logistical/set up delays, which have lengthened the backlog, though set up challenges are easing, notably in NA. We count on money era to be dampened by working capital and elevated OpEx in F23. Evertz reported sub 2-per-cent publicity to Russia/Ukraine in every of the final three years, which is a headwind however lower than feared.”

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Elevating his income and earnings expectations as a result of quarterly beat and “sturdy backlog tendencies,” Mr. Younger elevated his goal for Evertz shares to $17.25 from $16.50, holding a “purchase” score. The typical is $17.08.

“A return to a extra regular occasion schedule and simpler entry to buyer websites is prone to lead to quicker conversion of the backlog, benefitting the highest line,” he mentioned. “Administration implied that the order pipeline is strong, notably for its IPbased video merchandise inside North America, and we count on that Evertz is rising from the pandemic in higher form than its rivals. That mentioned, we do count on OpEx to develop within the close to time period with resumption of journey and commerce exhibits and curtailed authorities subsidies. On stability, we proceed to price Evertz a BUY given an enhancing demand atmosphere, sturdy aggressive place and sturdy stability sheet and a 5.3-per-cent annualized dividend yield (ignoring the $1 particular dividend declared in September) at present ranges.”


In different analyst actions:

* Nationwide Financial institution Monetary’s Rupert Merer decreased his goal for Anaergia Inc. (ANRG-T) to $20 from $22, holding a “sector carry out” score. The typical is $30.

“We revised our near-term forecasts, with delays to building and operations as a consequence of COVID restrictions and feedstock delays,” he mentioned. “In Italy, we pushed out estimates by just a few quarters, whereas in California, amenities reminiscent of RBF are working at low capability ranges. There could possibly be some shifting components to our estimates given provide chain challenges, nevertheless, a rising backlog, greater power costs and a rising want for power safety in Europe ought to help future investments.”

* CIBC’s Hamir Patel reduce his goal for Conifex Timber Inc. (CFF-T) to $2.50 from $2.75 with a “impartial” score. The typical is $2.92.

“The potential information middle/bitcoin-hosting enterprise at Mackenzie would symbolize upside to our earnings projections. With its one BC sawmill (and related bioenergy plant), CFF is effectively positioned to learn from engaging fundamentals for North American housing,” mentioned Mr. Patel.

* CIBC’s Mark Petrie raised his Dollarama Inc. (DOL-T) goal to $68, above the $67 common, from $60 with a “impartial” score.

* CIBC’s Bryce Adams elevated his goal for Ero Copper Corp. (ERO-T) to $23 from $22 with a “impartial” score. The typical is $25.14.

“Whereas valuation has just lately narrowed with friends, we preserve our Impartial score primarily based on an rising capex cycle and challenge execution threat,” mentioned Mr. Adams.

* Forward of the March 23 launch of its fourth-quarter outcomes, Raymond James analyst Steven Li reduce his goal for Mogo Inc. (MOGO-T) to $8 from $13.50, holding an “outperform” score, primarily based on decrease sector multiples. The typical is $9.

“We’re in search of an in-line 4Q with F4Q21 gross sales of $16.1-million (up 61 per cent year-over-year) vs. consensus of $15.9-million, adjusted EBITDA lack of $3.4-million vs. consensus of a lack of $5.0-million,” he mentioned. “MOGO comparables common a number of has contracted 50 per cent since our final revealed firm remark. We now have adjusted our goal worth accordingly.”

* CIBC’s Todd Coupland elevated his Optiva Inc. (OPT-T) goal by $1 to $27, beneath the $32.50 common, with a “impartial” score.

* After a first-quarter EBITDA miss, Nationwide Financial institution Monetary’s Adam Shine reduce his Transcontinental Inc. (TCL.A-T) goal to $24.50 from $28, reiterating an “outperform” score, whereas whereas Scotia’s Mark Neville reduce his goal to $23.50 from $25 with a “sector carry out” score. The typical is $25.58.

“A disappointing begin to fiscal 2022 ought to give strategy to higher execution, particularly in H2. Absenteeism is getting resolved however the pass-through of inflationary pressures will take time,” Mr. Shine mentioned.

* Stifel analyst Cody Kwong hiked his Vermilion Power Inc. (VET-T) goal to $34, above the $25.90 common, from $18.50 with a “maintain” score.

“Rising European pure fuel costs has been a boon for Vermilion, serving to its 4Q21 FFO outperform by 10 per cent whereas additionally being the important thing driver to our 2022 FFO actually doubling since our final formal replace,” he mentioned. “That mentioned, we consider it’s equally vital that administration has determined to maintain its 2022 steerage unchanged, which alerts to us, that its dedication to debt discount and an expedited pathway to accelerated return of capital for shareholders is really a precedence.”

* Scotia Capital’s Michael Doumet lowered his Wajax Corp. (WJX-T) to $28 from $30, holding a “sector outperform” score, whereas TD Securities’ Michael Tupholme reduce his goal to $27 from $34 with a “purchase” score. The typical is $28.50.

“As may be anticipated, Wajax goes to need to handle tools availability and technician capability in what we consider can be a powerful working atmosphere,” mentioned Mr. Doumet. “The setup, in our view, is such that 2022 EPS development will skew in the direction of the 2H, notably as mining shovels are delivered. Its B/S is powerful. And, we predict the prospect of stable EPS development is prone to get supplemented by M&A. Valuation is undemanding and the expansion story in ERS and Industrial Elements stays underappreciated by buyers, in our view.”