Thursday’s analyst upgrades and downgrades

Inside the Market’s roundup of some of today’s key analyst actions
After CGI Inc. (GIB.A-T) reported in-line third-quarter results and expressed caution on the pace of its recovery on Wednesday, Desjardins Securities analyst Jerome Dubreuil warned a recent rally has brought its shares “close to being fairly valued as it approaches key resistance levels.”
“In our view, the small sequential improvement in organic growth this quarter was a slight disappointment following the more pronounced improvement recently reported by Accenture and Infosys,” he said in a research note. “Management sounded cautious on the pace of the recovery, stating that it is seeing some underlying signs of stability in the macro business environment. We believe next quarter’s organic growth consensus of 0.5 per cent looks reasonable in this context. While we have lowered our expectations following the results, we still expect FY25 adjusted EPS growth to land in the teens, which is strong, in our view.”
Shares of the Montreal-based consulting company did rally 4.6 per cent on Wednesday with the announcement it will be offering its first ever dividend, making it one of only a handful of Canada’s largest tech firms to distribute the profit-sharing payments to its investors.
However, Mr. Dubreuil emphasized capital allocation remains “too conservative,” in his view.
“The introduction of a dividend [Wednesday] was a step in the right direction toward what we consider to be optimal capital allocation,” he said. “However, we believe the company could probably generate more value with a more aggressive M&A policy. We do value discipline and patience. However, it seems that the 1 times revenue multiple objective for acquisitions (communicated on the call yesterday, but unlikely to be a ceiling for more attractive targets) leaves a big margin of safety for CGI, which trades at 2.6 times EV/FY1 revenue, especially considering that we believe the possibility for both revenue and cost synergy exists for potential acquisitions. This multiple target likely explains the slow pace of M&A in recent years. We believe the company should leverage its integration expertise and balance sheet more often to create additional value, and that this could serve as a catalyst for additional multiple expansion.”
While he reduced his forecast for both 2024 and 2025 to reflect management’s comments, the analyst raised his target price for CGI shares to $172 from $166 as a result of the positive steps on capital allocation.” The average target on the Street is $164.77, according to LSEG data.
“We maintain our Buy rating on the name as we have a positive view of (1) long-term digitization trends; and (2) the stock’s defensive attributes amid the slowing Canadian economy,” he said.
Elsewhere, other analysts making target adjustments include:
* RBC’s Paul Treiber to $170 from $163 with an “outperform” rating.
“CGI’s shares rallied [Wednesday] as the quarter was better than feared, with revenue and adj. EPS effectively in line with consensus,” said Mr. Treiber. “While organic growth was below expectations, Q3 represents the first sequential improvement after 4 quarters of deceleration. Additionally, bookings (a key leading indicator) were solid as CGI’s managed services pipeline is starting to convert to awards.”
* Stifel’s Suthan Sukumar to $180 from $170 with a “buy” rating.
“An incrementally more constructive growth/demand outlook, growing base and backlog of long-term, recurring managed services (55 per cent of revenues), and government (37 per cent of revenues) tailwinds with an upcoming election cycle, support our view for a stronger calendar-H2, while additional margin expansion drives double-digit EPS growth visibility with flexibility for re-investment and M&A, supporting further organic/inorganic growth upside,” he said. “With structural improvements to their end-to-end operating model with IP/managed services, we continue to see CGI well positioned to capture greater share of IT budgets for stronger, more diversified and defensive growth ahead as IT demand recovers with improving macro visibility. We see an attractive set-up for shares.”
* Raymond James’ Steven Li to $171 from $167 with an “outperform” rating.
“Dividend program a positive as it expands accessible pool of investors. But management now expects an elongated u-shaped recovery. We believe organic growth next couple quarters could remain sluggish for GIB,” said Mr. Li.
* BMO’s Thanos Moschopoulos to $177 from $170 with an “outperform” rating.
“We remain Outperform on CGI following Q3/24 results, which were a hair light on revenue and in line on EPS, while CGI announced the commencement of a dividend. We’ve trimmed our forecasts for organic revenue growth, although the impact to our revenue/EPS forecasts is largely offset by the contribution from recent tuck-in M&A and more favorable FX. We continue to view the stock as attractive given CGI’s consistent EPS execution and expanding margin profile, and our view that the dividend should provide incremental valuation support for the share price,” he said.
* Jefferies’ Surinder Thind to US$132 from US$121 with a “buy” rating.
* Bernstein’s Derric Marcon to $138 from $127 with a “buy” rating.
* CIBC’s Stephanie Price to $155 from $151 with a “neutral” rating.
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While its second-quarter results were “soft” and backlog challenges persist, National Bank Financial analyst Rupert Merer thinks Lion Electric Co. (LEV-N, LEV-T) is “doing what it can in a challenging liquidity position.”
TSX-listed shares of the Saint-Jérome, Que.-based maker of electric school buses plummeted over 18 per cent on Wednesday with the premarket announcement of weaker-than-anticipated second-quarter results, including sales (101 units) and revenue ($30-million) that post missed Mr. Merer’s expectations (200 units and $58-million, respectively). It also revealed it would cut another 30 per cent of its work force and lease out excess factory space as it comes under mounting financial pressure.
“LEV finished Q2 with $25-million of total liquidity including $2-million of cash and $23-million available on its revolving credit facility, down from $31-million in Q1,” he said. “Amendments to credit facilities and an additional $5-million facility with Investissement Quebec were made during the quarter to give LEV some breathing room. LEV announced an additional 30-per-cent reduction in workforce (300 employees), which could save $25-million annually (on top of $40-million from previous rounds) and targets a working capital release of $50-75-million (from inventory), with a $20-milllion inventory reduction year-to-daye. There are other levers LEV can pull, including subleasing unused space and pre-payments from the first EPA round (up to $77-million), but with lower volumes and a $15-milion liquidity requirement, the outlook is uncertain.”
Mr. Merer also emphasized its backlog dropped from the previous quarter (1,994 units from 2,004), driven by a drop-off in truck orders, and he sees headwinds and tailwinds to growth.
“More than half of the vehicles in LEV’s order book are contingent upon receipt of grants under the Canadian government ZETF program, which continues to face delays,” he said. “The current ZETF cutoff for submitting claims is the end of 2025, but the outlook on these orders is uncertain. LEV could rebuild its order book with help from the second round of the EPA program as well as the school bus subsidy program in Quebec.”
Reiterating his “underperform” recommendation for Lion Electric shares, Mr. Merer trimmed his target to 80 cents from $1 to reflect a drop his projections based on the results and a weaker outlook for sales for the remainder of the year. The average is 82 cents.
Elsewhere, CIBC’s Kevin Chiang downgraded Lion Electric to “underperformer” from “neutral” and dropped his target to 65 cents from $1.15.
“While LEV’s underlying strategy is sound, the lack of visibility around the timing of an improvement in delivery rates and its liquidity position further impair the company’s near- to medium-term visibility. While we recognize 2024 is a transition year for LEV, with our view that a pick-up in deliveries likely does not occur until 2025 and a step-function increase in deliveries is what will be required to get LEV’s shares moving higher, we move to the sidelines,” said Mr. Chiang.
Others making changes include:
* Desjardins Securities’ Benoit Poirier to US$1 from US$1.50 with a “hold” rating.
“A significant miss vs expectations led to management taking further action to stop the downslide,” said Mr. Poirier. “While we believe that the newly implemented action plan should help alleviate the balance sheet situation in the short term, we prefer to remain on the sidelines until we see less volatility in financial results and more clarity on the outlook for future bookings and deliveries.”
* BMO’s Tamy Chen to 80 US cents from US$1 with a “market perform” rating.
“Similar to Q1/24, continued funding delays negatively impacted Q2/24 results. Lion expects more of the same in H2 followed by a gradual improvement in 2025. The company announced additional cost saving initiatives to better align with soft industry volumes. We believe the company’s liquidity position remains challenging,” she said.
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While WSP Global Inc. (WSP-T) delivered a “solid” quarter, “reaffirming a healthy growth and margin outlook,” ATB Capital Markets analyst Chris Murray is remaining neutral on its shares, pointing to prevailing valuations and given challenging conditions for larger accretive M&A.
On Tuesday after the bell, the Montreal-based firm reported revenue of $2.988-billion and adjusted fully diluted earnings per share of $1.89 for its second quarter, exceeding both the Street’s expectations ($2.916-billion and $1.85). Its organic growth of 8.0 per cent topped Mr. Murray’s 6.6-per-cent projection, led by double-digit growth in the company’s core regions of Canada and the U.S..
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That led WSP to modestly raise its full-year guidance. It now expects revenue of $11.4-$11.8-billion, rising from $11.2-$11.7-billion, and EBITDA of $2.1-$2.4-billion, up from $2.05-$2.13-billion.
“We expect the Company to deliver stronger-than-normal organic growth in Q4/24 due to the 2024 calendar (i.e., two additional billing days in Q4/24, offset by fewer in Q1/24),” said Mr. Murray. “Otherwise, margin trends and free cash flow generation should follow typical seasonal patterns. We expect WSP to deliver a full-year Adjusted EBITDA margin of 18.2 per cent (up 60 basis points year-over-year), representing the higher end of its target under its current strategic plan”
“We expect the Americas region to remain a growth driver in 2024, with recent backlog growth expected to receive a boost from U.S. infrastructure spending, which the Company views as a multi- year tailwind irrespective of the upcoming election results. Organic growth is expected to be driven by mid to high single growth in the U.S. and Canada, with EMEIA and APAC expected to deliver mid- single-digit levels of organic growth in 2024. We have slightly lowered our organic growth and margin expectations in APAC given management’s commentary around more challenging market conditions.”
Mr. Murray’s lukewarm stance on WSP’s investment proposition stems largely from that softness in Asia. While he noted booking trends in the region remained healthy during the quarter, he lowered his organic growth and margin expectations in the region, citing management’s commentary around more challenging market conditions.
“M&A provided limited growth in H1/24 as recent tuck-in activity was offset by the divesture of the Louis Beger assets in Q3/24,” he added. “Management reaffirmed that it is ‘open for business’ as it relates to M&A, particularly now that the ERP implementation and integration of the Wood assets are behind it, with leverage levels (1.7 times ex. leases) remaining supportive. The Company reiterated that valuations for higher-quality assets remain elevated, which we expect to challenge WSP’s ability to complete needle-moving transactions accretively.”
Maintaining his “sector perform” recommendation for WSP shares, Mr. Murray raised his target to $235 from $225 to reflect his higher forecast.
Other analysts making target adjustments include:
* TD Securities’ Michael Tupholme to $273 from $265 with a “buy” rating.
“We view Q2/24 as an all-round solid quarter,” he said. “We are encouraged by the quarter’s strong organic net revenue growth (up 8 per cent year-over-year), slightly better-than-expected adjusted EBITDA, and record backlog, along with management’s slight bump in its full-year 2024 guidance. Meanwhile, WSP appears well-positioned to execute on potential mid-to-larger sized M&A opportunities.”
* Raymond James’ Frederic Bastien to $255 from $250 with a “strong buy” rating.
“We reaffirm our bullish stance on WSP Global after the engineering consultancy exceeded the Street’s expectations for 2Q24 and raised its financial outlook for the year. Our Best Pick for 2024 not only capitalized on healthy conditions to deliver 8% organic growth in the quarter, but also continued to set the pace on productivity gains, pushing adjusted EBITDA margins up 55 bps year-over-year. Considering WSP’s momentum, unique enterprising culture and impressive acquisition track record, we believe the stock has more runway ahead still,” said Mr. Bastien.
* National Bank’s Maxim Sytchev to $251 from $234 with an “outperform” rating.
“Management’s body language regarding the ability to get to 20-per-cent EBITDA margins from the current 18.3 per cent 2024 guide seems to be even more confident given the supportive macro backdrop, internal improvements (ERP is now installed in 3/4 of company’s key geographies that represent 75 per cent of EBITDA) and leveraging of tech tools and design center capabilities,” he said. “With that, the capacity to do larger M&A has also been elevated on top of an accelerating organic growth profile. WSP remains a must-own in the space.”
* Desjardins Securities’ Benoit Poirier to $249 from $246 with a “buy” rating.
“WSP delivered yet another strong quarter from an execution standpoint, delivering impressive financial results, a 2,100 headcount increase, successful ERP implementation and increased guidance. We believe that the revised outlook (albeit already priced in coming into 2Q earnings) should help quench investors’ thirst. We continue to see the potential for future value creation stemming from mid- to large-size M&A given the strength of the balance sheet and the stock’s current valuation,” said Mr. Poirier.
* Stifel’s Ian Gillies to $250 from $235 with a “buy” rating.
“WSP delivered another solid beat-and-raise quarter. Our focus has firmly shifted to the company’s M&A prospects and the 2025-2027E business plan, both of which are likely to provide insights into the company’s growth trajectory through 2027E and how it will get there. We think it’s plausible the company could offer a 2025-2027E business plan that would see EBITDA grow LDD per annum while EPS growth would be in mid-teens. This view leaves us comfortable with the company’s elevated 2025E P/E of 25.3 times given the potential for multiple compression in future years,” he said.
* CIBC’s Jacob Bout to $245 from $239 with an “outperformer” rating.
* BMO’s Devin Dodge to $252 from $249 with an “outperform” rating.
* RBC’s Sabahat Khan to $252 from $245 with an “outperform” rating.
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Scotia Capital analyst Meny Grauman has low expectations for second-quarter earnings in the Canadian life insurance industry even though he still sees “lots of macro tailwinds.”
“We have favoured Canadian lifecos over Canadian banks since the beginning of the year, and despite 634 basis points of insurance outperformance (admittedly driven by one stock — MFC) we continue to believe that this trade has further room to go,” he said. “While bank capital levels have improved over the past few quarters, insurers still have an edge over banks when it comes to capital deployment including buybacks, which should provide a further boost to EPS growth across the group both this quarter and as we look out into the rest of the year and into 2025. Lifecos continue to be in a position to meet and even exceed their medium-term financial targets for both EPS growth and ROEs, while banks are likely to continue to struggle as PCL ratios have yet to peak, and loan growth remains constrained by a slowing economy and an over-levered consumer despite recent rate cuts in Canada.”
Mr. Grauman is forecasting core earnings per share to be flat on average quarter-over-quarter but up 4 per cent year-over-year.
“The introduction of IFRS 17 in Q1/23 means that year-over-year comparisons are relevant again as we already saw last quarter,” he said. “On average our estimates are 1 per cent below consensus (excluding SFC), with forecast misses for IAG and SLF and in-line estimates for GWO and MFC. On a fundamental basis, we assume resilient underlying insurance results, along with improving wealth management profitability thanks to improving equity markets, but see downward pressure on sequential results from the introduction of the global minimum tax (GMT). That tax impact will weigh on certain segments across the group including Asia for MFC and SLF, and Europe and CRS for GWO. Broadly speaking, we continue to take a conservative approach to the quarter’s core EPS numbers, but looking ahead our 2025 EPS estimates continue to forecast solid EPS growth broadly in-line with medium-term targets, which is very different from the outlook we have for the banks. Headline results should be positively impacted by rising equity markets in the quarter, but that should be outweighed by the drag from real-estate related losses and the retroactive impact of the GMT that is being excluded from adjusted results.”
The analyst reiterated Manulife Financial Corp. (MFC-T) remains his top pick in the sector, keeping a “sector outperform” rating and $40 target for its shares. The average on the Street is $38.61.
“Even after outperforming insurance peers by an average of 24 per cent year-to-date, and the large banks by an average of 20 per cent over the same time period, Manulife remains the most actionable stock in our insurance coverage and across our entire coverage universe,” he said. “The stock was a value trap for many years following the Global Financial Crisis, but in the wake of a normalization in long-term yields and December’s landmark LTC sale, we believe that it is now a true value name with significant upside, even after a period of significant revaluation. The lifeco’s June Investor Day hammered that point home as Manulife boosted its ROE guidance from 15 per cent plus to 18 per cent plus while reaffirming EPS growth of 10-12 per cent over the medium term, and guiding to cumulative remittances of $22-billion-plus between 2024 and 2027. The gap between realized and expected ALDA returns remains a key unresolved issue, but at this juncture we don’t see a trigger for the company to change its return assumptions. Another issue is performance in Asia, which remains under the microscope given the stock market performance of large regional peers including AIA and Prudential. That said, performance in this segment has been good, fueled by strong momentum in Hong Kong in particular despite some softness in markets like Vietnam that are dealing with regulatory change. The bottom line for us is that we believe MFC’s tail risk is still much smaller than what the shares are currently pricing in, and we think that this gap should continue to close as we move into 2025. We note that even after a strong run MFC shares are still trading at a 15-per-cent discount to SLF based on current P/B multiples (and a 7-per-cent discount to SLF based on 2025 consensus P/E multiples). We expect the valuation gap with SLF to continue to narrow, and even reverse over time given MFC’s new ROE target.”
He did raise his target for iA Financial Corp. (IAG-T), which is No. 2 in his pecking order, to $100 from $98 with a “sector outperform” recommendation. The average is $102.25.
“We continue to view the lifeco’s $1.5-billion in deployable capital as a key strength,” said Mr. Grauman. “Its deployment is still an important potential catalyst for the shares, and despite disappointment surrounding the now closed Vericity deal, we were encouraged by the firm’s July acquisition of two blocks of business (Final Expense and Term Life products) issued by Prosperity Life in the U.S.. A much more robust buyback program is also an important factor, with the lifeco buying back nearly 3.5 per cent of outstanding shares in Q2 alone.
His other ratings and targets are:
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Ahead of the Aug. 8 release of Boyd Group Services Inc.’s (BYD-T) second-quarter results, Stifel analyst Daryl Young thinks the focus is “squarely” on the outlook for collision claims and margins for the remainder of the fiscal year.
“Following Boyd’s 8-per-cent share price sell-off on the back of LKQ’s results last week, we think the stock is pricing in expectations for a very weak Q2/24, and prolonged headwinds across H2/24,” he said. “Our focus this quarter is management’s outlook commentary regarding potential incremental improvement in SSSG and margins, plus any updated views on the drivers of the continued weak industry-wide collision claims activity beyond weather (claims down 7 per cent in Q2/24). Our sense is that the industry is going through a post-COVID normalization related to insurance costs, used car pricing, and total write-offs, compounded by unusual weather and a stretched consumer (repair deferrals). Ultimately, we think these factors will balance out (as opposed to a more structural change), but timing is highly uncertain. Regardless, Boyd has a strong B/S and demonstrated ability to flex costs, positioning it well to navigate this environment.”
Mr. Young is now forecasting revenue for the quarter of $785-million, up 4.2 per cent year-over-year on a 2-per-cent decline in same-store sales and 6.5-per-cent growth from M&A and new stores. His adjusted EBITDA projection of $87.1-million is a drop of 8.6 per cent from the same period a year ago and lower than the Street’s expectation of $89.3-million.
“We have trimmed our SSSG estimates to reflect the weaker collision claims environment in Q2/24 and taken a more conservative assumption for the cadence of recovery in H2/24 (modest negative operating leverage impact in 2024 as well),” he said.
“Historically, collision repair demand has closely mirrored driving trends. However, there has been a decoupling of the relationship since the onset of the pandemic … We have attempted to provide context to the year-over-year discrepancies between VMT and collision claims, with a focus on mapping the impacts of congestion miles, used car prices, total write-offs, insurance pricing, repair deferrals, and weather. Looking back to the 2008/2009 recession, insurance claims and VMT decoupled; VMT remained mostly stable (down 2 per cent peak-to-trough) but Boyd noted industry-wide challenges for its SSSG from consumers opting to defer non-essential repairs given economic conditions (2009 SSSG declined 2.4 per cent); we view this as confirmation of LKQ’s current assessment that some economic sensitivity is likely leading to repair deferrals. Looking forward, we expect to see healthy growth in VMT but we think that there could be a lag in the timing of recovery in insurance claims until market conditions stabilize (but lapping the weather comps starting in Q4/24 should improve the outlook).”
Also seeing the margin outlook for Boyd remaining “murky” in the near term, Mr. Young cut his target for its shares to $295 from $305, reiterating a “buy” rating. The average on the Street is $299.08.
“Boyd’s shares have been volatile since reporting Q1/24, as investors price uncertainty around the depth/duration of a possible industry-wide slowdown in collision claims. The stock is now trading at 13.9 times EBITDA (2025E); clearly still not ‘cheap’, but it’s well below Boyd’s 2019 trading average of 16.2 times, and that’s on depressed margins of 13 per cent in 2025 (versus 14 per cent pre-pandemic). Furthermore, we think that the significant private equity interest in the industry provides a backstop for Boyd’s valuation.”
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In other analyst actions:
* CIBC’s Hamir Patel raised his Acadian Timber Corp. (ADN-T) target by $1 to $21, keeping an “outperformer” rating. The average on the Street is $20.33.
* National Bank’s Matt Kornack cut his Allied Properties REIT (AP.UN-T) target to $18 from $18.50, below the $19.58 average, with a “sector perform” rating. Other changes include: Scotia’s Mario Saric to $21 from $21.25 with a “sector outperform” rating and Desjardins Securities’ Lorne Kalmar to $18.50 from $19 with a “hold” recommendation.
“2Q results were impacted by the Westbank acquisitions (4 cents per unit), and SP NOI growth remained negative,” said Mr. Kalmar. “That said, occupancy was largely unchanged vs 1Q and AP appears to be making good progress on its disposition program. However, we expect the impact of refinancings, particularly in 2026, to weigh heavily on results and more than offset any potential recovery in fundamentals in the next two years, absent a distribution policy change or a material increase in low-yield dispositions.”
* Evercore ISI’s Vijay Kumar raised his Bausch + Lomb Inc. (BLCO-N, BLCO-T) target to US$17 from US$15.50 with an “in line” recommendation. The average is US$19.92.
* CIBC’s Dean Wilkinson increased his target for Boardwalk REIT (BEI.UN-T) to $86 from $81 with a “neutral” rating. Other changes include: TD’s Jonathan Kelcher to $95 from $90 with a “buy” rating, Raymond James’ Brad Sturges to $96 from $95 with a “strong buy” rating, Scotia’s Mario Saric to $85 from $82.50 with a “sector outperform” rating, National Bank’s Matt Kornack to $93 from $90 with an “outperform” rating and RBC’s Jimmy Shan to $98 from $88 with an “outperform” rating. The average is $89.36.
“Boardwalk REIT printed a strong as expected and in-line quarter, continuing to exceed its residential peers in terms of SPNOI growth, underpinned by its outsized exposure to non-rent-controlled markets. For the second quarter in a row, BEI updated and raised its forward-looking guidance, and accordingly we expect Street estimates to move commensurately upwards on the revised outlook,” said Mr. Wilkinson.
* Scotia’s Mario Saric raised his targets Brookfield Corp. (BN-N, BN-T) to US$50.50 from US$49.50 and Brookfield Asset Management Ltd. (BAM-N, BAM-T) to US$46 from US$44.50 with “sector outperform” ratings for both. The averages are US$53.63 and US$42.45, respectively.
* Scotia’s Orest Wowkodaw cut his Cameco Corp. (CCO-T) target to $81 from $85 with a “sector outperform” rating. The average is $76.74.
“CCO released relatively mixed Q2/24 results,” said Mr. Wowkodaw. “Although 2024 operating guidance was essentially unchanged, the company warned that the outlook at Inkai was becoming increasingly concerning. The five-year uranium contract book continued to creep slightly higher. Overall, we view the update as largely neutral for the shares.
“We rate CCO shares Sector Outperform based on improving fundamentals driven by the dual Western World agendas of decarbonization and energy independence.”
* Scotia’s Robert Hope bumped his Capital Power Corp. (CPX-T) target to $46 from $43 with a “sector perform” rating. Other changes include: BMO’s Ben Pham to $42 from $38 with a “market perform” rating, TD’s John Mould to $48 from $47 with a “buy” rating, Desjardins Securities’ Brent Stadler to $53 from $52 with a “buy” rating, RBC’s Maurice Choy to $44 from $39 with a “sector perform” rating and CIBC’s Mark Jarvi to $45 from $42 with a “neutral” rating. The average is $43.91.
“The fundamentals for gas remain strong as highlighted by elevated dispatches playing out the thesis that gas is critical to grid reliability—which we expect will continue and strengthen for decades to come. CPX reiterated it is having conversations with several technology companies in both Canada and the US, and we believe a datacentre/hyperscaler announcement is likely in the next 6–12 months—a material catalyst. CPX remains a favourite name to play the energy transition and AI/datacentre themes,” said Mr. Stadler.
* CIBC’s Dean Wilkinson bumped his First Capital REIT (FCR.UN-T) target to $19 from $18 with an “outperformer” recommendation, while Desjardins Securities’ Lorne Kalmar moved his target to $19 from $18 with a “buy” rating. The average is $18.06.
“FCR reported a headline beat, driven by both higher base rents and occupancy, further aided by one-time lease termination fees and recoveries (which we note are perhaps a bit more than one-time albeit less predictable),” said Mr. Wilkinson.
* National Bank’s Patrick Kenny bumped his Fortis Inc. (FTS-T) target to $56 from $55 with a “sector perform” rating. Other changes include: BMO’s Ben Pham to $59 from $58.50 with a “market perform” rating, Raymond James’ David Quezada to $61 from $59 with an “outperform” rating, CIBC’s Mark Jarvi to $59 from $57 with a “neutral” rating and RBC’s Maurice Choy to $62 from $61 with a “sector perform” rating. The average on the Street is $58.43.
“With the in line Q2/24 results and the reaffirmation of the 2024-2028 outlook rehighlighting the stability and low-risk regulated businesses of Fortis, we expect the market will maintain its focus on Fortis’ growth prospects (notably relating to ITC via the MISO LRTP and the rate base growth associated with a higher electricity load environment across North America) and the company’s funding picture (notably, as it relates to ongoing regulatory proceedings, climate-related events, and the upcoming U.S. election). While fairly valued, we continue to view Fortis’ shares as being a cornerstone holding for many defensive-minded investors,” said Mr. Choy.
* CIBC’s Paul Holden hiked his target for Intact Financial Corp. (IFC-T) to $270 from $250 with an “outperformer” rating. Other changes include: BMO’s Tom MacKinnon to $275 from $250 with an “outperform” rating, TD’s Mario Mendonca to $282 from $270 with a “buy” rating, Desjardins Securities’ Doug Young to $270 from $255 with a “buy” rating, National Bank’s Jaeme Gloyn to $280 from $265 with an “outperform” rating and Jefferies’ John Aiken to $264 from $241 with a “hold” rating. The average is $263.38.
* Scotia’s Orest Wowkodaw cut his Lundin Mining Corp. (LUN-T) target to $18 from $18.50, above the $17.69 average, with a “sector perform” rating.
* National Bank’s Michael Parkin bumped his New Gold Inc. (NGD-T) target to $4.25 from $4 with an “outperform” rating. The average is $3.65.
* TD Cowen’s Michael Tupholme cut his Nutrien Ltd. (NTR-N, NTR-T) target to US$67 from US$69 with a “buy” rating. The average is US$64.23.
* RBC’s Keith Mackey moved his targets for Precision Drilling Corp. (PD-T) to $125 from $122 and Trican Well Service Ltd. (TCW-T) to $6 from $5.50 with “outperform” ratings for both. Elsewhere, Raymond James’ Michael Barth raised his Precision target to $143 from $136 with a “strong buy” rating and target for Trican to $5 from $4.50 with a “market perform” rating. The averages are $128.14 and $5.81, respectively.
* RBC’s Geoffrey Kwan increased his TMX Group Ltd. (X-T) target to $46 from $44 with an “outperform” rating, while TD’s Graham Ryding bumped his target to $42 from $41 with a “hold” rating. The average is $41.61.
“Although Q2/24 operating EPS was a penny ahead of our forecast and consensus, we think it was still a solid quarter. With the exception of listings activity remaining weak and further declines in equity market data subscribers, the TMX’s other businesses performed well,” said Mr. Kwan. “Trayport continues to deliver strong growth and the recently acquired VettaFi is largely tracking in line with our expectations. Bigger picture, fundamentals continue to improve with early signs that equity trading volumes may be stabilizing and possibly increasing (since peaking in early 2021) being a potential positive development. We think the TMX has attractive growth potential, but with the shares trading at 23 times NTM [next 12-month] P/E, at the high end of historical and vs. global peers, we see the shares as fairly valued.”
* RBC’s Sabahat Khan raised his Toromont Industries Ltd. (TIH-T) target to $142 from $137 with an “outperform” rating. Other changes include: TD’s Cherilyn Radbourne to $150 from $140 with a “buy” rating and National Bank’s Maxim Sytchev to $135 from $132 with an “outperform” rating.. The average is $136.25.
“Mix and 30 basis points Equipment gross margin compression did not help the quarter, but absolute numbers (i.e., the ones you put in your jeans) were ahead of our projections,” said Mr. Sytchev. “We believe investors were generally surprised (as we were) by the strength of New equipment deliveries as it’s always hard to calibrate the pace of backlog being delivered. That being said, New equipment = greater Product Support tail down the line. The model continues to work well and the mining / non-resi backdrop remains constructive. When adding potential tuck-in M&A at CIMCO and a clean balance sheet, we don’t view a 20 times P/E multiple on 2025E projections as egregious for such a highquality compounder.”
* Canaccord Genuity’s Mike Mueller reduced his target for Vermilion Energy Inc. (VET-T) to $20 from $20.50 with a “buy” rating. The average is $21.06.