Inside the Market’s roundup of some of today’s key analyst actions
) third-quarter financial results falling narrowly below expectations, Desjardins Securities analyst Benoit Poirier advises “do not let short-term weakness scare you away,” seeing a “positive signal” to investors from the reiteration of its guidance and an increase to its share buyback plan.
Mr. Poirier did emphasize investors got “an early Halloween treat” as the board approved an additional $500-million in potential buybacks, increasing the NCIB budget to $4.5-billion from $4.0-billion. “CN’s Q3 results were impacted by headwinds from wildfires, lower demand, and the B.C. port strike,” he said. “That said, the company reaffirmed guidance and pointed to a much more bullish volume outlook versus last quarter, a positive to sentiment in our view. Key is that the network is running fluidly, positioning the company for operating leverage should volumes inflect in line with the company’s outlook.
While its LTL business is improving, Mr. Doerksen warned that TFI’s other segments are likely facing “some soft quarters ahead. “While we have reduced our numbers, our long-term compounding FCF generation thesis for TFII remains unchanged,” he said. “We view sell-off as an over-reaction and an attractive entry point; we calculate a potential three-year CAGR of 17.8 per cent , higher than for both CNR and CP. Our numbers for 2024 remain conservative but believe TFII could surpass US$8.00 assuming M&A and/or a stronger TL recovery.
“As recruitment and retention, dynamic pricing, inventory optimization and other operational efforts are taking hold, we nudge our profitability expectations upwards, seeing our FYQ3/24 EBITDA margin estimate move to 11 per cent , bearing a 50-basis points improvement sequentially, in line with management guidance for 50-60 bps.,” he said. “We also flag that management is targeting $6-8 million worth of inventory release, the bulk of which should be completed by the end of Q3.
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