Analysts at National Bank of Canada Capital Markets and RBC Capital Markets have projected an 81 per cent increase in shares of OceanaGold Corp. (OGC:TSX), driven by positive results from ongoing exploration at the company's Haile gold mine in South Carolina. The analysts set price targets of $76 and $78, respectively, while shares closed at $43.07 on Friday. Haile is OceanaGold's largest-producing asset, according to the Vancouver-based company.
OceanaGold's Transition to Underground Mining
National Bank analyst Don DeMarco noted in a May 12 report that prospects have improved since the company announced plans to transition from open pit to underground mining. "Our thesis is supported by significant near-term production and EBITDA growth and a robust balance sheet," DeMarco said. TD Cowen analysts Wayne Lam and Jennifer Mao set a price target of $56 after visiting the Haile mine, observing that open pit operations are performing well as the mine enters peak years, and the switch to underground will support future operations. Based on 11 analysts' calls, OceanaGold has a 12-month price target of $64.95, according to Bloomberg.
Calian Group Surges on Strong Earnings
Calian Group Ltd. (CGY:TSX) shares rose 21 per cent on May 14 after reporting earnings that beat estimates on several metrics, including revenue. The Ottawa-based defence, space, health and infrastructure services company posted revenue of $229 million, up 18 per cent year over year, versus consensus of $215 million. Desjardins analyst Benoit Poirier raised his price target to $90 from $83, citing strong margin and organic growth driven by the defence and space segment. "Overall, we anticipate a positive market reaction to the big beat across the board," Poirier said. He added that there is untapped value, including potential for $400 million in revenue from mergers and acquisitions, which could bring shares to $107. Even without M&A, organic growth from increased defence spending offers upside. Calian has a 12-month price target of $90.80 based on five analysts, according to Bloomberg.
High Expectations for Canada's Big Banks
Canada's major banks begin reporting earnings next week, starting with Bank of Nova Scotia, National Bank of Canada and Bank of Montreal. Market expectations are high, but Scotia Capital analyst Mike Rizvanovic expressed caution in a May 14 note: "With valuation multiples increasingly stretched, we are a bit cautious on the group in the near-term, and we see some potential downside if results don’t live up to lofty expectations." He noted that recent strong stock performance has already priced in earnings per share (EPS) comfortably ahead of consensus. Loan losses remain a risk, though Rizvanovic believes they are manageable for now. Scotia Capital expects EPS to be seven per cent lower than the previous quarter but higher year over year, with a modest uptick in provisions for credit losses and strong capital markets gains. His top picks are Royal Bank of Canada (RY:TSX) and National Bank of Canada (NA:TSX), the latter on expected EPS beats from capital markets, and the former for downside protection if selling pressure emerges.
