Inside the Market\u2019s roundup of some of today\u2019s key analyst actions<\/p>\n
RBC Dominion Securities analyst Michael Harvey sees \u201cpositive operational momentum\u201d for Paramount Resources Ltd. (POU-T<\/a>) following the Monday\u2019s release of a \u201csolid\u201d operational update that featured third-quarter volumes tracking ahead of guidance and an outlook positioned to meet or exceed guidance.<\/p>\n The Calgary-based company also announced the sale of 18.5 million shares of Nuvista Energy Ltd (NVA-T<\/a>) at a price of $16 per share, which is 5-per-cent premium to Friday\u2019s close, for total proceeds of $296-million. Mr. Harvey called it \u201ca tidy piece of business,\u201d believing \u201cParamount has crystallized a meaningful gain as a result of this investment.\u201d<\/p>\n \u201cCorporate volumes of 33,800 barrels of oil equivalent per day (47-per-cent liquid) were above prior Q3 guide of 30-32,000 boe\/d, largely driven by the Willesden Green property which is running at approximately 11,500 boe\/d on the back of success from new Duvernay wells and an early start-up at Alhambra,\u201d he said. \u201cFourth quarter and full-year guidance remain unchanged for now at 43.5 mboe\/d and 40.5 mboe\/d, respectively (midpoints); our estimates are slightly higher than both figures on the back of [Monday\u2019s] update.\u201d<\/p>\n \u201cParamount has numerous upcoming catalysts, which include plans to make a final investment decision at Sinclair (400 mmcf\/d plant + wells) by Q4\/25 following additional testing. While the company has not detailed a formal estimate, we estimate that this project could map to roughly $700 million in investment including the facility and 20-30 new wells. Alhambra Phase 2 continues to target Q4\/26, though we note there is potential that this target comes forward given history and execution success with Phase 1.\u201d<\/p>\n After an increase to his cash flow expectations, Mr. Harvey raised his target for Paramount shares to $26 from $23, keeping a \u201csector perform\u201d rating. The average target on the Street is $25.13, according to LSEG data.<\/p>\n With respect to the company\u2019s balance sheet we note a cash position that we expect to map to roughly $600 million at year-end, supporting what we expect will be a multi-year pace of outspend,” he added.<\/p>\n =====<\/p>\n In a research report released Tuesday titled From Cactus to cathode, Desjardins Securities analyst Bryce Adams initiated coverage of Arizona Sonoran Copper Co. Inc. (ASCU-T<\/a>) with a \u201cbuy\u201d recommendation, touting \u201can attractive asset (the Cactus project in Arizona) and a discounted valuation which provides attractive investor appeal.\u201d<\/p>\n Mr. Adams sees the Toronto-based developer possessing a \u201csimple operational plan (open pit, heap leach)\u201d for Cactus, which he thinks is \u201cwell-situated in the industrial area of Casa Grande, close to roads, power and water, and just 45 minutes from the Phoenix international airport.\u201d<\/p>\n \u201cWe expect the Cactus pre-feasibility study (PFS) to highlight an open pit\u2013 only heap leach and solvent extraction and electrowinning (SX-EW) project with oxides and enriched material in the mine plan (primary sulphides excluded),\u201c he said. \u201dThe company recently announced a land acquisition package that is sufficient for the PFS infrastructure. Overall, we view the asset as technically simple, with modest up-front capital requirements. We model US$900-million in initial capex but expect that our estimate may be conservative to the PFS. We estimate capital intensity of US$11,481\/t, above that in the PEA but attractive vs selected peers.\u201c<\/p>\n \u201cWe understand that the definitive feasibility study(2026E) should be linear to the PFS (2025E) and that once the PFS is completed the project will be well-defined, with modest scope and technical updates included in the DFS. That being the case, ASCU expects to file amendments to the state-level permits once the PFS is completed and for those to be accepted within eight months of submission. The air, water and reclamation bond permits should be completed in late 2026 around the same time as the DFS is scheduled for completion. In our view, these timelines dovetail favourably and will put ASCU in a strong position to be able to announce a financing package and FID in late 2026, followed by a two-year construction period and first production in 2029.\u201d<\/p>\n Mr. Adams also thinks Cactus \u201cstands out as one of the most competitive copper development projects in the region, supported by below-average cash costs relative to both operating mines and development projects, as well as strong annual production potential among intermediates\/juniors in the region.\u201d<\/p>\n \u201cBased on the above project economics and timelines, as well as a favourable location and simple project details, we view ASCU as a strong takeout candidate. We note that both Rio Tinto (6.0 per cent) and Hudbay (9.9 per cent) are on the shareholder register and that the larger Ivanhoe Electric is adjacent to ASCU with its Santa Cruz project,\u201d he noted.<\/p>\n Mr. Adams set a target of $5 per share. The current average is $4.05.<\/p>\n =====<\/p>\n Citing valuation concerns, Raymond James analyst Brian MacArthur downgraded Uranium Royalty Corp. (URC-T<\/a>) to \u201cmarket perform\u201d from \u201coutperform\u201d previously, while he emphasized continuing to like its \u201cexposure to uranium through the royalty model, as well as its growth profile, longer-term optionality, favourable jurisdictional risk, and strong balance sheet.\u201d<\/p>\n \u201cURC is a unique company as the largest publicly traded, uranium-focused royalty company,\u201d he added. \u201cWe believe royalty companies like URC offer equity investors diversified exposure to commodity prices, while mitigating downside risk given limited exposure to operating and capital costs. At the same time, upside optionality exists through exploration and asset expansion potential. URC\u2019s royalty portfolio is focused on uranium assets with lower jurisdictional risk, longer duration, and backed by some strong operators. Given URC\u2019s high-margin business model, its diversification, near-term growth profile, longer-term optionality, favourable jurisdictional risk, and strong balance sheet, we believe URC offers investors a good way to get lower-risk exposure to uranium.\u201d<\/p>\n After updating his forecast to reflect a review of operating updates by some operators for properties on which URC has royalties, Mr. MacArthur raised his target for the Vancouver-based company\u2019s shares to $5 from $4.50. The current average is $4.75.<\/p>\n =====<\/p>\n National Bank Financial analyst Jaeme Gloyn thinks the allegations and evidence brought by Jehoshaphat Research in a short report<\/a> released Monday claiming Goeasy Ltd. (GSY-T<\/a>) is manipulating their reporting to delay and avoid reporting rising delinquencies and charge-offs are \u201cwithout merit.\u201d<\/p>\n Accordingly, in reaction to the 9.9-per-cent drop in the Mississauga-based company\u2019s share price on Monday as well as a post-close analyst call in which management firmly refuted the allegations, Mr. Gloyn now sees \u201ca buying opportunity.\u201d<\/p>\n \u201cThe report includes former employer interviews and former competitor executive interviews to explain how frequently and easily GSY uses tactics to delay reporting charge-offs and delinquencies,\u201d he said. \u201cJR argues GSY will have to start reporting higher charge-offs as these loans will inevitably need to default and be charged-off and expects this catch-up in losses to \u2018devastate earnings\u2019. The report argues its thesis on the following points: i) GSY\u2019s change in their definition of net charge-offs, ii) rising interest receivable as a percentage of interest income, iii) lower allowance rates on stage 3 loans, iv) large shift of loans into GSY\u2019s \u201clow-risk\u201d category, v) the surprise departures of former CEO, Jason Mullins and CFO, Hal Khouri.”<\/p>\n \u201cJR\u2019s evidence of manipulation (Rising interest receivables, lower allowance rates on stage 3 loans and the shift in loans to the \u2018low risk\u2019 category) is explained by GSY\u2019s rapid increase in auto loans. GSY has grown its portfolio of auto loans from $40-million in 2021 to over $1-billion today,\u201d he said. \u201cThe key is these loans are larger and typically benefit from a lower loss given default because they are secured by the vehicles. Unlike unsecured loans that charge-off after 90 days, secured auto loans will charge-off after 180 days. As these larger auto loans become delinquent, it is reasonable to see an increase in interest receivable. Further, because these loans are secured by vehicles where confidence in recovery is higher, it is also reasonable to report a decrease in stage 3 allowances as a percentage of loans outstanding. Additionally, the risk categorization of loans is determined based on probability of default, which can change based on collections abilities. GSY enhanced their collections capabilities in 2024 which could explain the change in classification.\u201d<\/p>\n The analyst concluded the evidence presented by the Florida-based firm is explained by recent growth of GSY\u2019s secured lending platform. <\/p>\n \u201cWe are aware of the potential volatility that can come with rapid growth of a lending vertical as we have seen with auto lending at GSY,\u201d he noted. \u201cWe believe management is also aware of this and is actively making investments to improve collections and underwriting. That said, this does not imply that GSY is involved in any accounting games or excessive \u2018kick the can\u2019 activity.\u201d<\/p>\n Mr. Gloyn reiterated his \u201coutperform\u201d rating and $265 target for Goeasy shares. The average is $239.22.<\/p>\n Elsewhere, Scotia Capital\u2019s Phil Hardie cut his target to $225 from $235 with a \u201csector perform\u201d rating.<\/p>\n \u201cThe release of a short report alleging that goeasy has improperly delayed credit losses and materially unreported loan delinquencies has put near-term pressure on the stock,\u201d he said. \u201cWe believe the central theme of the report follows a relatively well-worn path for short-sellers that target lenders during transitioning economies. The author alleges that company uses \u201cpretend and extend\u201d practices to avoid reporting delinquencies and uses accounting approaches that delay reporting of loan losses and other expenses.<\/p>\n \u201cWe don\u2019t buy into the report\u2019s bearish view that delayed net-charge-offs are likely to drive a significant earnings miss for 2026, or that GSY is engaged in questionable practices. Following a 10-per-cent one-day decline in the stock after the release of the report, we would not be surprised to see a near-term bounce to recover some lost ground, however we think the report will sharpen investor focus on underlying delinquency and portfolio credit performance trends and constrain near term multiple expansion. Ultimately we think the key to sustainably removing any overhang will be delivering solid results with the charge-off rate remaining in line with the targeted range with late stage delinquencies also trending down.\u201d<\/p>\n =====<\/p>\n National Bank Financial analyst John Shao came away from a visit to Zedcor Inc.\u2019s (ZDC-X<\/a>) Denver branch with \u201ca higher conviction\u201d that the mobile surveillance and live monitoring solutions company current growth is \u201csustainable,\u201d sensing \u201ca strong engagement among local employees who are constantly searching for new business opportunities while providing high-quality services.\u201d <\/p>\n \u201cOur discussion with customers was unsolicited and could be cross-referenced to our previous channel checks, all of which suggest that Zedcor has the market-leading product and services,\u201d he said in a report titled The \u201cLocal Touch\u201d is the Biggest Barrier to Entry.<\/p>\n Mr. Shao thinks the success of the branch can be \u201creplicated and thus Zedcor\u2019s geographic expansion is scalable\u201d with limited capital needed to open a branch that can serve multiple neighbouring states. He concluded growth across the United States is \u201cachievable.\u201d<\/p>\n \u201cThis is a high pace work environment with Zedcor staff constantly taking inbound calls for new tower deployments, client service requests and new business opportunities,\u201d the analyst said. \u201cThe quick turnaround of inventory plus the limited return at this branch are accurately reflected in Zedcor\u2019s growth (84 per cent from the most recent quarter) and a high asset utilization rate of over 90 per cent.<\/p>\n \u201cWe get a better sense of what the barrier to entry is \u2013 it is the local touch. When the Company employs a group of highly motivated individuals who diligently search for new market opportunities and invest their time to build relationships with individual decision makers, we believe this diligence and local touch are the biggest entry barrier, along with Zedcor\u2019s high standard of service. Investors who are newly introduced to this story tend to believe the product entry barrier is low. We share the same view in terms of the product itself \u2013 but believe the real moat lies in the execution, relationships and service quality that are much harder to replicate.”<\/p>\n Mr. Shao reaffirmed his \u201coutperform\u201d rating and $5.50 target for the Toronto-based company\u2019s shares. The average is currently $5.57.<\/p>\n =====<\/p>\n In other analyst actions:<\/p>\n * CIBC\u2019s Mark Petrie initiated coverage of Groupe Dynamite Inc. (GRGD-T<\/a>) with an \u201coutperformer\u201d rating and a Street-high $65 target, exceeding the $56.50 average. <\/p>\n * In response to its definitive agreement to acquire Royal Camp Services Ltd. for $165-million, Acumen Capital\u2019s Trevor Reynolds raised his Black Diamond Group Ltd. (BDI-T<\/a>) target to $17 from $14.50 with a \u201cbuy\u201d rating.<\/p>\n \u201cOverall, we view the acquisition as positive and expect the combined assets to provide BDI with strong exposure to expedited major projects in Canada along with increased defence spending,\u201d said Mr. Reynolds.<\/p>\n * CIBC\u2019s Kevin Chiang cut his target for Canadian National Railway Co. (CNR-T<\/a>) to $140 from $148 with a \u201cneutral\u201d rating. The average is $157.33.<\/p>\n