Inside the Market’s roundup of some of today’s key analyst actions
The friendly deal that will see Cenovus Energy Inc. (CVE-T) take over MEG Energy Corp. (MEG-T) is a “strategic masterstroke” when it comes to how it will consolidate the Christina Lake oil operations, said Chris MacCulloch of Desjardins Securities.
Mr. MacCulloch reiterated Cenovus as a top pick while increasing his price target on the stock to C$29 from C$27.50.
Cenovus Energy announced on Friday it plans to acquire MEG Energy in a C$7.9 billion cash-and-stock deal. The deal came after Strathcona’s earlier hostile takeover offer, which was rejected by MEG’s board in June and had been valued at C$6 billion.
“We view Friday’s overwhelmingly positive market response to the proposed transaction as confirmation of what the investment community already knew—consolidating Christina Lake is a slam dunk for CVE. Simply put, there isn’t another operator that could have offered the operational synergies that CVE can given proximity to its existing assets at Christina Lake and its technical expertise in thermal oil sands development. These factors support its impressive development plan that would deliver incremental growth at highly attractive capital efficiencies of ~C$13,000/bbl/d, among the most competitive we have seen for long-life, low-decline oil sands production," Mr. MacCulloch said in a note to clients.
“The transaction is even more impressive considering the modest price tag and 75% cash funding, which should enable CVE to consolidate Christina Lake without significant dilution to equity holders. Although it still has some work to do right-sizing debt levels, we are confident this can be achieved through non-core asset dispositions,” he added.
The analyst said it’s possible Strathcona Resources would reenter the fray by raising its initial bid for the company. But it’s highly unlikely to sway the MEG board or shareholders given the poor liquidity of its shares and the break fee that is now involved, he said. “That said, we would not rule out the potential for CVE to offer a modest sweetener prior to MEG’s shareholder vote in October, which it has left itself ample room to fund at C$27.25/share,” Mr. MacCulloch said.
As for MEG Energy, Mr. MacCulloch moved his recommendation to a tender from a “hold”, with a price target of C$28.
“In our view, the proposed deal represents fair value despite the modest take-under vs Thursday’s (August 21) closing price given the cash component of the bid and the equity component, which enables MEG shareholders to participate in the synergies of the combined entity,” the Desjardins analyst said.
Elsewhere, UBS raised its price target to C$27 from C$25. ATB Capital Markets analyst Patrick O’Rourke raised his price target on Cenovus Energy to C$28 from C$25 while reiterating an “outperform” rating. “The strategic rationale is underpinned by a logical asset fit, consolidating adjacent and highly complementary assets at Christina Lake, with CVE identifying ~$150mm in immediate annual synergies and an additional ~$280mm in long-term optimizations achievable by 2028,” he commented.
And National Bank Financial analyst Travis Wood upgraded Cenovus Energy to “outperform” from “sector perform” while raising his price target to C$28 from C$24. “In our view, the consolidation of Christina Lake simply provides Cenovus with an opportunity to leverage scale to enhance margins in the area. Through leveraging both tax pools and operating efficiencies, we expect the company will outperform the targeted annual synergy capture of $150-400 million over the next several years. This scale, coupled with increased transparency around future growth opportunities provide investors with an attractive free cash flow outlook, which will be used to reduce debt and drive return of capital,” Mr. Wood commented.
The average price target on Cenovus shares is now C$26.57, up from C$25.57 a month ago, according to LSEG data.
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Desjardins Securities analyst Alexander Leon lowered his price target on Inovalis Real Estate Investment Trust (INO-UN-T) to 85 cents from C$1 following weaker-than-expected second quarter results.
“Total portfolio occupancy was unchanged sequentially at 58.9%, and 18,000sf of previously vacant space is committed for occupancy in 3Q25. However, tenants in default of rent at Gaia (~21,500sf), the upcoming departure of Lorenz Bahlsen at Trio (~86,500sf; INO’s second largest tenant contributing 9% of total revenue), and higher capex and leasing costs represent significant operational headwinds through early 2026,” Mr. Leon said.
He reiterated a “hold” rating. Mr. Leon is the sole analyst covering the REIT, according to LSEG data.
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National Bank Financial analyst Vishal Shreedhar raised his price target on Groupe Dynamite Inc. (GRGD-T) to C$40 from C$32 as he looked ahead to the company’s second quarter results.
He projects the company will report EPS of 44 cents, in line with the consensus, and up from 40 cents in the year earlier period.
“Our expectation of 10.7% EPS growth y/y in Q2/F25 largely reflects double-digit same-store sales growth and net new store openings in the last 12 month and SG&A leverage, partly offset by gross margin contraction (impact of 145% tariffs in early Q2/F25 and the cycling of favourable timing and lower occupancy costs), higher D&A (depreciation and amortization), a higher tax rate and slightly higher interest expense,” Mr. Shreedhar said.
He said he is maintaining a “favourable disposition” on the retailer and it is a top pick in the sector. “Investment in GRGD is differentiated by strong financial metrics, with an EBITDA margin and return on invested capital that is amongst the highest in our coverage universe (F2024 EBITDA margin of 31.6% and ROIC of 47.4%),” he said.
The average analyst price target is C$33.65, which is up from C$28.05 a month ago.
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Canaccord Genuity analyst Doug Taylor initiated coverage on Tiny Ltd. (TINY-X) with a “speculative buy” rating and C$1.75 price target.
Victoria-based Tiny is a consolidator of businesses across a wide array of industries including product design, ad agencies, ecommerce solutions and internet products.
Recent quarterly results from the company included the initial impact of its recent acquisition of Serato Audio Research Limited, a global DJ software company, noted Mr. Taylor.
“With this significant, highly profitable asset in the fold, Tiny is resuming its deleveraging profile at an accelerated rate. Our positive thesis is based on several catalysts: 1) Improved organic growth profile through Serato inclusion and in lapping easier comps for the Creative Platform segment; 2) Accelerated deleveraging with improving FCF and one-time licensing fee capture; 3) Realization of latent value in the company’s Tiny Fund I investments,” the analyst said.
There is no other analyst coverage on the stock.
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Raymond James analyst Brad Sturges trimmed his price target on Nexliving Communities Inc. (NXLV-X) to C$2.30 from C$2.50 following the company’s second-quarter results. He is maintaining an “outperform” rating.
NexLiving’s 2Q25 funds from operations was about 5 cents a share, below Mr. Sturges’ 6 cents estimate, due to higher-than-forecasted General and Administrative expenses costs. But this was up 26% from a year earlier.
“While we have trimmed our FFO/share and AFFO/share estimates to reflect 2Q25 results, we forecast NexLiving to generate robust 2025E adjusted funds from operations (AFFO)/share growth of +33% YoY, driven by its recent Devcore MFR portfolio acquisition last year. We believe NexLiving could deliver relatively stronger AFFO/share growth YoY in 2H25, based on an expected reduction in average occupancy rate headwinds due to the company’s leasing efforts in New Brunswick, and lower expected G&A cost inflation YoY in the back of the year following completion of non-recurring strategic investments implemented by Nexliving as well as due to the timing of stock incentive compensation in 1H25,” Mr. Sturges said in a note to clients.
The average analyst target is C$2.65.
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In other analyst actions:
NVIDIA Corp. (NVDA-Q): Stifel raises target price to US$212 from US$202