Inside the Market\u2019s roundup of some of today\u2019s key analyst actions<\/p>\n
After \u201cexceptional\u201d second-quarter results, Stifel analyst Martin Landry thinks Group Dynamite Inc.\u2019s (GRGD-T<\/a>) momentum appears to have continued into August, however he expects a \u201cdeceleration of growth and profitability\u201d through the remainder of the fiscal year \u201cto be conservative.\u201d<\/p>\n Shares of the Montreal-based retailer, which operates under the Garage and Dynamite banners, jumped over 15 per cent on Wednesday after it reported quarterly comparable-store sales growth of 25.7 per cent year-over-year, blowing past Mr. Landry\u2019s expectation of 12 per cent and consensus projection of 16.7 per cent \u201cdue to higher traffic as a result of the momentum in the brand and digital marketing effectiveness.\u201d Adjusted fully diluted earnings per share increased 43.4 per cent to 57 cents, topping the analyst\u2019s 42-cent estimate and the Street\u2019s forecast of 44 cents.<\/p>\n \u201cShares moved higher despite being up 51 per cent in the last two months, highlighting the magnitude of the earnings beat,\u201d he said in a note titled The busiest store at the mall. \u201cMost investors had seen the outperformance of the company from spending surveys on credit\/debit cards, but comparable sales growth of 25.7 per cent year-over-year blew past most expectations. Groupe Dynamite\u2019s success comes from: (1) a trendy product offering, (2) rapid turnaround time from ideation to availability on shelves, (3) sexy and provocative marketing campaigns, pushing boundaries more than competitors, and (4) successful digital advertising, which resonates with customers.\u201d<\/p>\n With sales momentum is continuing into third quarter at a similar pace, Mr. Landry thinks \u201cthere could be upside to the company\u2019s guidance\u201d as it raised its full-year comparable-store sales growth guidance to 17-19 per cent, from 7.5-9.0 per cent, previously.<\/p>\n \u201cEBITDA margin should benefit over the next 12 months from financial efficiencies stemming from the new U.S. distribution center,\u201d he added. \u201cIf the current China-U.S tariff rate remains unchanged, FY25 EBITDA margin could reach the higher end of the guidance. The removal of the De Minimis exemption rule for online shipments into the U.S. does not have a material impact for GRGD as a majority of the U.S. online orders were already fulfilled from the U.S. We have increased our H2FY25 EPS forecasts by 8 per cent vs previously.\u201d<\/p>\n Maintaining his \u201cbuy\u201d rating for Groupe Dynamite shares, Mr. Landry hiked his target to $53 from $27.50. The average target on the Street is $48.45, according to LSEG data.<\/p>\n “In the last 12 months, Groupe Dynamite\u2019s operating profit increased by 30 per cent year-over-year, an impressive performance driven by (1) strong comparable sales growth of 15 per cent, and (3) scale benefits with SG&A as a percentage of sales down 250 basis points year-over-year,\u201c he said. \u201dWe believe the company can continue to gain market share and grow much faster than the industry.”<\/p>\n Elsewhere, other analysts making target adjustments include:<\/p>\n * National Bank\u2019s Vishal Shreedhar to $55 from $40 with an \u201coutperform\u201d rating.<\/p>\n \u201cWe maintain a favourable disposition on GRGD and Top Pick selection. Investment in GRGD is differentiated by strong financial metrics, with an EBITDA margin and ROIC that are among the highest in our coverage universe (F2024 EBITDA margin of 31.6 per cent and ROIC of 47.4 per cent),\u201d said Mr. Shreedhar.<\/p>\n * TD Cowen\u2019s Brian Morrison to $55 from $40 with a \u201cbuy\u201d rating.<\/p>\n “Groupe Dynamite exceeded lofty expectations in Q2\/F25, delivering another \u2018beat and raise\u2019 for its F2025 key guidance metrics. With a developing track record for sustained midterm growth that includes on-trend product driving SSSG\/eCommerce, its real estate optimization strategy, and solid FCF\/BS strength, we believe GDI warrants a valuation multiple toward the high-end of its peer group,” said Mr. Morrison.<\/p>\n * Desjardins\u2019 Chris Li to $53 from $36 with a \u201cbuy\u201d rating.<\/p>\n “GRGD\u2019s very strong comparable sales reflect continuing successful execution of its growth initiatives (real estate optimization, product innovation, enhanced customer engagement through loyalty\/digital etc). Momentum is expected to continue in 2H. While the very strong share price reaction likely reflects these positives, for long-term investors, our positive view is supported by double-digit EPS growth, solid FCF and a healthy balance sheet supporting a higher capital return,” said Mr. Li.<\/p>\n * RBC\u2019s Irene Nattel to $58 from $43 with an \u201coutperform\u201d rating.<\/p>\n \u201cStrong and accelerating momentum driving substantially better-than- expected KPIs, putting GRGD on the catwalk to meet\/exceed revised F25 guidance and through our forecast period, and supportive of our OP rating. Combination of strong execution, sharply revised expectations\/forecasts, execution on NCIB, and better flow of funds into small cap and discretionary names have driven multiple re- rating far more quickly than anticipated. In our view, as long as GRGD continues to deliver sector-leading results, re-rating should be sustained\/enhanced. Reiterating GRGD as an attractive SMID-cap with sector-leading growth outlook, compelling optionality for FCF deployment\/potential valuation expansion,\u201d she said.<\/p>\n * Raymond James\u2019 Michael Glen to $55 from $42 with an \u201coutperform\u201d rating.<\/p>\n T\u201che focal point for the quarter was the elevated SSSG of 28.6 per cent (up 25.7 per cent constant currency) which was well above our 20-per-cent forecast and showed a notable acceleration from F1Q at 13 per cent,\u201d he said. \u201cDriving of the comp were a combination pricing (up 12 per cent), successful product, and targeted marketing and social media spend, which actively engaged the customer. In the background rests a data-driven inventory management system, which tracks real-time what the customer wants and emphasizes availability on those products, colours and assortments. This removes \u2018fashion-risk\u2019 from the stores and the end result is a highly effective, inventory lean (GDI turns inventory 7.5-8 times) and low-markdown operating model.\u201d<\/p>\n * BMO\u2019s Stephen Macleod to $55 from $42 with an \u201coutperform\u201d rating.<\/p>\n * Barclays\u2019 Adrienne Yih to $61 from $26 with an \u201coverweight\u201d rating.<\/p>\n * Canaccord Genuity\u2019s Luke Hannan to $54 from $43 with a \u201cbuy\u201d rating.<\/p>\n =====<\/p>\n National Bank Financial analyst John Shao thinks Kraken Robotics Inc.\u2019s (PNG-X<\/a>) \u201cgrowth tailwind\u201d just got \u201canother boost\u201d through a contract win for its biggest customer.<\/p>\n On Wednesday, the Royal Australian Navy announced it has awarded California\u2019s Anduril Industries Inc. a $1.56-billion contract to deliver, develop and support a large fleet of Ghost Shark Extra Large Autonomous Underwater Vehicles over the next five years. St. John\u2019s-based Kraken has been supplying critical subsea batteries to Anduril.<\/p>\n \u201cWithin three years, Anduril has turned prototype into fleet, which is a milestone for this defence company,\u201d said Mr. Shao. \u201cDue to the tight integration, we expect Anduril to carry forward its partnership with Kraken Robotics into this new contract, and thus we expect Kraken to remain as an important battery supplier for Anduril going forward.<\/p>\n \u201cCapacity-wise, Anduril\u2019s new AUV contract also is in sync with Kraken\u2019s new battery facility in Halifax, Nova Scotia. This facility is on schedule to open in late September or early October with the initial battery production in late 2025. As a result, capacity limit does not seem to be an issue in our view.\u201d<\/p>\n The analyst thinks the RAN contract win is \u201cunlikely an isolated case\u201d and now predicts similar contracts will follow.<\/p>\n “The Ghost Shark platform fills a growing demand among navies for affordable, autonomous undersea systems that can complement or substitute for crewed submarines,\u201c he explained. \u201dThe rapid transition from prototype to program of record in just three years demonstrates scalability and operational credibility, making Ghost Shark an attractive option for allies facing similar challenges. Given that Anduril has already established partnerships in the U.S. and UK \u2014 and the AUKUS framework explicitly encourages technology sharing across member nations \u2014 it is highly plausible that other Western navies will follow Australia\u2019s lead in procuring Ghost Shark. If that happens, it will substantially elevate Kraken\u2019s growth trajectory.”<\/p>\n Keeping an \u201coutperform\u201d rating for Kraken shares, Mr. Shao raised his target to $5 from $4. The average target is $4.39.<\/p>\n =====<\/p>\n After \u201csolid\u201d second-quarter results, including \u201cexceptional\u201d same-store sales growth, Roots Corp.\u2019s (ROOT-T<\/a>) \u201cgrowing brand strength outlines upside potential,\u201d according to TD Cowen analyst Brian Morrison.<\/p>\n \u201cWhile it remains \u2018early days\u2019, with marketing spend forecast to remain elevated in H2\/F25, this raises our confidence for an improving earnings profile in F2026, as costs ease and drive sales\/leverage,\u201d he added.<\/p>\n The Toronto-based retailer rose 2.5 per cent after direct-to-consumer sales increased 12.7 per cent year-over-year, topping Mr. Morrison\u2019s forecast by 6 per cent. He attributed the beat to \u201cits product offering resonating\/improved inventory position driving heightened full-price sell-through, resulting in outstanding SSSG [same-store sales growth of 17.8 per cent (forecast 10.0 per cent).\u201d<\/p>\n \u201cManagement provided an update on the state of the consumer, that is trending ahead of expectations,\u201d said the analyst. \u201cIt is seeing strong customer response to core products\/positive uptake to its accelerated marketing efforts that supported market share gains year-to-date. We anticipate positive growth momentum to continue in the seasonally strong H2\/F25.<\/p>\n \u201cMarketing spend remains a focal point: Management plans for elevated marketing expenditures to continue in H2\/F25, as it is achieving \u2018great initial results\u2019 from its efforts. With strong year-over-year sales aided by its \u2018testing the waters\u2019 marketing strategy, we are gaining comfort this should accelerate brand momentum\/operating margin leverage as Roots returns to a normalized marketing cadence in F2026.\u201d<\/p>\n Keeping a \u201cbuy\u201d rating, Mr. Morrison, currently the lone analyst covering Roots, bumped his target for its shares to $4 from $3.75. <\/p>\n \u201cWe believe Roots marketing\/product strategy is bearing fruit, and that an inflection point for its EPS profile has taken hold,\u201d he explained. \u201cImproving brand strength\/product should accelerate sales growth and support earnings growth, especially upon a return to a normalized marketing spend as a percent of sales. This positive outlook and balance sheet strength supports a modest increase to our target multiple, an in turn our target price to $4.00.\u201d<\/p>\n =====<\/p>\n TD Cowen analyst David Kwan thinks the upcoming quarters, including next week\u2019s release of its results for the end of its 2025 fiscal year, will play a \u201ccritical role\u201d in deciding the near-to-medium term trajectory of Sangoma Technologies Corp.\u2019s (STC-T<\/a>) stock.<\/p>\n \u201cThey should help investors gauge the success (or lack thereof) of the significant GTM changes implemented in recent years,\u201d he added. \u201cWe still believe a sustained return to growth should help drive a re-rating.\u201d<\/p>\n Mr. Kwan is currently projecting fourth-quarter revenue estimate of $58.7-million, falling in line with the consensus projection on the Street and implying a 4-per-cent year-over-year decline. However, it would be a rise of 1 per cent quarter-over-quarter, which would represent the first quarter of sequential growth in two years.<\/p>\n He also expects investor focus to be on the company\u2019s guidance for fiscal 2026.<\/p>\n \u201cWe are forecasting F2026 revenue of $239.8-million, essentially in line with consensus at $241.6-million, and implying 2-per-cent organic growth,\u201d said Mr. Kwan. Our F2026 Adjusted EBITDA forecast of $44.9-million is also in line with consensus ($44.4-million). We note that our forecasts\/consensus do not include the impact of the sale of VoIP Supply (we estimate $15-$20-million in revenue and $1-million in Adjusted EBITDA). <\/p>\n \u201cIn particular, the F2026 guidance should help investors better assess management\u2019s confidence in an expected rebound in the business and the magnitude of the impact of the changes it has implemented over the last two years.\u201d<\/p>\n The analyst kept a \u201cbuy\u201d rating and $11 target for the Markham, Ont.-based company\u2019s shares. The average is $11.38.<\/p>\n \u201cAlthough the near-term revenue growth outlook remains challenging, we expect a return to positive revenue growth in late C2025, aided by early benefits from its go-to-market strategy changes and easier year-over-year comps,\u201d he said. \u201cWe expect continued margin improvements, particularly in F2026, as it begins to realize the benefits of its ERP migration that should allow leverage to continue trending downward and provide more flexibility on the capital-allocation front. Despite the strong rebound in the share price since the Q2\/F24 release, the stock is still trading at the bottom end of the peer group and below its historical average, while offering a double-digit FCF yield. Accordingly, we believe the shares remain attractively valued.\u201d<\/p>\n =====<\/p>\n In other analyst actions:<\/p>\n * BMO\u2019s Fadi Chamoun raised his Bombardier Inc. (BBD.B-T<\/a>) target to $190 from $185 with an \u201coutperform\u201d rating. The average is $172.54.<\/p>\n * JP Morgan\u2019s John Royall cut his Cenovus Energy Inc. (CVE-T<\/a>) target to $29 from $32 with an \u201coverweight\u201d rating. The average is $26.81.<\/p>\n * Morgan Stanley\u2019s Toni Kaplan cut her Thomson Reuters Corp. (TRI-N<\/a>, TRI-T<\/a>) target to US$187 from US$197 with an \u201cequal-weight\u201d rating. The average on the Street is US$196.10.<\/p>\n","protected":false},"excerpt":{"rendered":"Inside the Market\u2019s roundup of some of today\u2019s key analyst actions After \u201cexceptional\u201d second-quarter results, Stifel analyst Martin…\n","protected":false},"author":2,"featured_media":136105,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-136104","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/136104","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=136104"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/136104\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/136105"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=136104"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=136104"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=136104"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}