Inside the Market’s roundup of some of today’s key analyst actions
RBC Dominion Securities analyst Mark A. Dwelle upgraded RLI Corp. to “sector perform” from “underperform” and raised his target price on the insurer to US$67 from $56.
“Three consecutive quarters of double-digit premium growth, and a improving combined ratio (ex-volcano losses) highlight a strong quarter,” he writes, citing the ratio of losses and expenses to premium revenue. Though the company’s price-to-book value multiple “remains rich,” he says, “we see improving fundamentals, stable reserves and a strong capital return program as generally supportive of the current valuation.”
Mr. Dwelle says his past concerns about profit margins and reserves for losses have been resolved, and a reemergence of growth has put earnings expectations “back on a favourable track.” The company’s dividends provide extra support, he says.
His increased target price comes from increasing his book-value multiple from 2.8 to 3.1 and using his book-value forecast for the end of 2019, versus 2018. He also increased his earnings estimates.
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Industrial Alliance Securities analyst Neil Lindsell says investors should be more positive on the future viability of Aimia Inc., as the points-reward company has detailed more plans to rebound from the loss of its preferential Air Canada relationship.
Mr. Lindsell retained his “speculative buy” rating and $3.75 target price, versus Thursday’s close of $2.30, after the Aimia announcement. The company says it intends to expand reward options to “any seat on any airline, anywhere at any time” and introduce a points transfer program in 2020 allowing members to convert their Aeroplan Miles into about 20 airline frequent flyer programs and numerous hotel loyalty programs.
Mr. Lindesll says he “recognize[es] that we are still two years from the launch of the ‘New Aeroplan,’ that there remain a number of moving parts, and that profitability will still be uncertain until we can gauge member acceptance and Aeroplan’s ability to plan and effectively execute on this purchasing strategy.” At the same time, “Aeroplan’s extensive database with decades of information on member travel habits provides good confidence in the Company’s ability to deliver on that kind of predictive purchasing.”
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Canaccord Genuity Group Inc. analyst Mark Rothschild raised his target price on Choice Properties REIT to $13 from $12.75 after it reported second-quarter earnings. TD Securities also raised its target price to $13, from $12.50.
Canaccord’s Mr. Rothschild says the second quarter, the debut reporting period after the Canadian Real Estate Investment Trust, or CREIT, merger, showed progress on the integration of the two, although steps like reducing redundancies and integrating information systems remain. “With the addition of CREIT’s portfolio, Choice has added additional development projects which provide the opportunity for value creation over the long term.” As of the end of the quarter, Choice had approximately 3.7 million square feet of active developments and expects to invest approximately $1.2 billion in developments over the next several years.
Choice’s units trade at 4.6 per cent discount to his estimate of their net asset value, he says, and are less expensive than peers on the basis of a cash flow multiple.
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Barclays Capital Inc. analyst John Aiken cut his target price on insurer Intact Financial Corp. to $106 from $110 after the company pre-announced catastrophe losses from Central Canadian storms that exceeded his forecast. With shares closing at $96.31 Thursday, he maintained his “outperform” rating.
The storms are expected to take a $142 million chunk out of second-quarter results when Intact announces July 31, but investors “largely shrugged off the preannouncement,” Mr. Aiken writes. Intact has underperformed other Canadian financials and the broader S&P/TSX Composite this year, he says, “as we believe investors have already priced in the impact of weather-related events and the underperformance of personal auto.”
Despite reducing his earnings estimate, causing the target-price decline, Mr. Aiken remains positive, noting Intact continues to lead the industry in market share, profitability and efficiency and should continue to benefit from industry consolidation.
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In other analyst actions:
Advantage Oil & Gas Ltd AAV.TO: CIBC cuts target price to C$5.25 from C$5.50
Black Diamond Group Ltd BDI.TO: CIBC raises target price to C$2.75 from C$1.50
Bonavista Energy Corp BNP.TO: CIBC cuts target price to C$1.65 from C$1.75
Bonterra Energy Corp BNE.TO: CIBC raises target price to C$18 from C$16.5
Calfrac Well Services Ltd CFW.TO: CIBC cuts target price to C$8.5 from C$9.5
Crescent Point Energy Corp CPG.TO: CIBC raises target price to C$13 from C$12.5
Enerplus Corp ERF.TO: CIBC raises target price to C$22 from C$20
Gluskin Sheff + Associates Inc GS.TO: CIBC raises target price to C$19 from C$17
MPX Bioceutical Corp MPX.CD: Canaccord Genuity raises target price to C$1.25 from C$1.15
NEO Lithium Corp NLC.V: Cormark Securities raises TP to C$3.35 from C$3.25
Obsidian Energy Ltd OBE.TO: CIBC raises target price to C$1.75 from C$1.5
Pason Systems Inc PSI.TO: CIBC raises target price to C$20 from C$19
Pengrowth Energy Corp PGF.TO: CIBC raises target price to C$1.10 from C$0.90
Petrus Resources Ltd PRQ.TO: CIBC cuts target price to C$1.25 from C$1.75
Pine Cliff Energy Ltd PNE.TO: CIBC raises to neutral from underperform
Pine Cliff Energy Ltd PNE.TO: CIBC raises target price to C$0.50 from C$0.35
Rogers Communications Inc RCIb.TO: Barclays raises price target to C$70 from C$68
Rogers Communications Inc RCIb.TO: CIBC raises target price to C$70 from C$67
Rogers Communications Inc RCIb.TO: Cormark Securities raises PT to C$74 from C$72
Rogers Communications Inc RCIb.TO: JP Morgan raises price target to C$72 from C$67
Rogers Communications Inc RCIb.TO: RBC raises target price to C$69 from C$68
Storm Resources Ltd SRX.TO: CIBC raises target price to C$3.25 from C$3
Surge Energy Inc SGY.TO: CIBC raises target price to C$3 from C$2.75
Tamarack Valley Energy Ltd TVE.TO: CIBC raises target price to C$6.25 from C$6
TMX Group Ltd X.TO: CIBC raises target price to C$98 from C$88
Torc Oil & Gas Ltd TOG.TO: CIBC raises target price to C$10.25 from C$9.5
Total Energy Services Inc TOT.TO: CIBC cuts target price to C$14 from C$16
Vermilion Energy Inc VET.TO: CIBC raises target price to C$60 from C$55
Western Energy Services Corp WRG.TO: CIBC cuts target price to C$2 from C$2.5
Whitecap Resources Inc WCP.TO: CIBC raises target price to C$12.75 from C$12.5
David Milstead