Inside the Market\u2019s roundup of some of today\u2019s key analyst actions<\/p>\n
National Bank Financial analyst Richard Tse raised his rating for Open Text Corp. (OTEX-Q<\/a>, OTEX-T<\/a>) to \u201coutperform\u201d from \u201csector perform\u201d after hosting investor meetings with Executive Chair and Chief Strategy Officer Tom Jenkins, seeing \u201ca renewed investment opportunity in what had been an orphaned name.\u201d<\/p>\n \u201cThat investment opportunity comes in two stages \u2013 the first is in the short term where we believe the next 3 – 6 months will be catalyst-rich, bringing renewed attention to the name while making it a compelling and easier to understand, developing growth story,\u201c he said. \u201dThat should also drive a commensurate valuation re-rating in the Company\u2019s shares. The second stage is what we believe is a quietly developing AI play from an unassuming leader in enterprise data via the Company\u2019s long-standing core strength in content management. It\u2019s this second stage that\u2019s the most exciting as it offers the potential for a material valuation re-rating in the name longer term.”<\/p>\n In a client note titled Pivot into Opportunity, Mr. Tse said he sees multiple catalysts for a re-rating of the Waterloo, Ont.-based software company\u2019s shares in short-term, including the divestiture of non-core assets.<\/p>\n \u201cWhile that\u2019s positive, we think the bigger benefit comes from the qualitative \u2013 simplifying the story and allowing the Company to focus on a material pivot towards monetizing its data position in AI,” he said.<\/p>\n \u201cWith OpenText\u2019s upcoming annual user conference in November, we expect to hear an increasing uptake in the Company\u2019s AI deployments from customers using its content management products and services. In what may be surprising to many investors, Open Text\u2019s oldest product category of Content is where it\u2019s seeing the most growth. In a recent investor slide, Open Text highlighted that Content Cloud revenue was up 17 per cent year-over-year in FY25; we believe approximately two-thirds was attributed to AI.”<\/p>\n However, it is in the long term where the company \u201ccould get really interesting,\u201d according to Mr. Tse.<\/p>\n \u201cHaving covered OpenText from an equity research lens for close to 25 years, in that time, we\u2019ve seen virtually every single acquisition the Company has undertaken in the market,\u201d he explained. \u201cCollectively, OpenText has completed around 300 acquisitions towards becoming a leader in the Enterprise Content Management (ECM) space, relative to others,\u00a0notably, while we include Microsoft (SharePoint) in this $50-billion ECM market, OpenText holds a relative lead in large enterprise as validated by its partnership with SAP. We think the above preamble is important to understanding OpenText\u2019s aspirations around AI.<\/p>\n \u201cTo be clear, we don\u2019t believe OpenText is a pure-play AI company, but that does not mean it cannot be a beneficiary of AI, as we\u2019ve seen with other names. In our view, OpenText\u2019s potential comes from its ability to monetize the vast amounts of unstructured data it manages across its 120K+ enterprise customers. The thesis is quite simply that enterprises want to utilize their data securely, which is what OpenText has done for years around its core offering today – serving data securely to customers, so they can better execute on their business processes. However, going forward, we think it is inevitable that (all) enterprises will be looking to utilize their data via AI (including agents) with OpenText sitting in the cross-hairs of that opportunity. Bottom line, while early in this developing thesis, we\u2019d note recent actions in the market, such as Salesforce\u2019s bid to acquire Informatica for an EV of $8.2-billion (4.7 times NTM [next 12-month] Sales and 13.9 times NTM EBITDA), appear to provide reasonable validation of the data opportunity. Of note, it\u2019s broadly viewed that Salesforce is acquiring Informatica to strengthen its data foundation for AI (clean, integrated, catalogued, and managed data).\u00a0In our view, OpenText is differentiated given its focus and specialization in unstructured data. Bottom line, we think this is where there\u2019s growing potential to see a material valuation re-rating; interestingly, if we were to ascribe the valuation from the Informatica transaction to our OpenText \u2018Post-Divestitures\u2019 financial profile, the implied share price would be $65.\u201d<\/p>\n Mr. Tse raised his target for Open Text\u2019s Nasdaq-listed shares to US$45 from US$34.\u00a0 The average target on the Street is US$35.47, according to LSEG data.<\/p>\n =====<\/p>\n In reaction to recent share price appreciation, Desjardins Securities analyst Lorne Kalmar moved Allied Properties Real Estate Investment Trust (AP.UN-T<\/a>) to \u201csell\u201d from \u201chold\u201d previously, believing it now “looks expensive.”<\/p>\n “Following AP\u2019s strong unit price performance since July 31 and the negative 4-per-cent total return to our target, we are moving our recommendation to Sell,” he said. \u201cWhile we acknowledge the improving sentiment around the office sector, in our view, AP\u2019s current valuation screens expensive, particularly on P\/NAV and implied cap rate, and does not appropriately reflect either the current state of the office market or some of the potential headwinds the REIT could face over the next 12\u201318 months.”<\/p>\n Mr. Kalmar thinks the Toronto-based REIT\u2019s re-rating has been \u201cdriven by sentiment and ignores several important realities.\u201d <\/p>\n \u201cThe first is that we do not expect AP to participate meaningfully in the initial phases of the office market recovery, which is being driven by bank RTO mandates, primarily in Toronto (2 million square feet, or 2 per cent of downtown Toronto inventory), he explained. \u201dWe only expect AP\u2019s portfolio to begin to meaningfully recover once there is a rebound in office-using employment and the economic outlook, and Class A vacancy declines to the single digits (2Q25: 17.0 per cent). <\/p>\n \u201cWe also have concerns around AP\u2019s ability to meet its 90-per-cent occupancy target by year-end, as well as the recoverability of the $234-million loan on 150 West Georgia and the timing of KING Toronto\u2019s completion, both of which could impact leverage reduction (ND\/EBITDA: 11.9 times). We would reconsider our rating on a pullback in the unit price, evidence to support expectations for a recovery of the REIT\u2019s portfolio fundamentals and\/or private market support for the current valuation.\u201d<\/p>\n Seeing its current valuation “not rooted in reality,” Mr. Kalmar maintained an $18 target for Allied units. The current average is $18.22.<\/p>\n “While we acknowledge the improving sentiment around the office sector, in our view, AP\u2019s current valuation screens expensive, particularly on P\/NAV and implied cap rate, and does not appropriately reflect either the current state of the office market or some of the potential headwinds the REIT could face over the next 12\u201318 months,” he said.<\/p>\n =====<\/p>\n Ahead of the release of its third-quarter results on Sept. 24, Desjardins Securities analyst Gary Ho thinks “scarcity value with accelerated buybacks should drive better valuation” for AGF Management Ltd. (AGF.B-T<\/a>)<\/p>\n “Industry flows have seen an improvement while strong markets boost investors\u2019 confidence,” he said. \u201cWe updated our model to reflect higher AUM [assets under management] driving our upwardly revised adjusted EPS estimate of $0.44 (consensus C$0.42). Recent M&A transactions and scarcity value bode well for AGF\u2019s valuation while its increased NCIB activity provides share price support.\u201d<\/p>\n Mr. Ho\u2019s new EPS forecast of 44 cents is 3 cents higher than his previous expectation, driven by a higher projection for its Wealth Management business.<\/p>\n \u201cKey themes include: (1) Retail net flows of $44-million. Industry trends (per SIMA) have been recovering, which is not a huge surprise given the strong markets over the past months. June, July and preliminary August long-term fund net inflows total $10-billion, led mostly by conservative categories such as fixed income ($5.2-billion), with equity funds seeing slight net outflows in June and July. We forecast $44-million in net inflows in 3Q (more bullish vs AGF\u2019s flattish flows from its last call) and expect continued success in the SMA build-out (not in retail flow numbers). SMA\/ETF AUM increased 54 per cent year-over-year to $2.8-billion in 2Q25. Fund performance should hold in well. While 50 per cent of strategies outperformed peers on a three- and five-year basis in 2Q, its three-year percentile deteriorated to 51 per cent vs 44 per cent at 1Q. (2) Forecast 3Q SG&A expense of $61.5-million. We model $246-million for FY25, roughly in line with guidance of $245-million. Our FY26 and FY27 SG&A estimates imply 3.5-per-cent growth per year. (3) Alt asset contribution. We expect private alt FV gains of $7.8-million. AGF targets an 8\u201310-per-cent return on its alt investments (but has been trending above this threshold). We will look for AGF\u2019s intentions to increase its 25-per-cent New Holland stake in the near term. (4) Share buybacks. AGF has been very active with its NCIB, with 643,700 shares repurchased for $8-million and an additional 0.4 million shares ($4.6-milion) under its EBT. This marks its fastest pace since its 2022 SIB,” the analyst said.<\/p>\n Reiterating his \u201cbuy\u201d recommendation for AGF shares, Mr. Ho raised his target to $16.50 from $15 after increasing his earnings expectations through fiscal 2026. The average on the Street is $14.40.<\/p>\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) M&A should be EPS-accretive.\u201d<\/p>\n =====<\/p>\n Raymond James analyst Steven Li notes U.S. mortgage rates started to move lower last week ahead of the latest meeting of the U.S. Fed, which he said \u201cbodes well\u201d for Real Matters Inc. (REAL-T<\/a>) volumes in fiscal 2026. <\/p>\n \u201cMBA data on mortgage applications has also trended more positively in the last couple of months especially for refi applications,\u201d he added.<\/p>\n Bank of Canada and U.S. Fed expected to resume rate cuts this week<\/a><\/p>\n Mr. Li emphasized the impact of this trend will largely be felt in the company\u2019s Title & Close (T&C) segment, noting its larger and more profitable Appraisal business will \u201calso benefit from lower rates but is harder to model given many more factors (new homes, affordability etc.).\u201d <\/p>\n \u201cT&C is 100-per-cent refinancing and as long as current mortgage rates are 50 basis points less than what you are paying, it makes financial sense to refinance … Net-net, where Chase refi rates currently are (5.625 per cent), we have potentially $5-milion A-EBITDA upside to our EBITDA forecast (and likely consensus as we are in-line) – caveat being this has to be sustained unlike last year\u2019s head fake. The lower rates go, the more upside there … Any potential positive impact on its Appraisal segment from lower rates would be on top,\u201d he added.<\/p>\n Keeping an \u201coutperform\u201d rating for Real Matters shares, the analyst raised his target to $9 from $7.50. The average is $7.21.<\/p>\n =====<\/p>\n While acknowledging the slow ramp-up of its flagship Attachie project remains an overhang for investor sentiment, Raymond James\u2019s Luke Davis added Arc Resources Ltd. (ARX-T<\/a>) to the firm\u2019s “Analyst Current Favorites\u2018” list, emphasizing the Calgary-based company “holds some of the highest-quality assets in the WCSB and think the near-term weakness will be transitory.”<\/p>\n \u201cSince the beginning of August, ARC shares have materially underperformed the energy benchmark, largely driven by a choppy start at their flagship Attachie project,\u201d he said. \u201cIn our view, although management has reiterated its 35-40 mboe\/d guidance, we think their tone has softened, albeit so has broader sentiment, and we believe this increases the likelihood that the planned Phase 2 FID is deferred.\u201d<\/p>\n While he lowered his forecast for Arc to reflect that underperformance, Mr. Davis called Attachie, which is a natural-gas play located in northeastern British Columbia, the company\u2019s \u201ccrown jewel.\u201d<\/p>\n \u201cManagement considers Attachie its largest and most economic asset, boasting break-evens belowUS$40\/bbl WTI and C$0\/mcfgas, and has made it the focal point of the company\u2019s long-term growth profile,\u201d he said. \u201cThe culmination of more than a decade of planning, ARC aims to develop the asset over multiple phases with peak capacity of 150-180 mboe\/d (60-per-cent liquids, 30-per-cent of corporate productive capacity). As much as ARC\u2019s strategy aligns with their broader asset book, the company is also making a call on product mix – opting to increase exposure to high-value condensate given Western Canada is structurally short. Canadian oilsands operators currently import roughly 250 mbbl\/d of condensate from the U.S. to meet blending demand, which we expect will yield supportive pricing for the foreseeable future.\u201d<\/p>\n Keeping an \u201coutperform\u201d rating, Mr. Davis lowered his target to $33 from $35. The average is $34.06.<\/p>\n \u201cARX trades at a 0.4-timess discount\/in-line to gas-weighted peers in 2025E\/26E; we argue for a premium given its high-quality Montney portfolio, infrastructure footprint, and highly regarded management team, though we expect it could take some time course correct with Attachie in full focus,\u201d he said.<\/p>\n ====<\/p>\n In other analyst actions:<\/p>\n * BMO\u2019s Jeremy McCrea upgraded Parex Resources Inc. (PXT-T<\/a>) to \u201coutperform\u201d from \u201cmarket perform\u201d with a $20 target, rising from $16 and exceeding the $17.96 average on the Street.<\/p>\n * Telsey Advisory Group\u2019s Dana Telsey downgraded Lululemon Athletica Inc. (LULU-Q<\/a>) to \u201cmarket perform\u201d from \u201coutperform\u201d with a US$200 target, down from US$360 and below the US$211.40 average.<\/p>\n * In response to its takeover by Royal Gold Corp.<\/a>, CIBC\u2019s Cosmos Chiu lowered Sandstorm Gold Ltd. (SSL-T<\/a>) to \u201ctender\u201d from \u201cneutral\u201d with a $16.50 target, rising from $13.50 and above the $14.51 average on the Street.<\/p>\n","protected":false},"excerpt":{"rendered":"Inside the Market\u2019s roundup of some of today\u2019s key analyst actions National Bank Financial analyst Richard Tse raised…\n","protected":false},"author":2,"featured_media":145592,"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-145591","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\/145591","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=145591"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/145591\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/145592"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=145591"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=145591"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=145591"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}