Inside the Market’s roundup of some of today’s key analyst actions
Citi analyst Alexander Hacking reduced his 2025 and 2026 forecast for Newmont Corp. (NEM-N, NGT-T) in response to its recent guidance cut, the firm’s commodity price forecast and lingering operational concerns.
“Citi remains bullish gold seeing prices closing in on $3,000/oz by end-2024 based on a combination of deterioration in the U.S. labour market, still high interest rates weighing on growth, and higher ETF demand (note: albeit Fed expectations were reined in this week),” he said.
“NEM stock has significantly underperformed this year due to a combination of the big guidance cut in October (mid-term from 6.7moz to 6.0moz) and disappointing operating performance. Management & the Board are rightfully facing hard questions given that downgrades were centered on newly acquired Newcrest assets. Asset sales have gone well & we would not be surprised by further portfolio actions to simplify the structure (e.g. exiting PV stake / consolidating Fruta del Norte).”
For the fourth quarter of 2024, Mr. Hacking lowered his earnings per share estimate by a penny to 93 US cents, while his full-year 2025 and 2026 estimates dropped to US$3.66 and US$3.82, respectively, from US$4.70 and US$6.22. The current consensus forecasts on the Street are US$3.90 and US$3.95, according to LSEG data.
With those moves, he moved his target for Newmont shares to US$45 from US$66, keeping a “buy” recommendation. The average target is US$56.66.
“We rate Newmont Mining Buy,” he said. “Positive factors include low operating costs, a stable balance sheet, management with a strong operating track record, potential upside from synergies at the Nevada JV, and optimization of NCM portfolio. Negative factors include some challenging legacy assets (earmarked for divestment), geopolitical risk, and challenges to grow production from such a large base. On balance we see more upside than downside at current levels.”
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Scotia Capital analyst Orest Wowkodaw upgraded his recommendation for Altius Minerals Corp. (ALS-T) after Champion Iron Ltd.’s (CIA-T) proposed Kami Fe project in the Labrador Trough, which it holds a 3.0-per-cent gross revenue royalty on, took a “significant step forward” last week.
“On December 18th, CIA announced that it had entered into a binding partnership agreement with Nippon Steel Corporation and Sojitz Corporation for the joint ownership and development of the proposed Kami Fe project,” he said. “A Definitive Feasibility Study (DFS) is expected to be completed in mid-2026. Following the receipt of permits and a final investment decision, the project construction period is estimated at 48 months. We anticipate start-up in 2031 with the first full year of output (9Mtpy) in 2032. Based on our long-term 65-per-cent Fe price of US$108/t (and a 0.78 CAD), we estimate recurring after-tax revenue royalty to ALS of $24-milion per annum. We have ascribed an initial 0.7 times multiple to the Kami royalty in our updated 5-per-cent NAVPS, equal to $150-million or $3.15 per share.”
Calling the development “very positive” for ALS and citing an “attractive” implied return of 29 per cent to his revised 12-month target of $33, up from $27, Mr. Wowkodaw moved his rating to “sector outperform” from “sector perform” previously. The average target on the Street is $29.79.
“In our view, the advancement of the Kami Fe project and the likely monetization of the Silicon Au royalty in Nevada represent two anticipated material catalysts for the shares over the next 12-18 months,” he said. “We note that potash, silicon, iron ore, and renewables, now represent a commanding 24 per cent, 20 per cent, 20 per cent, and 16 per cent (or 80 per cent collectively) of our operating level NAVPS estimate. ALS shares trade at a relatively attractive 5-per-cent P/NAV of 1.11 times.”
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Citi analyst Patrick Cunningham sees Lithium Royalty Corp.’s (LIRC-T) deal with Triple Flag Precious Metals Corp. (TFPM-T) for a 0.5-per-cent gross overriding revenue royalty over the Tres Quebradas lithium brine project in Catamarca, Argentina as “taking advantage of an attractive deal especially at cycle-low” and emphasizes it also “preserves acquisition optionality and reduces single-asset exposure.”
“The total cash consideration is $28-million and following the transaction LIRC will hold a net aggregate 0.9-per-cent gross overriding revenue royalty,” he added. “Note, LIRC acquired an additional 0.5 per cent on the asset for $25-million in cash and 207.8k LIRC shares back in July 2023. LIRC CEO Ernie Ortiz called this deal ‘materially accretive’ as the P/NAV multiple reflected in the transaction is a premium to LIRC’s current P/NAV reflected at its share price. LIRC buffers its B/S with the deal, opening the door for acquiring additional high-quality royalties down the road and some optionality for repurchases near-term.”
“We reduce the royalty percentage contribution in our model from 1.4 per cent to 0.9 per cent and reflect the $28-million in proceeds in our net cash balance. Our resulting NAV including net cash goes up less than $1-milllion, likely less accretion vs. LIRC’s commentary due to our modeled increases to long-term lithium carbonate prices to $16k/t by 2028E. We raise our P/NAV multiple to 0.95 times (from 0.9 times) with less uncertainty on the balance sheet as a robust cash position is able to support $5-5.5-million cash G&A expense per annum, potentially $3.5-million in contingent payments in 2025E, and flexibility for acquisitions. We assume LIRC flips to cash flow positive in 2026E with at least 6 assets in production and 2-3 assets in early stages of ramp-up.”
Maintaining a “buy” recommendation for Toronto-based Lithium Royalty’s shares, Mr. Cunningham bumped his target to $7.50 from $7. The current average on the Street is $8.70.
“We rate the shares of LIRC a Buy for the following reasons: 1) Exposure to secular growth in lithium from EV & ESS applications. Supply of lithium is likely to struggle to keep up with demand implied by OEM’s penetration targets and could see prices move up significantly. 2) Diversified high-quality assets. LIRC has a portfolio of 35 royalties with no single asset making up more than 15 per cent of our NAV estimate. Management’s investment criteria have biased the portfolio to high-quality assets, which are likely to have lower technical risk .3) Upside from the royalty model. The royalty model offers free upside via asset expansions and extensions. Precious metal royalty companies have been a success case, with a track record of execution, scale, and potential upside being rewarded with multiple expansion,” he said.
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Citing a weaker outlook for pumping services in Canada’s energy sector, ATB Capital Markets analyst Waqar Syed cut his forecast for STEP Energy Services Ltd. (STEP-T) after resuming coverage following last week’s announcement of the termination of its take-private deal with ARC Financial Corp.
“We update our estimates to reflect Q3/24 results and management guidance,” he said. “This leads to 11 per cent and 16 per cent reduction in our 2024 and 2025 EBITDA estimates, respectively.
“STEP faces significant challenges in the NAM pumping market as weaker commodity prices, high natural gas storage levels, and intensified competition weighs on activity levels and margins. These headwinds have resulted in subdued utilization rates, in the U.S. in particular, with one fleet idle and the second fleet seeing white space also. But, in Canada also, utilization pressures were extreme in Q4/24, and although they should abate some in Q1/25, pumping prices should be about 5-10 per cent lower year-over-year in Q1/25, making H1/25 much weaker than H1/24. We now expect break-even EBITDA for STEP in Q4/24, and 23 per cent lower year-over-year EBITDA in H1/25.”
Mr. Syed continues to see maximizing shareholder returns as “a key focus” for the Calgary-based company moving forward.
“As STEP is reaching a comfortable net debt level of around $61-million in 2025e, we estimate the company’s debt levels will hover around that number throughout 2025,” he said. “The company’s focus for its FCF will be utilizing its NCIB; STEP returned $8-milion back to its shareholders in H1/2024 via its NCIB.”
Reaffirming his “outperform” recommendation for Step shares, Mr. Syed lowered his target to $5 from $5.50. The average on the Street is $5.21.
“Our price target is based on a target EV/EBITDA multiple applied to 2025 EBITDA, and we raise the target multiple from 2.5 times to 2.7 times to arrive at our new $5.00 (Previous: $5.50) price target,” he explained. “Our new PT is also in-line with what a strategic buyer was willing to pay for STEP. Although the stock price briefly went above the $5.00 level, and the minority shareholders rejected the $5.00 offer, we believe that in the absence of a’white knight’ emerging and the strategic buyer refusing to raise the acquisition price, a $5.00/sh price target is an appropriate 12-month price target, despite the sharply lower 2025 EBITDA expectations. Our lowered expectations reflect higher competitive pressures in Canadian pumping, following the influx of an additional pumping fleet in Canada from the US, brought about by a small private pumper. We hear of Q1/25 pumping prices about 5-10 per cent lower year-over-year.”
“STEP has returned 7 per cent year-to-date and is attractively priced at 2.3 times 2024, 2.2 times 2025 and 1.8 times 2026 estimate EV/EBITDA,” he said. “On FCF yield, it is trading at 16 per cent, 13 per cent and 16 per cent for 2024, 2025 and 2026 estimates. However, the market outlook for STEP in both Canada and the U.S. is much worse now than before, although a strategic buyer exists who has indicated interest in buying the stock at $5.00/sh, offering 20-per-cent upside above the current stock price level.”
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Saskatoon-based Draganfly Inc. (DPRO-Q, DPRO-CN) is poised to benefit from increasing investor appetite, according to H.C. Wainwright analyst Scott Buck, emphasizing recent industry wins highlight the growing demand for unmanned aerial vehicles.
“Since reporting 3Q24 operating results on November 14, 2024, DPRO shares have increased 65.0 per cent versus a 4.0-per-cent decline in the Russell 2000 index,” he said. “Outperformance, in our view, is largely driven by recent military contract wins within the UAV industry. This includes Red Cat Holdings, Inc. (RCAT; not rated)subsidiary Teal Drones being selected as the U.S. Army’s Short Range Reconnaissance Program of Record in mid-November. This program is believed to generate as much as $270.0-million of total revenue to RedCat, versus just $16.4-million of total revenue over the past twelve-month period. New contract announcements within the industry, especially from military customers highlight the important role UAVs are likely to play in future warfighting efforts.
“While these larger military contracts have not yet materialized for Draganfly, continued contact with the Department of Defense and a small purchase order for its Commander3XL drone announced in September are positive signs. Draganfly management, on more than one occasion, has suggested the company is aligned to win military contracts driving annual revenue at multiples of current levels. These new larger purchase orders are expected in early 2025, which in our view are likely to drive DPRO shares meaningfully higher. Despite recent share appreciation, valuation levels still lag peers, just 2.0 times 2025 revenue estimates versus between 5.0 times and 8.0 times for peers. This suggests some catch-up is likely should the company begin to announce new contracts. As new contract announcements are likely to coincide with more investor eyeballs on the space, we believe DPRO shares are positioned to move meaningfully higher.”
After updating his valuation for the Canadian manufacturer, Mr. Buck raised his target for its shares to US$7, matching the average on the Street from US$5, reiterating a “buy” recommendation.
”Over time, we believe the business could see meaningful multiple expansion, towards the high end of the peer group, as revenue mix shifts toward higher-margin, high visibility services rather than hardware products,” he concluded. “However, near term, we expect lower margin hardware sales to be the primary driver of revenue growth. As the company demonstrates its ability to drive meaningful revenue growth through additional product and service sales, accelerated by clear FAA guidelines for commercial drones and geopolitical turbulence, we believe more favorable financial results should drive new investor interest for DPRO shares. As a result, we expect shares to move towards our $7.00 price target.”
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In other analyst actions:
* In a report titled enGene-ered to be a LEGEND in NMIBC, H.C. Wainwright’s Andres Maldonado initiated coverage of Montreal-based EnGene Holdings Inc. (ENGN-Q) with a “buy” rating and US$25 target. The average is US$28.33.
“The NMIBC [non–muscle invasive bladder cancer] treatment landscape is undergoing a renaissance, and enGene’s detalimogene represents an innovative treatment option,” he said. “At the core of enGene’s approach is its DDX platform, which produces non-viral gene therapies, enabling the delivery of genetic material directly to mucosal tissues while bypassing the challenges associated with viral vector-based systems. enGene’s lead candidate, detalimogene voraplasmid, is currently being evaluated in a pivotal clinical study (LEGEND, Cohort 1) for patients with high-risk non-muscle invasive bladder cancer (HR-NMIBC) with carcinoma in situ (CIS) who are unresponsive to Bacillus Calmette-Guérin (BCG). Thus far, detalimogene has demonstrated an early but compelling clinical profile, achieving a 71 per cent (15/21) CR at any time and a 47-per-cent CR at six months (51-per-cent six-month Kaplan-Meier estimate). These results compare favorably with recent approvals citing CRs at any time ranging from 41 per cent to 62 per cent.”
* CIBC’s Kevin Chiang cut his target for Bombardier Inc. (BBD.B-T) to $127 from $132 with an “outperformer” rating. The average on the Street is $119.40.
“Aviation Week Intelligence Network (AWIN) released the November 2024 business jet deliveries and noted that BBD delivered 16 aircraft. QTD, BBD has delivered 22 planes,” he said. “We have adjusted our BBD model to reflect the risk of Trump tariffs on Canadian exports. While our base case view is the aerospace sector will be exempt (so no impact on deliveries), we do see the risk of buyers delaying potential orders. As such, we have moved our book-to-bill assumption in 2025 to 0.85 times from 1.0 times, resulting in a decrease in our FCF estimate for next year to $728-million from $905-million prior versus BBD’s target of more than $900-million.”
* Mr. Chiang raised his CAE Inc. (CAE-T) target to $37 from $33, keeping a “neutral” rating, while BMO’s Fadi Chamoun moved his target to $38 from $33 with an “outperform” rating The average is $32.38.
“Browning West has taken a 4.3-per-cent economic interest in CAE and is looking to facilitate the company’s search for a new CEO in order to unlock shareholder value. We believe Browning West will have strong support from current CAE shareholders. We have increased our target multiple by 1 point to 11.5 times due to a potential activist campaign at CAE,” said Mr. Chiang.
* H.C. Wainwright’s Kevin Dede raised his target for Neptune Digital Assets Corp. (NDA-X) to $2 from $1 with a “buy” rating. He’s currently the lone analyst covering the Vancouver-based blockchain company.
“Neptune’s F4Q24 (Aug.) results, released Friday, showed a sequential revenue pullback to $0.45-million from $0.65-million in F3Q24, largely reflecting softer bitcoin mining activity,” he said. “Digital asset holdings stood at $31.3-milllion compared to $36.5-million in May. Encouragingly, broader crypto markets have rebounded considerably since late August, with bitcoin up roughly 25 per cent ... This improvement, combined with Neptune’s continued put-option premium capture and methodical rebalancing into bitcoin, should help deliver stronger F1Q25 results. While continuing to run its legacy mining fleet until the end of its useful life, management sees more compelling returns from stacking BTC via staking revenues and self-staking 26,964 Solana tokens, of which another 20 per cent unlock in March 2025; note however, the release of the balance held in escrow at roughly 2 per cent per month could stretch into 2026. Long-standing emphasis on proof-of-stake yields, derivative-driven premium income, and measured altcoin participation remains central to Neptune’s growth engine. Meanwhile, its private equity stake in SpaceX — now valued at $7.1-million, up from $4.0-million in August, following SpaceX’s latest funding round at a $350-billion valuation — further diversifies Neptune’s portfolio and adds incremental upside potential. Taken together, these initiatives highlight prudent capital deployment that hedges near-term volatility while positioning Neptune to benefit from an improving crypto environment and a more robust altcoin cycle. Further, in catalyst form: (1) quarter-end mark-to-market; (2) increasing SOL balance; and (3) greater bitcoin balance as altcoin yield is traded for bitcoin should all reflect positively in Neptune’s Nov. quarter release early next year. We see ample room for expansion as the crypto cycle matures, new tokens enter Neptune’s portfolio, and institutional activity accelerates.”
* Jefferies’ Robert Dickerson cut his Saputo Inc. (SAP-T) target to $32 from $36 with a “buy” rating. The average is $32.83.
* TD Cowen’s Daniel Chan lowered his Tiny Ltd. (TINY-X) target to $1.50 from $2 with a “hold” rating. The average is $1.83.
“We have lowered our growth expectations given the continued challenges Tiny is experiencing and the accelerating revenue declines experienced in Q3. However, we have taken our EBITDA margin higher given the restructuring is expected to generate $4-million of annual savings,” he said.