Inside the Market\u2019s roundup of some of today\u2019s key analyst actions<\/p>\n
Many analysts covering Dollarama Inc. (DOL-T<\/a>) raised their price targets on the stock following the retailer\u2019s better-than-expected fiscal first quarter results that demonstrated resilient demand and earnings growth. <\/p>\n Desjardins analyst Chris Li said Dollarama\u2019s 9% stock price rise on Thursday \u201cproves that 4Q\u2019s concerns over slowing growth in Canada and LATAM were unwarranted.\u201d<\/p>\n He sees continued strong performance to come.<\/p>\n \u201cFurther share price appreciation should come from exceeding 3\u20134% comp guidance, launching higher price points next year, continuing strong growth in LATAM, Mexico becoming breakeven sooner and improving losses in Australia. We believe these catalysts are possible and DOL should remain a core holding for long-term investors,” Mr. Li said in a note to clients. <\/p>\n \u201cCanada comp sales of 5.6% (vs 3.7% estimate) were well-balanced from traffic (3.5%) and basket (2.0%). We believe 2Q to date remains healthy (at the top end of full-year 3\u20134% guidance), supported by continuing strong traffic and price increases in 2H last year. Our latest pricing survey shows competition remains rational, with DOL maintaining its compelling value proposition (~40% lower than WMT and AMZN on a price-per-unit basis), which should support solid traffic and moderate price increases. On Canada gross margin, we remain at the top end of full-year guidance (45.5%). This implies a ~30bps yoy decline for the remainder of the year (vs +80bps in 1Q), mainly reflecting product cost inflation. We continue to expect solid low-teens EPS growth from Canada this year,” he said.<\/p>\n \u201cFor Dollarcity, LATAM earnings were strong, increasing 38% yoy, driven by solid comp store sales, new stores and margin expansion. Mexico\u2019s start-up losses (C$4m)were in line and on track to reach EBITDA breakeven by next year. Losses in Australia related to its multi-year transformation were slightly lower than expected, but they will accelerate in 2Q and 3Q and remain on track to reach ~C$70mfor the full year,\u201d he added.<\/p>\n Mr. Li raised his price target to C$215 from C$205 and reiterated a \u201cbuy\u201d rating. \u201cBased on the current share price, the implied P\/E on Canada is ~31x FY27E EPS, which we believe is supported by ~12% EPS growth and investor preference for high-quality defensive names,\u201d he said.<\/p>\n Canaccord Genuity analyst Luke Hannan raised his price target to C$204 from C187, also applauding the company\u2019s sales resilience despite softer consumer confidence.<\/p>\n However, he thinks the stock is now pricey and investors should wait for a dip before buying. <\/p>\n \u201cOur target represents 40.0x our F2027 EPS estimate of $5.09 (previously 37.5x our F2027 EPS estimate of $4.99).<\/p>\n \u201cWe still believe in Dollarama\u2019s long-term growth profile, a result of its lack of meaningful competition, industry-leading profitability and free cash flow generation, robust return on invested capital, and platforms for further growth in Latin America and Australia. That said, we prefer to wait for a more meaningful pullback before adding to positions,\u201d Mr. Hannan said. <\/p>\n Elsewhere, TD raised its target to C$227 from C$225 and reiterated a \u201cbuy\u201d rating and BMO raised its target price to C$221 from C$210 and maintained an \u201coutperform\u201d rating. Scotiabank raised its target to C$220 from C$200 and reiterated a \u201csector outperform\u201d rating. CIBC raised its target to C$228 from C$202 and reiterated an \u201coutperformer\u201d rating. And Stifel raised its target to C$215 from C$190 while affirming a \u201cbuy\u201d rating.<\/p>\n Several analysts cut their price targets on Transat A.T. Inc. (TRZ-T<\/a>) after disappointing fiscal second quarter results that were blamed on external factors: high jet fuel prices and the cancelation of travel to Cuba. <\/p>\n EBITDA came in at -C$21 million, falling short of consensus of C$64 million. The two external factors drove a negative impact of C$95 million, according to analysts. <\/p>\n Desjardins analyst Benoit Poirier noted that the outlook for Transat remains uncertain due to the operating environment, as he cut his price target to C$2.80 from $3.30 and reiterated a \u201chold\u201d rating. <\/p>\n “After five consecutive quarters of growth, 2Q yield declined 0.7% yoy, as most 2Q bookings were sold before the fuel surcharge was introduced. Management mentioned that initial surcharges were well absorbed, but that more recent increases slowed booking momentum, while the ability to offset fuel without hurting demand started to erode after mid-May. Management noted that fuel surcharges should gradually mitigate higher fuel costs, with full offset only expected toward year-end. We now forecast a 2.0% EBITDA margin in FY26 and see the potential for double-digit profitability being pushed back to FY28,” Mr. Poirier told clients in a note. <\/p>\n He added that Transat should benefit from the government\u2019s loan support program for airlines meant to address fuel cost pressures. \u201cWe now forecast FCF to end the year at -C$196m with leverage of 21.7x, with a return to more normal levels in FY28,\u201d he said.<\/p>\n Elsewhere, TD cut its price target to C$2.25 from C$2.50 and reiterated a \u201chold\u201d rating, concerned that raising airfares will put load factors at risk. National Bank cut its target to C$2 from C$2.25.<\/p>\n Canaccord Genuity analyst Carey MacRury upgraded his rating on Triple Flag Precious Metals (TFPM-T<\/a>) to \u201cbuy\u201d from \u201chold\u201d while maintaining a C$52 price target. <\/p>\n A unit of Triple Flag entered into a settlement agreement with Steppe Gold Ltd. this week under which Steppe has delivered to Triple Flag all gold and silver stream obligations in arrears under its stream agreement. Additionally, the settlement agreement provides that the Steppe Gold Stream Agreement has been amended to provide for fixed cumulative deliveries totaling 34,770 ounces of gold over the ten-year period starting in Q3 2026 and ending in Q4 2036, following which Triple Flag will be entitled to gold deliveries equal to 1.5% of the prior quarter\u2019s gold production from the ATO mine, subject to a 500 gold ounce quarterly cap. <\/p>\n Mr. MacRury took the news as an opportunity to upgrade Triple Flag, but mostly attributed his decision to a recent pullback in the share price and lower valuation. <\/p>\n \u201cTFPM is currently trading at 1.15x NAV, below the historical average of 1.32x after the stock has corrected ~18% over the last month,\u201d Mr. MacRury noted.<\/p>\n National Bank analysts had a lunch with company management at CGI Inc. (GIB-A-T<\/a>), including with new president and CEO Tim Hurlebaus, and liked what they heard. <\/p>\n \u201cWe were encouraged by Mr. Hurlebaus\u2019s commentary and optimism looking ahead, while our positive view of CGI remains,\u201d National Bank analyst Doug Taylor said in a note. He reiterated an \u201coutperform\u201d rating and C$135 price target.<\/p>\n The analysts were told that organic growth appears on track for a rebound. <\/p>\n \u201cManagement reiterated its expectation for the U.S. Federal segment to return to positive organic growth for the upcoming FQ3\u201926, while providing optimism for overall organic growth (CC) to turn positive in short order. While a more precise timeline wasn\u2019t provided for that inflection, the Company attributed its recent organic growth deceleration to a handful of larger customers experiencing internal (nuanced) circumstances \u2013 notably, those were not AI-related issues \u2013 which seem to be easing. Management added that during its recent leadership conference held earlier this week, organic growth goals were established that are above (consensus) market expectations,” Mr. Taylor said. <\/p>\n As for AI\u2019s impact on IT services, which has been key to driving the company\u2019s stock price lower in recent months: \u201cThe company was repeatedly asked about AI\u2019s impact on the medium and longer-term future of both SI&C and MS businesses. Management\u2019s view remained steadfast that CGI will have as important a role to play here as with any new technology. CGI sees AI as improving project ROI and bringing forward modernization backlogs, while ultimately having a positive impact on revenue as customers move faster with pipelines. We remain of the view that AI can be a near-term accelerator for CGI rather than a potential disruptor.\u201d<\/p>\n He added: \u201cCGI\u2019s priorities remain: 1) reinvestment \/ supporting organic growth, 2) accretive M&A to contribute ~50% of overall growth, 3) buybacks, and 4) dividends. Interestingly, given recent geopolitical events, CGI\u2019s Canadian heritage could offer an advantage when acquiring globally vs. a competing U.S. peer. Additionally, CGI\u2019s focus on data sovereignty is leading to increased interest in its infrastructure capabilities, which should expand investment into its data centre network.\u201d<\/p>\n Some price targets were nudged up on TMX Group Ltd. (X-T<\/a>) after the company acquired RAFI Indices, more than tripling its indexing assets. <\/p>\n In a deal announced Thursday night, RAFI will be acquired from Research Affiliates Global Holdings for C$683 million. <\/p>\n Raymond James analyst Stephen Boland raised his price target to C$65.25 from C$61.50 and reiterated a \u201cstrong buy\u201d rating on TMX. <\/p>\n \u201cWe view this transaction favourably, as TMX continues to leverage the cash flow generated by strong results in its market-driven business to accelerate growth within the Global Insights segment. We continue to view the Global Insights business as less volatile than Capital Formation or Trading and Clearing. We believe the continued shift in revenue mix will support a higher valuation multiple over the long term,\u201d said Mr. Boland. <\/p>\n The transaction is expected to be accretive to adjusted EPS within the first 12 months of closing, excluding synergies, Mr. Boland noted. The acquisition is expected to be debt financed, with an anticipated pro forma leverage ratio of approximately 2.7x that includes the previously announced and pending acquisition of Cboe Canada and Cboe Australia. TMX plans to return to its target leverage range of 1.5x-2.5x within one year of closing, he added.<\/p>\n