Inside the Market’s roundup of some of today’s key analyst actions
Pointing to a backdrop of growing demands on global electrical grids, Stifel analyst Madison Tapscott, thinks nuclear energy generation is “poised for a second renaissance.”
“Our thesis is informed by a combination of factors that may be individually understood by the market but not fully appreciated as to their combined impact,” she said. “These include: 1) the sustained developing-market urbanization and changing developed-market consumption trends, 2) nuclear power’s unique characteristics within the global demand equation and 3) uranium’s relatively limited and tightly controlled supply within a geopolitically changing environment.”
In a report released Wednesday titled Uranium’s Bright Future: Supply Risks, Policy Shifts and the Future of Nuclear Energy, Ms. Tapscott built a constructive thesis for uranium demand, citing a surge in electricity needs and seeing nuclear power " in the right place at the right time.”
“According to the IEA, electricity demand is anticipated to nearly double by 2050,” she said. “The global super-trend of increasing urbanization remains the key demand driver with a well-understood impact on per capita energy consumption. However, it is the changing profile of electricity demand, particularly within developed countries, that we believe is less appreciated in its impact. In our view, the previous advanced economies phase of “energy consumption reversal” will be challenged by the continued uptake of EVs – and to a lesser extent – the increasing electricity demand for AI.”
“The market may have recently shifted to a lighter ESG sentiment but that doesn’t mean clean energy is no longer in demand. We detail several tech industry examples of power diversification strategies targeted at nuclear. The fact is that nuclear power has the highest capacity factor and is one of the few clean energy sources that is baseload or dispatchable. Stable baseload is necessary for critical infrastructure like EV and AI and in our view, nuclear will play an outsized role in meeting demand for solutions requiring long-term environmental considerations.”
Ms. Tapscott said Stifel’s base case scenario centres on global nuclear generating capacity increasing by 1.5 times by 2040 “with an annual average increase (net of retirements) of 12GW per year through 2040, with China, India and Japan the biggest movers for global nuclear energy growth.”
“This translates to a 54-pr-cent increase of U3O8 (+95mmlb) required by 2040,” she added.
“Uranium supply is relatively limited and tightly controlled. Production is primarily sourced from four countries including Kazakhstan, Canada, Namibia, and Australia, representing 79per cent of total global production. Additionally, two companies are responsible for 35 per cent of global production (Kazatomprom and Cameco). This presents an interesting pricing dynamic in a fragmented geopolitical environment. Also, new projects are required to avoid a significant supply deficit by 2040. We have analyzed all publicly available uranium projects globally to build our supply model and estimate primary uranium production growth of 3-5%, which still results in a significant supply deficit of ~80mmlbs U3O8 in 2040. Geopolitical headwinds can further fragment supply-demand dynamics, forcing countries to focus on domestic growth of uranium projects for supply chain security, which is quite supportive for uranium exploration and development companies further down the line.”
The analyst initiated coverage of a group of equities in the uranium industry. They include:
* Cameco Corp. (CCO-T) with a “buy” rating and $90 target. The average on the Street is $79.55, according to LSEG data.
Analyst: “A dominant market position in uranium production and the nuclear fuel value chain best-positions CCO against a backdrop of rising uranium price forecasts and the benefits of opportunities amid vertical integration in the Fuel Services businesses through its 49-per-cent stake in the Westinghouse Electric Co. – which we view as a fundamentally undervalued part of the business. In our view, improving financial performance, an accretive uranium contract book, high industry barriers to entry, and lack of investment alternatives amid investor positioning is expected to drive valuations to the high-end of historical ranges.”
* NexGen Energy Ltd. (NXE-T) with a “buy” rating and a $16 target. Average: $13.76.
Analyst: “In our view, NXE’s Rook 1 project holds strategic significance as a construction-ready (once fully permitted), high-margin, long-life, technically de-risked asset in a premier mining jurisdiction that should attract M&A interest and command a premium valuation in the market.”
* Uranium Energy Corp. (UEC-A) with a “buy” rating and US$10.50 target. Average: US$10.71.
Analyst: “With the largest production capacity in the United States, we see UEC set to capitalize on the growing need for domestically sourced uranium. We believe UEC is well positioned to execute on production growth from its U.S. portfolio while offering sector-leading trading liquidity, in addition, UEC’s 100-per-cent unhedged portfolio of uranium assets offers significant exposure to uranium price upside opportunities.”
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Touting its “hot” deployment pipeline following a fourth-quarter earnings beat, National Bank Financial analyst Zachary Evershed thinks Alaris Equity Partners Income Trust (AD.UN-T) is worth of investor attention, given its “a substantial return to target, minimal exposure to current macro/geopolitical headwinds, and robust execution with strong portfolio performance.”
“Management affirmed that the pipeline remains strong, and the third-party AM business has a lineup of suitors,” he said. “AD is ensuring the 1-2 asset managers it ends up partnering with are true partners, aligning on cultural fit, time horizon and deal term expectations. Further padding out dry powder, management is working to expand the Trust’s credit facility and would consider a hybrid debenture or straight debt issue but would not look to issue equity at current levels. No partner redemptions are expected imminently, though we can expect 2-3 over the coming 12-18 months to also rearm the balance sheet.”
After the bell on Monday, the Calgary-based capital market company reported revenue of $46.9-million for the quarter, topping both Mr. Evershed’s $39.9-million estimate and the consensus of $40.8-million while “substantially” above the company’s guidance of $38.9-million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also “significantly” topped expectations ($34.1-million and $34.2-million, respectively).
“Run-rate revenue of $187.4-million is expected over the next 12 months (including $19.4-million in common dividends),” said the analyst. “After an expected $18.5-million in opex and $62.7 million in interest and taxes, management sees the run-rate payout ratio below the 65-per-cent target, leaving firepower to allocate to the NCIB (rather than dividend.”
“AD repurchased 218.9k shares (0.5 per cent) in January and February, returning a total of $4.3-million to shareholders year-to-date. At prices below net book value ($24.22), management plans to deploy excess free cash flow into the NCIB, aiming to narrow the discount and roughly translating to $25-million in buybacks annually. When asked about an SIB, management did not reject the idea, but noted a particularly large redemption to free up capital would be needed. We calculate a 2025 payout ratio of 52 per cent, which, if adjusted for $25- million in buybacks, rises to 66 per cent.”
After adding common dividends to his forecast (2-per-cent yield), Mr. Evershed raised his target for Alaris units to $25 from $24.50. The average target on the Street is $25.40.
“In our newly introduced 2026 forecast, we assume a much more conservative $6-million in common equity distributions, a 2-per-cent yield on Alaris’s common equity stakes (cost basis, not fair value),” he explained. “Though common distributions are unpredictable by their very nature, as the common equity strategy matures into its seventh year (or fifth year since ramping above $100 million invested), and as our 2-per-cent assumption comes in below the lowest historical reading (3.2 per cent in 2020) and well below the 7.3-per-cent average, we believe this leaves room for an upside surprise.”
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RBC Dominion Securities analyst Douglas Miehm sees Knight Therapeutics Inc.’s (GUD-T) acquisition of the assets of Paladin Pharma Inc. as a “synergistic fit” and believes it should benefit the Montreal-based company as it expands its presence in Canada.
“Post-acquisition, Canada will become the second-largest market, accounting for 20-plus per cent of the pro-forma revenues,” he said. “Management is optimistic about achieving synergies through the integration of Paladin’s operations. Although the company plans to continue expanding its Canadian teams to facilitate new product launches, it foresees a potential reduction in new hires following the Paladin acquisition.”
Shares of Knight surged over 10 per cent on Tuesday after the premarket announcement of the deal, which will see it pay $120-million cash to seller Endo Operations Ltd. for Paladin as well as future contingency payments of up to US$15-million if it achieves certain sales targets.
“The acquired portfolio is extremely diversified, comprising over 40 products,” said Mr. Miehm. “The majority of the revenues are generated by mature, owned products, most of which have already lost exclusivity. Management anticipates these to experience a small decline. However, this decline is expected to be offset by growth from the in-licensed promoted assets, which are very early in their launch phase, resulting in flat revenues over the next couple of years, per management.”
“While the company did not provide details on the margins of the acquired portfolio, management indicated that the EBITDA margins are expected to be similar to those of the rest of Knight’s business, with potential synergies anticipated in 2026 and beyond. Assuming EBITDA margins of 16 per cent, in line with 2024 company guidance, would imply an EBITDA of $11-million for the acquired portfolio. Using an EV of $100-million ($120-million less $20 million for inventory), we estimate a transaction multiple of 1.4 times EV/Revenue and 8.9 times EV/EBITDA.”
Assuming the deal will close in mid-2025, Mr. Miehm increased his target for Knight shares by $1 to $8, reiterating an “outperform” rating. The average target is $7.44.
“Our positive thesis remains premised on the potential for long-term value creation through business development activities and the launch of several new products, which are expected to weigh on 2025 margins, in our view,” he said.
Elsewhere, Raymond James’ Michael Freeman raised his target to $8 from $7.50 with an “outperform” rating.
“This acquisition grows GUD’s Canadian Rev. base materially, adding a broadly distributed portfolio (40 products generating $70-million in revenue) of stable, cash-flowing pharma products and loading in a slate of growthy pipeline products, notably XCOPRI (cenobamate tablets for management of partial-onset seizures) and Wynzora Cream (calcipotriene and betamethasone dipropionate for topical treatment of plaque psoriasis),” said Mr. Freeman. “Pro forma Paladin, Canada should make up one quarter of GUD’s total sales, make it GUD’s #2 geography behind Brazil. We note that the P/S multiple on this asset acquisition (not a company acquisition) may be a red herring; we think the core motivations behind this transaction were GUD’s view on the growth potential of Paladin’s pipeline assets (not its mature assets) and the benefit of quickly recruiting a Canadian salesforce. GUD has previously discussed its ambition to significantly bolster its Canadian business, motivated by the launch of JORNAY PM and anticipating the addition of further Canada-distributed products, so this acquisition of Paladin’s in-place salesforce and base of mature products accelerates this process nicely. GUD current has 60 Canadian employees, and 15 of these have global functions; GUD didn’t disclose the total FTE count associated with Paladin, but with >130 associated members (sales + back office) on its LinkedIn page, we’re confident GUD’s Canadian personnel base will materially expand from 2H25 forward. (GUD also didn’t guide to operating expenses added from the deal.)”
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National Bank Financial analyst Vishal Shreehar is expecting a “solid” performance from Lassonde Industries Inc. (LAS.A-T) when it reports fourth-quarter 2024 financial results on March 19, however he warns of the impact of notable medium-term capital expenditure commitments.
“We consider LAS to be a company with turnaround potential, predominantly within the U.S. operations,” he said. “If the U.S. business returns to historical EBIT margins, we estimate more than 10-per-cent upside to our 2026 EPS estimates. That said, we believe that heightened expected capex alters the thesis from what was strictly a turnaround story.”
For the quarter, Mr. Shreedhar is projecting sales from the Rougemont, Que-based juicemaker of $722-million, rising from $605-million during the same period a year ago and above the consensus forecast of $703-million. He expects earnings before interest, taxes, depreciation and amortization (EBITDA) of $80-million, increasing from $53-million and also ahead of the Street at $68-million.
The analyst’s earnings per share estimate of $4.23 is well ahead of the consensus of $3.86 on the Street and a significant rise from $3.14 in fiscal 2023. He attributes that 35-per-cent year-over-year gain to “impact of acquisitions (Summer Garden, partly offset by Diamond Estates), higher volumes, higher pricing, better efficiency (in-sourcing of certain capacity, among others), partly offset by higher costs related to: inputs, warehousing, investments (innovation, distribution expansion and strategic trade spend), selling & marketing, and D&A (accelerated depreciation of certain existing New Jersey assets, Summer Garden, and the deployment of a second high-speed juice box line in Rougemont in Q3/24, among others).”
“We model 8.4-per-cent sales growth year-over-year (excluding acquisitions and FX), reflecting higher year-over-year pricing and volumes (additional volumes from the new single-serve line in North Carolina),” said Mr. Shreehar. “Our blended input cost index suggests continued pressure; notwithstanding, we model gross margin rate expansion of 150 basis points year-over-year (excl. acquisitions and D&A; Q3/24 was higher by 200 basis points year-over-year) largely reflecting lower conversion costs and pricing.
“While Lassonde’s accelerated capex plan (until 2026) is anticipated to be accretive to the current ROCE (13.7 per cent as of Q3/24) and has a payback period of ~5 years post completion, we expect earnings momentum to slow down. We anticipate heightened interest expenses (LAS expects leverage of 2.0-2.5 times in H2/25 to 2026 from 1.83 times as of Q3/24) and higher D&A will dampen EPS momentum (mid-single-digit to low-double-digit from more than 30 per cent year-over-year in 2024) over the medium term.”
Maintaining a “sector perform” recommendation for Lassonde shares, the analyst raised his target to $213 from $199 to reflect higher estimates and a roll-forward in his valuation period. The average target is $217.
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RBC Dominion Securities analyst Paul Treiber saw Enghouse Systems Ltd.’s (ENGH-T) first-quarter 2025 financial report as “mixed,” featuring “soft organic growth and lower profitability, given the company’s ongoing transition to the cloud.”
“Positively, Q1 free cash flow was solid, bringing TTM [trailing 12-month] FCF to a multi-year high,” he added. “FCF powers Enghouse’s capital deployment and we believe M&A is likely to ramp, given the uncertain environment and a robust M&A pipeline.”
After the bell on Monday, the Markham, Ont.-based software company revealed quarterly revenue of $124-million, up 2.9 per cent year-over-year but below the Street’s expectation of $127-million. Excluding a foreign exchange gain of $2.3-million, normalized IFRS earnings per share of 35 cents came in 2 cents under the consensus forecast.
“Despite negative organic growth, Q1 FCF rose 7 per cent year-over-year to $21-million, well above RBC [estimate] at $4-million,” said Mr. Treiber. “Growth reflects solid deferred revenue, which was up 5 per cent year-over-year to an all-time high of $142-million. Q1 brings TTM FCF to $131-million, up 26 per cent year-over-year and the highest level in nearly 4 years (since COVID-elevated Q2/FY21).
“Even though organic growth was negative. Excluding hardware, constant currency (CC) organic growth was down 9 per cent Q1, in line with the negative 9 per cent in our model and stable with negative 9 per cent Q4. We believe post-acquisition normalization at Lifesize was similar to last quarter (down $4.4-million); excluding this normalization, we believe CC organic growth would have been negative 5 per cent, flat with Q4 and slightly below Enghouse’s 10-year average (negative 4 per cent), given the company’s shift to the cloud and challenging market conditions, particularly in the IMG segment. Our outlook continues to call for Enghouse’s organic growth to improve to negative 3 per cent by FY26.”
Maintaining an “outperform” rating for Enghouse shares, Mr. Treiber trimmed his Street-high target to $38 from $40. The average target is $31.67.
“Enghouse is trading 57 per cent below peers and 40 per cent below its 10-year average,” he said. “Enghouse has a strong track record of allocating capital at high rates. We believe risk-reward on the shares is attractive given Enghouse’s discounted valuation and our outlook for M&A to ramp over the next 12-18 months.”
Elsewhere, CIBC’s Stephanie Price cut her target to $30 from $31 with a “neutral” rating.
“Enghouse continues to balance demand by offering both SaaS and on-premise solutions to its customers, and management remained firm on its objective of maintaining strong profitability. We remain on the sidelines through this transition, although foresee upside from potential M&A ($271-million in net cash),” said Ms. Price.
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Ahead of the March 21 release of its fourth-quarter 2024 financial results, Desjardins Securities analyst Gary Ho sees Dentalcorp Holdings Ltd.’s (DNTL-T) management continuing to “execute on its acquisition playbook while steadily improving EBITDA margin and growing FCF/deleveraging.”
“Our positive investment thesis is based on DNTL’s (1) proven M&A playbook in a fragmented market; (2) organic growth outlook; (3) compelling financial profile with resilient top-line growth and growing cash flows; and (4) recession-resistant attributes,” he added.
In a note released Wednesday, Mr. Ho made modest reductions to his quarterly expectations, including slightly lower same practice revenue growth, offset by higher contribution from acquisitions due to timing and healthy margin expansion. He’s now projecting revenue of $398-million and SPRG of 3.5 per cent, compared to the company’s guidance of $391‒398-million and 3.5-4.5 per cent, respectively. His adjusted EBITDA estimate of $74.1-million tops the Street’s expectation of $73.2-million.
“We believe the government’s messaging on the [Canadian Dental Care Plan] roll-out in 2025 created some noise in 4Q, with patients deferring appointments toward the end of the year as they await further news on CDCP coverage,” said Mr. Ho. “Given the upcoming election, we expect CDCP to have a relatively muted impact on DNTL’s business until there is better clarity.”
“Due to CDCP noise, we lowered 4Q24 and 1Q25 SPRG to 3.5 per cent and 3.7 per cent, respectively. For 2025, we expect 3.9-per-cent SPRG, including 2.5 per cent from fee guides and 1.4 per cent from volume growth (new patients, higher visit frequency and other organic initiatives). Our forecast assumes no further CDCP benefit.”
The analyst kept a “buy” rating and $12 target for Dentalcorp shares. The current average on the Street is $12.38.
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In other analyst actions:
* Citing a limited return to his target and “broader macro concerns on steel demand amid escalating tariff risks and soft global growth,” TD Cowen’s Craig Hutchison downgraded Labrador Iron Ore Royalty Corp. (LIF-T) to “hold” from “buy” with a $31 target, down from $32 and under the $33.20 average on the Street.
“Under these conditions, we believe it will be difficult for the shares to outperform. LIF’s cash flows continue to support a solid 8-per-cent forward dividend yield, which should support the share price,” he added.
* Believing an “epic M&A run” has transformed Healwell AI Inc. (AIDX-T) into a global healthcare data “contender,” Raymond James’ Michael Freeman initiated coverage with an “outperform” rating and $3 target. The average is $4.14.
“AIDX is a multi-modal healthcare company that provides end-to-end healthcare data solutions for enterprise and public sector customers, healthcare AI solutions for physicians and health systems to support preventative patient care, and clinical development solutions for large life science and pharma partners,” he said. “AIDX’s growing basket of services, which includes globally- and nationally (Canada)-relevant digital front door and digital care record platforms, AI-first disease detection technologies, clinical data insight generation capabilities, a full-service clinical research organization, and a deep strategic partnership with WELL Health (WELL-TSX, ‘outperform’ rating) —Canada’s largest pool of clinics—are driving the company’s emergence as a global healthcare data powerhouse and a go-to partner to large life science companies for accelerating clinical development. With AIDX set to manage the data of more than 150 million patients worldwide (pro-forma its acquisition of Orion Health), the company is now situated as a primary HCIT contender on the world stage and one of the highest-revenue healthcare software companies traded on the TSX.”
“We see compelling organic growth pathways, underpinning top-line expansion. AIDX combines field-leading AI algorithms with two crucial drivers of success in healthcare AI: (1) access to large volumes of healthcare data, and; (2) access to a significant provider base,” he added. “This privileged Orion + WELL-empowered setup is a key source of AIDX’s defensible competitive advantage. With an increasingly robust financial profile—stepping into company-wide profitability 2Q25 — we expect AIDX’s capacity to create value will be materially enhanced.”
* Scotia’s Himanshu Gupta trimmed his Nexus Industrial REIT (NXR.UN-T) target to $8.50 from $9 with a “sector outperform” rating, while BMO’s Michael Markidis cut his target to $8 from $8.25 with a “market perform” rating. The average is $8.64.
“We maintain our SO rating for higher yield, but some patience is required on the name,” Mr. Gupta said. “Sentiment on the industrial sector has been sideways for some time, with larger Industrial peers (DIR and GRT) trading at 21-per-cent to 28-per-cent discounts to NAV. NXR trading at an 18-per-cent discount to NAV and at 10.4 times 2026 estimated AFFO. Overall, NXR has done a good job on asset dispositions (legacy retail and office assets) and is all set to become a pure-play Industrial REIT.”
* Canaccord Genuity’s Robert Young dropped his Pollard Banknote Ltd. (PBL-T) target to $32 from $42 with a “buy” rating. The average is $36.50.
“Pollard reported Q4/24 results below expectations, as manufacturing issues and order timing drove lower volumes and higher costs,” he said. “While ASP [average selling price] remained elevated due to contract repricing and a favorable customer mix, this was partially offset by lower instant ticket volumes. A one-time manufacturing issue resulted in high spoilage of large, high-value games, weighing on gross margins. Management expects instant ticket volumes to remain flat YoY in 2025 but remains confident on improved ASP and improved margins as contract repricing reflects higher input cost flows through. We highlight Pollard is now live (as of Feb 13) with its Kansas iLottery contract using its proprietary Catalyst platform. Early feedback has been positive and serves as a proof point for ongoing discussions for new iLottery contracts. However, we expect ramp-up costs for Kansas will remain a margin headwind through year-end 2025, after which management expects profitability. Management was confident that Pollard’s manufacturing footprint in the US and Canada can service domestic demand in both, limiting tariff risk. We have revised our estimates to reflect weaker instant ticket volumes in 2025 and slower margin ramp.”
* Canaccord Genuity’s Carey MacRury hiked his SSR Mining Inc. (SSRM-T) target to $16.75 from $14.50 with a “buy” rating. The average is $13.22.
“2024 was a year of operational recovery for the company after the heap leach failure at its Çöpler operation in Türkiye in February,” said Mr. MacRury. “While Çöpler remains suspended, operations continued as usual at its other assets (albeit with forest fires impacting Seabee). SSR ended the year with the announcement of the acquisition of the CC&V operation in Colorado from Newmont, paying up to $275-million. While the timeline for a restart at Çöpler remains uncertain, we see upside in both an eventual restart and a potential construction decision at Hod Maden, as well as ongoing the upcoming mine plan for CC&V. In addition, SSR’s balance sheet remains strong, ending the year with $388-million in cash and $400-million available under its undrawn credit facility plus $100-million accordion feature.”
* After mixed first-quarter results, National Bank’s Adam Shine trimmed his Transcontinental Inc. (TCL.A-T) target to $22 from $23, keeping an “outperform” rating, while TD Cowen’s Sean Steuart cut his target to $22 from $23 with a “buy” rating. The average is $22.57.
“TCL’s FQ1/25 results were impressive. The negative impact from the month-long Canada Post strike was more than offset by cost savings and currency tailwinds. We believe that TCL has manageable exposure to potential U.S./Canada tariffs. The company’s robust balance sheet — bolstered by FCF prospects and asset recycling — provides options for both acquisitions and capital returns to shareholders,” said Mr. Steuart.