Mattr Corp. (MATR:TSX) experienced a significant rally this week, with its shares climbing 34.2 per cent. The surge followed the Toronto-based energy and infrastructure technology company’s July 13 announcement, where it upgraded its preliminary second-quarter projected results for revenue and adjusted earnings before interest, taxes, and depreciation (EBITDA). This positive update prompted a wave of optimism among analysts, with five of the eight covering the stock hiking their 12-month price targets.
Specifically, Mattr now anticipates second-quarter revenue to fall between $390 million and $400 million, a substantial increase from the consensus estimate of $332 million. Similarly, the company projects second-quarter EBITDA in the range of $60 million to $65 million, significantly exceeding the $43.1 million consensus.
Michael Tupholme, an analyst at TD Cowen, was among those who revised their outlook, raising his price target for Mattr to $23 from $14. This previous target reflected where the shares were trading prior to the company’s update. Tupholme noted that the strength appears ‘broad based,’ suggesting the company’s robust performance is driven by ‘underlying healthy demand.’ Despite the stock’s considerable jump, Tupholme still sees ‘value in Mattr.’ Shares of Mattr Corp. closed Friday at $18.29. According to Bloomberg, the consensus 12-month price target for Mattr, based on the calls of seven analysts, stands at $19.43.
CIBC Favors Lifecos Over Banks Amid Q2 Earnings Season
Beyond Mattr Corp.’s impressive performance, Canadian financial institutions are also drawing analyst attention, particularly in the lead-up to second-quarter earnings season. CIBC Capital Markets analysts, led by Paul Holden, reiterated their preference for Canada’s top life insurers over the Big Banks. The CIBC team noted on July 14 that ‘The lifecos have traded better since Q1 with the discount to the banks narrowing.’ They anticipate a nine per cent increase in earnings per share year over year for the second quarter, buoyed by factors such as strong stock markets and ongoing share buybacks.
CIBC’s preference is rooted in several key factors, including greater upside potential from higher interest rates, consistently high returns on equity, and active share repurchase programs. Great-West Lifeco Inc. (GWO:TSX) and Manulife Financial Corp. (MFC:TSX) have been identified as CIBC’s top picks within the sector. Great-West Lifeco is described as ‘the cleanest story,’ having delivered a ‘solid’ series of consecutive results. CIBC hiked its price target for GWO to $93 from $80, with shares closing Friday at $92.82. Manulife, currently trading at a discount compared to its peers, is expected to perform strongly in the quarter, driven by robust sales in Asia. CIBC analysts ‘like the stock ahead of results,’ raising their price target to $69 from $61. Manulife shares closed Friday at $60.74. Additionally, CIBC adjusted price targets for Sun Life Financial Inc. (SLF:TSX) to $116 from $102 and iA Financial Corp. (IAG:TSX) to $208 from $180. Shares for these companies closed Friday at $114.74 and $208.22, respectively.
Scotia Capital Updates Energy Price Targets Ahead of Q2 Reports
The oil and gas sector is also gearing up for its second-quarter earnings reports, with Scotia Capital Markets analysts, led by Kevin Fisk, providing updated ratings and price targets for Canadian oilpatch players. In a July 17 report, the Scotia team projected West Texas Intermediate (WTI) and Brent crude prices at US$70 and US$75 a barrel, respectively, for the third quarter. This outlook is based on ‘depleted inventories and strategic reserves, and a heightened geopolitical supply risk premium.’ While bullish on refined oil products, Scotia Capital has revised its price outlook for natural gas downwards, citing plentiful North American supply.
Among their specific calls, Scotia upgraded International Petroleum Corp. (IPCO:TSX) to ‘sector outperform’ from ‘sector perform,’ citing ‘its high production growth, attractive free cash flow, and reasonable valuation.’ The target price for IPCO was maintained at $38, with shares closing Friday at $31.00. Cenovus Energy Inc. (CVE:TSX) was assigned a price target of $49, reflecting Scotia’s belief that its U.S. refinery performance is ‘starting to bear fruit’ and that the company is on track to meet its net debt target, which could pave the way for increasing capital return to 75 per cent of free cash flow. Cenovus shares closed Friday at $39.20. For Suncor Energy Inc. (SU:TSX), Scotia anticipates earnings to be driven by ‘extremely robust crack spreads’—the margin between crude oil cost and a refined product. The firm hiked Suncor’s price target to $106 from $101; shares closed Friday at $87.53. Scotia also highlighted Suncor’s repurchase of $350 million worth of shares monthly during the second quarter, seeing ‘the potential for a material acceleration of buybacks utilizing excess free cash flow.’
The week’s market activity underscores a dynamic environment on the TSX, with Mattr Corp.’s significant ascent driven by strong operational performance and positive analyst revisions. Meanwhile, strategic preferences for lifecos and updated outlooks for the energy sector highlight diverse opportunities and ongoing adjustments as companies prepare to unveil their latest financial results.
