Analyst Upgrades and Downgrades Overview

In a busy start to the week, several analysts made significant adjustments to their outlooks for various companies. Here’s a roundup of the most important analyst actions and what they mean for investors.

Rail Industry Update: Canadian National Railway and Canadian Pacific Kansas City

RBC Dominion Securities analyst Walter Spracklin has lowered his earnings expectations for Canadian National Railway Co. (CNR) and Canadian Pacific Kansas City Ltd. (CPKC) in light of lingering impacts from recent labor disputes. Despite what he describes as a 'nice recovery' in third-quarter volume levels, he pointed out challenges stemming from these disputes, which have affected earnings.

'We have updated our estimates following discussions with management teams of several railway companies,' Spracklin explained, noting that his revised earnings projections reflect a cautious outlook for coal and intermodal segments, with earnings per share (EPS) expectations for CPKC dipping slightly to $1.03, above the consensus estimate. Nonetheless, he reaffirmed a target price increase for CPKC shares to $137, establishing it as a 'top pick' in the rail sector.

Looking forward, Spracklin asserts that the merger of Canadian Pacific and Kansas City Southern (KCS) presents significant opportunities in crucial sectors such as grain, fertilizer, and crude oil transport—setting the stage for potential long-term growth.

Shopify Soars: Analyst Bullish on E-Commerce Giant

Citi analyst Tyler Radke is optimistic about Shopify Inc. (SHOP), raising his price target to US$103 from US$90. Following upbeat discussions with Shopify's investor relations team, he reiterated his confidence in the company's ability to capture a larger market share, particularly as it pushes upmarket and expands its payment solutions.

Radke's revised earnings projections paint a favorable picture for Shopify in the latter half of 2024 and beyond, anticipating that the momentum in payment adoption will significantly enhance profitability. With an expected surge in gross merchandise volume (GMV), Citi predicts Shopify will reach US$645 billion by FY28.

TD Cowen's 'Canada Best Ideas' List

Several stocks made their way onto TD Cowen’s 'Canada Best Ideas' list:

- Bombardier Inc. (BBD): Rated 'buy' with a target of $129, signaling a shift from a turnaround to a re-rating story due to operational advancements.

- Brookfield Renewable Partners LP (BEP): Rating 'buy' at US$34, with analysts highlighting the expected growth in global renewable energy demand.

- HudBay Minerals Inc. (HBM): A 'buy' rating with a target of $16, underlining the company’s strategic positioning in copper production.

Restructuring at Ballard Power Systems: Analyst Insights

Citi's Vikram Bagri reported that Ballard Power Systems (BLDP) needs to navigate challenges following a restructuring aimed at reducing operating expenses by over 30%. He expressed concern about cash burn forecasts for 2025 but noted that the company has a strong liquidity position.

Payfare Inc. Faces Challenges with DashDirect Loss

After the loss of its services agreement with DoorDash, Payfare Inc. (PAY) experienced significant downward revisions in revenue forecasts. Analyst Stephen Boland has downgraded the stock to 'market perform' due to uncertainties surrounding growth options. The anticipated decline in revenue is projected to impact the company’s performance through at least 2025.

Additional Analyst Moves

- Enbridge Inc. (ENB): Downgraded to 'hold' by Jefferies while raising the target to $58.

- Centerra Gold Inc. (CG): Target cut to $13 from $13.50, despite a solid balance sheet.

- Medexus Pharmaceuticals Inc. (MDP): Initiated coverage with a 'speculative buy' rating and a target of $8.25 due to promising developments in oncology.

Conclusion