Within the Market summary of some of the key stocks of analysts today
Citing its exposure to European gas prices and the improvement in relative valuation, Scotia Capital analyst Jason Bouvier raised his recommendation for Vermilion Energy Inc. (FP-T) Monday.
“A good increase in the cash flow profile in 2023 was also expected as acquisitions are completed and hedges are renewed,” the Calgary-based company moved to “surpass the sector” of “performance of the sector “in a research note.
“WTI prices have fallen about $ 14 a barrel from their recent high. During that same period of time, European gas prices have risen by 50 percent,” he said. “VET gets about 40-45 percent of its cash flow from European gas prices. Since the price of VET shares has fallen roughly in line with its peer group over the past two weeks, the relative rating of VET has improved materially “.
“In 2022, we estimate VET coverage losses at $ 616 million. Currently, the company has about 40% of its production covered in 2022. This drops to 10% in 2023. There is no oil covered for the 2023 and US gas is covered at higher prices than 2022. As a result, although We have major commodities falling from 2022 to 2023 (strip), VET cash flow actually increases by 2.2 billion from dollars in 2022 to $ 2.4 billion in 2023 (10 percent more).
Mr. Bouvier expects Vermilion to reach its $ 1.2 billion net debt target in the third quarter of this year and sees the potential for no debt by the end of fiscal year 2023.
“After reaching its debt target, the company will be in a good position to increase shareholder profitability. We expect an increase in dividends and SBB over the next 1-2 years,” he said.
He maintained a $ 36 target for the company’s shares. The current average target on the street is $ 36.46, according to Refinitiv data.
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Believing his business model can “surpass its core chemical peers through a recession,” Scotia Capital analyst Ben Isaacson improved. Revenue fund for Chemtrade logistics (CHE.UN-T) to “higher performance sector” from “performance sector”.
To justify its change, he noted several factors, including the expectation that demand for acid irrigation services will increase over the coming quarters; Demand for ultrapure sulfuric acid will “skyrocket” in North America in the medium term; a “relatively tight” view of caustic soda and a “fairly stable margin variability” for its water chemical business.
“Chemtrade has proactively cleaned up both its portfolio and balance sheet, which we believe could lead to a slight multiple expansion over time,” Isaacson said. “Initiatives include the sale of its non-core specialty chemicals business, the sale of $ 10 million from an inactive facility in Augusta, Georgia, as well as the closure of a chlorate plant in Quebec due to of the slower growth of post-COVID demand “.
He said Chemtrade’s 7.8 percent distribution performance has “strong support” and sees a “decent” valuation discount.
“Compared to all S&P TSX Materials shares with a market capitalization in excess of $ 1 billion, CHE offers the second highest return (its market capitalization is slightly in excess of $ 1 billion),” he said. “As of 1/22, the four-quarter distribution payout ratio is 48 percent. Until the end of ’23, we don’t see the four-quarter distribution payout ratio exceed 60 percent, providing a strong support for a distribution of $ 0.15 per unit per quarter “.
“CHE is trading at 6.1 times and 6.5 times EBITDA ’22 and ’23 of $ 325 million and $ 305 million, respectively. This compares with the EBITDA EV / NTM multiples of five and ten 7.2 times and 7.4 times, respectively.The lower five-year multiple is due to the acquisition of Canexus, which brought more basic chemical volatility to the portfolio.However, if we look at the first full year of CHE after Canexus, by the end of 23 (using Street estimates), the average EBITDA is $ 300 million, with very little variability, so we see no reason why the CHE direct multiple should not start to return to 7.2 times over the next year. In fact, a multiple premium could be argued above that amount, as leverage has improved materially. “
Mr. Isaacson raised his target to $ 10.25 from $ 9.50. The average on the street is $ 10.
“While expecting a higher (relative) return, investors can enjoy a return of almost 8%, well supported by a four-quarter payout ratio that should not exceed 60% until ’23,” he said. .
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National Bank financial analyst Vishal Shreedhar expects to see improved results MTY Food Group Inc. (MTY-T) when it reports its second-quarter results in early July, as casual food trends are recovering with a easing of pandemic-related restrictions.
However, he warned that a “solid” recovery in Canada could be partially offset by “reduced performance” of its Papa Murphy’s pizza chain.
“Investors will focus on evolving consumer behavior as economies continue to reopen (year-on-year), especially amid widespread inflation, supply chain challenges, limited working conditions and concerns about the slowdown in consumer spending, ”Shreedhar said.
It expects adjusted earnings before interest, taxes, depreciation and amortization for the quarter of $ 46.6 million, above the agreed estimate of $ 45 million and a 7.2% year-over-year increase from $ 43 million. $ 5 million. Revenue is expected to grow to $ 154 million from $ 136 million, also surpassing the street ($ 136 million).
“During the quarter, OpenTable data suggest a strong recovery in diners sitting in Canada as restrictions gradually lifted. The strong recovery in Canada is expected to be partially offset by reduced demand at Papa Murphy’s ( accumulated demand for food outside), ”Mr. Shreedhar.
Citing his “attractive valuation, operating progress and support capital allocation results,” he said he remains “constructive” in MTY, although he acknowledged “a higher risk related to inflation, the chain supply, labor and macroeconomic conditions “.
Maintaining a “superior” rating of his shares, Mr. Shreedhar lowered its target to $ 63 from $ 70 to reflect a decrease in its valuation multiple “due to increased uncertainty with the macroeconomic context”. The average on the street is $ 68.14.
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When Food Couche-Tard Inc. (ATD-T) reports on Tuesday its fourth-quarter financial results after the bell, Desjardins Securities analyst Chris Li expects to see “strong fuel and sales margins and solid commodity margins offset by high cost operating, slow fuel volume and increased volatility in Europe. ”
However, he expects investor attention to focus on the outlook and trends for the current first quarter given rising gas prices.
“Although industry fuel margins have moderated from mid to high 30 cpg in the US (January-April) to an average of 28-29 cpg in the US in May and June, we believe our forecast is low 30 cpg of the U.S. can be achieved in the first quarter and fiscal year 23, with the support of company-specific initiatives. (Change of fuel brand to Circle K, improved acquisitions through partnership with Musket, optimization of prices and other sourcing and logistics capabilities.) On an equal footing, a one-cent change in the U.S. fuel margin affects our fiscal year EPS 23 by US $ 0.08 (3 percent) Fuel volume will be affected by high prices, and while general and administrative expenses will remain high in the short term due to higher labor costs and credit card fees, pressures should begin to ease. in the second quarter.We expect sales and margins s of commercial stores remain solid, supported by the transmission of costs and the positive change of the mixture (single service, private label, etc.), partially offset by higher costs of raw materials (food service) and discretionary reduction (i.e., car wash). ”
With this change in his fuel margin estimate, Mr. It increased its full-year earnings per share forecast for 2022 to $ 2.57 from $ 2.41 and in 2023 to $ 2.56 from $ 2.51.
He maintained a “buy” rating and a $ 60 target for Couche-Tard shares. The average on the street is $ 62.72.
“While we expect earnings to remain volatile in the short term due to macro uncertainties, we remain positive in terms of ATD’s long-term growth potential, supported by a strong portfolio of growth initiatives. its solid balance sheet is valuable, especially in today’s market, supporting the return on capital, ”he said.
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CIBC World Markets analyst Scott Fromson, Sumayya Syed and Dean Wilkinson on Monday lowered their target prices for real estate stocks.
His changes included:
- Allied Properties Real Estate Investment Trust (AP.UN-T, “superperformer”) at $ 47.50 from $ 50. The average on the street is $ 49.35.
- American Hotel Income Properties REIT (HOT.UT / HOT.UN-T, “neutral”) at $ 3.80 from $ 4. Average: $ 3.84.
- Automotive Properties REIT (APR.UN-T, “neutral”) at $ 14.25 out of $ 15. Average: $ 14.76.
- Boardwalk REIT (EIB.UN-T, “neutral”) at $ 58 out of $ 60. Average: $ 60.95.
- Brookfield Asset Management Inc. (BAM-N / BAM.AT, “superperformer”) at $ 68 from $ 75. Average: $ 70.55.
- NO REIT (CAR.UN-T, “neutral”) at $ 55 from $ 60. Average: $ 63.22.
- Chartwell Retirement Homes (CSH.UN-T, “superperformer”) at $ 14.25 from $ 15. Average: $ 14.38.
- Colliers International Group Inc. (CIGI-Q / CIGI-T, “superperformer”) at $ 150 from $ 170. Average: US $ 162.
- Crombie REIT (CRR.UN-T, “superperformer”) at $ 18.25 from $ 19. Average: $ 19.42.
- CT REIT (CRT.UN-T, “neutral”) at $ 18 from $ 19. Average: $ 18.79.
- Dream Industrial REIT (DIR.UN-T, “superperformer”) at $ 17 from $ 18. Average: $ 18.44.
- Dream Office REIT (D.UN-T, “superperformer”) at $ 27 from $ 28.50. Average: $ 27.08.
- Dream Unlimited Corp. (DRM-T, “superperformer”) at $ 53 from $ 56. Average: $ 55.33.
- European Residential REIT (ERE.UN-T, “superperformer”) at $ 5.35 from $ 6. Average: $ 5.74.
- Extendicare Inc. (EXE-T, “neutral”) at $ 8 from $ 8.50. Average: $ 8.15.
- First Capital REIT (FCR.UN-T, “superperformer”) at $ 19.50 from $ 21. Average: $ 20.54.
- FirstService Corp. (FSV-Q / FSV-T, “neutral”) at $ 140 from $ 145. Average: …