{"id":160086,"date":"2023-06-12T08:00:00","date_gmt":"2023-06-12T00:00:00","guid":{"rendered":"https:\/\/www.mediaintel.asia\/?p=919715"},"modified":"2023-06-12T08:00:00","modified_gmt":"2023-06-12T00:00:00","slug":"mondays-analyst-upgrades-and-downgrades","status":"publish","type":"post","link":"https:\/\/www.chinalegalblog.com\/en\/2023\/06\/12\/mondays-analyst-upgrades-and-downgrades\/","title":{"rendered":"Monday\u2019s analyst upgrades and downgrades"},"content":{"rendered":"
\"MediaIntel.Asia\"<\/a><\/div>\n

Inside the Market\u2019s roundup of some of today\u2019s key analyst actions
\nSigns of a \u201crapid backdrop detetrioration\u201d in the fourth-quarter 2023 financial results from Saputo Inc. (SAP-T) overshadowed \u201cbusiness improvement,\u201d according to National Bank Financial analyst Vishal Shreedhar.
\nShares of the Montreal-based dairy company plummeted 11.2 per cent on Friday following the release of an earnings report that actually exceeded the Street\u2019s expectations. Revenue grew to $4.4468-billion from $3.957-billion a year ago, topping both Mr. Shreedhar\u2019s $4.385-billion estimate and the consensus projection of $4.400-billion. Earnings per share jumped to 47 cents from 26 cents, also ahead of forecasts (43 cents and 42 cents).
\nHowever, president and chief executive Lino Saputo cautioned consumer sentiment has \u201cturned somewhat negative\u201d in a call with analysts and dairy markets are now \u201csomewhat uncertain.\u201d
\n\u201cSAP reiterated its F2025 EBITDA target of $2.125-billion (NBF estimate is $1.877-billion), though it updated the components noting a changing dairy backdrop,\u201d said Mr. Shreedhar. \u201cFurthermore, during the call, it speculated on extending the target timeline citing demand\/commodity weakness.
\n\u201cIn F2024, SAP anticipates a year of organic growth with a focus on EBITDA margin expansion, maximizing cash flow and driving operating leverage. Q1 is expected to deliver modest growth. In our view, execution against the plan becomes more nuanced as it increasingly relies on implementing operational improvement initiatives.\u201d
\nIn response, Mr. Shreedhar cut his full-year 2024 revenue and EPS projections to $17.507-billion and $1.88, respectively, from $17.987-billion and $2.03. His 2025 revenue estimate grew to $18.2-billion from $17.964-billion, but his EPS expectation slid to $2.18 from $2.29.
\n\u201cFundamentally, we see significant operational improvement over the next 2+ years associated with numerous network optimization (automation\/digital), and manufacturing footprint rationalization initiatives (approximately $200-million in F2024, and more than $200-million in F2025, albeit partially offset by market conditions),\u201d he said. \u201cThis could suggest that the selloff was overdone, particularly if based on concerns regarding commodity prices (which are inherently volatile). On the other hand, questions on SAP\u2019s ability to achieve targets and deliver relatively consistent growth have intensified.
\n\u201cConsidering tepid dairy market outlook commentary, we have reduced our estimates.\u201d
\nReiterating his \u201coutperform\u201d recommendation for Saputo shares, Mr. Shreedhar cut his target to $37 from $43 to reflect his lower estimates and \u201cincreasing uncertainty in the backdrop.\u201d The average target on the Street is $39.25, according to Refinitiv data.
\nElsewhere, other analysts making target adjustments include:
\n* Desjardins Securities\u2019 Chris Li to $38 from $43 with a \u201cbuy\u201d rating.
\n\u201cIncreasing competition and softening demand (inflation, rising rates, economic uncertainty, slower-than-expected China reopening, etc) have driven a sharp decline in dairy prices, resulting in unfavourable market factors,\u201d said Mr. Li. \u201cWe have reduced our FY24 EBITDA by 9 per cent, and our FY25 EBITDA of $1.861-billion is below management\u2019s aspirational target of $2.1-billion. While we believe risk\/reward skews to the positive, we expect the stock to be range-bound until earnings visibility improves, likely in 2H.\u201d
\n* RBC\u2019s Irene Nattel to $40 from $46 with an \u201coutperform\u201d rating.
\n* CIBC\u2019s Mark Petrie to $38 from $43 with an \u201coutperformer\u201d rating.
\n* TD Securities\u2019 Michael Van Aelst to $42 from $46 with a \u201cbuy\u201d rating.
\n=====
\nDespite calling Neighbourly Pharmacy Inc.\u2019s (NBLY-T) in-line fourth-quarter results \u201csolid,\u201d Desjardins Securities analyst Chris Li wants to \u201cwait for better margin visibility\u201d before raising his rating for its shares.
\n\u201cWhile same-store sales are trending in line with the long-term range, elevated costs related to the pharmacist shortage will weigh on margins for two more quarters,\u201d he said.
\n\u201c4Q FY23 revenue and adjusted EBITDA were right in line with our forecast and consensus. Lower-than-expected same-store sales (1.6 per cent vs 3.0-per-cent estimate) was due to transitory factors, with the trend normalizing in 1Q FY24 (2.6\u20132.8 per cent, in line with the long-term range). Since the recently announced acquisitions (10 sites) will close after 1Q FY24, we expect 1Q FY24 revenue to be largely in line with the $191-million in 4Q FY23 (vs current consensus of $198-million). Pharmacist temporary relief staffing headwinds are expected to persist in 1H FY24 and weigh on margins before improving in 2H FY24. We forecast 40\u201350 basis points year-over-year improvement in 2H.\u201d
\nMr. Li thinks the M&A pipeline \u201cremains robust\u201d for the Toronto-based company, seeing it on track to acquire 35-40 pharmacies this year at a \u201cfavourable valuation.\u201d
\n\u201cNBLY is leveraging its solid financial position and strong reputation as the acquirer of choice to seek high-quality assets with above-average EBITDA per site while at the same time being able to pay at the lower end of the historical 6\u20137 times EBITDA range,\u201d he said. \u201cDespite recent noise around increasing competition for M&A, NBLY is on track to acquire 35\u201340 pharmacies a year. Management remains comfortable with pro forma leverage of 3.5 times net debt\/EBITDA, with some flexibility to take this up to 4 times for high-quality acquisitions. We estimate leverage will remain in the mid- to high-3 times range based on 35\u201340 acquisitions per year at 6\u20137 times EBITDA.\u201d
\nMaintaining a \u201chold\u201d rating for its shares, Mr. Li reduced his target to $21 from $25 after lowering his 2024 EBITDA expectation based on margin pressure in the first half of the fiscal year. The average on the Street is $27.44.
\n=====
\nDesjardins Securities analyst Gary Ho is predicting AGF Management Ltd. (AGF.B-T) will \u201crebound\u201d from a first-quarter miss when it reports its results before the bell on June 21.
\nHe\u2019s projecting earnings per share of 31 cents, a 5-cent improvement sequentially and up 17 cents from the same period a year ago. He\u2019s expecting EBITDA from its Wealth Management business to rise to $23.5-million from $20-million in the previous quarter but down from $27.8-million in fiscal 2022.
\n\u201cOur forecast continues to point to elevated SG&A, offset by strong contribution from its private alt platform in 2Q,\u201d Mr. Ho said.
\n\u201cDespite weak industry net flows (IFIC reported industry long-term fund net redemptions of $10.8-billion for March and April combined), we expect continued net inflows for AGF of $92-million in 2Q. We believe three-year fund performance continues to track well against AGF\u2019s target, albeit likely below 1Q FY23. AGF reported May AUM of $41.2-billion (down 1.7 per cent vs 1Q).\u201d
\nMaintaining a \u201cbuy\u201d rating, he lowered his target to $9.75 from $10.25 based on lower assets under management. The average on the Street is $9.21.
\n\u201cWe favour AGF given its fund performance, positive retail net flows, solid balance sheet and healthy FCF profile,\u201d said Mr. Ho.
\n\u201cWe foresee a few near- or medium-term positive catalysts: (1) retail net flows trending at or above industry; (2) redeployment of capital for organic growth, to seed new private alt strategies and for share buybacks; (3) growth in fees\/earnings from its private alt platform; and (4) 2022\u2032s DSC ban benefiting FCF and EPS.\u201d
\n=====
\nNational Bank Financial analyst Lola Aganga reaffirmed her \u201coutperform\u201d recommendation for Bravo Mining Corp. (BRVO-X) after resuming coverage following its equity raise of $20-million, citing the \u201cattractive critical metals mix\u201d at its 100-per-cent-owned Luanga project in Brail as well as the \u201cproject economics and regional exploration potential, notably considering the currently undefined high-grade nickel mineralization which is a focus of the Phase 2 drill program.\u201d
\nThe Vancouver-based company plans to use proceeds from the public offering of 5.65 million common shares (at a price of $3.50 each) to fund exploration at Luanga, located in the Carajas mineral province, as it continues Phase 2 drilling and geophysical work as well as general corporate purposes.
\n\u201cThe next significant catalyst\/de-risking event will be the maiden resource expected in the latter half of the year,\u201d said Ms. Aganga in a note. \u201cConcurrently, BRVO is rapidly advancing Phase 2 drilling to follow up on the newly identified higher-grade nickel magmatic sulphide mineralization and commence extensive geophysics at site.\u201d
\n\u201cResults to date have been positive with more than 80 per cent of re-assay intercepts received returning better grades compared to historic results. Our assumptions capture 90 per cent of the Historical Resource at grades of 1.7 PGE + Au, and expect to see further upside to our estimates following the inclusion of rhodium in the upcoming maiden resource.\u201d
\nDespite the share dilution, the analyst increased her target to $4.80 from $4.10 based on revised financing assumptions, as she now expects a $20-million raise in 2025 to help fund pre-feasibility activities at $3.50 per share from $1.65 per share based on recent price appreciation. The average target is now $4.18.
\n=====
\nH.C. Wainwright analyst Heiko Ihle sees a \u201cfoundation from meaningful growth\u201d from U.S. GoldMining Inc.\u2019s (USGO-Q) \u201calready impressive resource base.\u201d
\nThat led him to initiate coverage of the Vancouver-based company, which began trading on the Nasdaq following the completion of initial public offering on April 20, with a \u201cbuy\u201d recommendation.
\n\u201cU.S. GoldMining\u2019s (USGO) Whistler project maintains a significant gold and copper resource located within a world-class mining jurisdiction,\u201d Mr. Ihle said. \u201cThe project, which is located just 150 kilometers (km) northwest of Anchorage, Alaska, hosts multiple deposits offering a variety of mineralization styles and mining opportunities. On a consolidated basis, the site presently hosts 3.0 million Indicated gold equivalent ounces (GEOs).
\n\u201cWe believe that 6.4 million GEOs in the Inferred category offers significant opportunity. We expect USGO\u2019s management team to further de-risk these ounces going forward. We also believe the conversion of Inferred ounces into the Indicated category should prove to be a catalyst in driving the project\u2019s value. In the longer term, we expect these resources to form the basis for an economic study.\u201d
\nWhile acknowledging the lack of a published economic study for Whistler, Mr. Ihle set a target of US$20 per share. The average is US$16.25.
\n\u201cLooking ahead, the primary near-term value driver for USGO is likely to be its success with the drill bit ... Whistler has seen incremental exploration work from a variety of different operators throughout its past,\u201d he said. \u201cWe nonetheless believe that a significant amount of value has been left on the table. In addition, we expect this value to be unlocked under USGO\u2019s ownership as the project is now poised to benefit from a dedicated technical team and a fully funded systematic drill program that we expect to be utilized as the basis of a maiden economic study. In turn, the firm remains fully permitted to conduct a broad-scale exploration program in 2023. Subsequently, mine design and financial modeling is expected to be completed in 2024 following the completion of a scoping study.\u201d
\n=====
\nIn other analyst actions:
\n* TD Securities\u2019 Cherilyn Radbourne trimmed her ATS Corp. (ATS-T) target to $71 from $72. The average is $69.67.
\n* CIBC\u2019s John Zamparo reduced his target for Canopy Growth Corp. (WEED-T) to 50 cents from $1.75 with an \u201cunderperformer\u201d rating. The average is $2.88.
\n* RBC\u2019s Alexander Jackson cut his Frontier Lithium Inc. (FL-X) target to $3.25 from $3.75 with an \u201coutperform\u201d recommendation. The average is $3.95.
\n* RBC\u2019s Irene Nattel lowered her North West Company Inc. (NWC-T) target to $36 from $38 with a \u201csector perform\u201d rating. The average is $38.25.
\n* Jefferies\u2019 Samad Samana raised his target for Shopify Inc. (SHOP-N, SHOP-T) to US$65, exceeding the US$61.67 average, from US$44 with a \u201chold\u201d rating.<\/p>\n

This data comes from MediaIntel.Asia's Media Intelligence and Media Monitoring Platform<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Inside the Market\u2019s roundup of some of today\u2019s key analyst actions
\nSigns of a \u201crapid backdrop detetrioration\u201d in the fourth-quarter 2023 financial results from Saputo Inc. (SAP-T) overshadowed \u201cbusiness improvement,\u201d according to National Bank Financi…<\/p>\n","protected":false},"author":253,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[669,692,144,586,671,1607,194,1002,1284],"tags":[10426,3686,7501,7010,3760,2353,10315,7539,7327],"class_list":["post-160086","post","type-post","status-publish","format-standard","hentry","category-bank","category-canada","category-china","category-economy","category-finance","category-manufacturing","category-news-chinese-law","category-retail","category-stock-market","tag-alaska","tag-boycott","tag-dairy","tag-expansion","tag-gold","tag-ipo","tag-media-intelligence","tag-milk","tag-revenue"],"_links":{"self":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts\/160086","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/users\/253"}],"replies":[{"embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/comments?post=160086"}],"version-history":[{"count":2,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts\/160086\/revisions"}],"predecessor-version":[{"id":160089,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts\/160086\/revisions\/160089"}],"wp:attachment":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/media?parent=160086"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/categories?post=160086"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/tags?post=160086"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}