Tuesday, October 5, 2021 - BEFORE THE OPEN - Leishman Catling & Associates
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Tuesday, October 5, 2021
STOCKS
Source: FactSet (5pm EDT)
BEFORE THE OPEN
Source: Thomson Reuters
Futures for Canada's main stock index rebounded, a day after the benchmark
index hit a 2-1/2-month low, as oil prices stayed near their highest levels in at
least three years. Global equities climbed as worries that rising oil prices will
feed inflationary pressures appeared to ease. Gold prices fell as the U.S. dollar
benefited from subdued risk sentiment, with bullion likely to see choppy trade
in the run up to Friday's U.S. jobs numbers.
COMMODITIES & CURRENCIES
STOCKS IN THE NEWS Source: FactSet (5pm EDT)
Source: Thomson Reuters
Facebook (FB):
The company has complied with Russian demands to delete some content
Moscow deems illegal, but it could still face a hefty fine as it was slow to do so,
the Vedomosti newspaper reported, citing Russia's state communications
regulator. Separately, Facebook blamed a "faulty configuration change" for a
nearly six-hour outage on Monday that prevented the company's 3.5 billion
users from accessing its social media and messaging services such as WhatsApp,
Instagram and Messenger.
Nuvei (NVEI):
The payments technology company on Monday filed for an initial public offering
in the United States, more than a year after its debut on the Toronto Stock GLOBAL INDICES
Source: FactSet (5pm EDT)
Exchange. The company is offering a total of 1.5 million of its subordinate voting
shares. Part of those shares will be listed on Nasdaq under the symbol "NVEI",
the company said.
Pfizer Inc. (PFE):
The effectiveness of the Pfizer vaccine in preventing infection by the coronavirus
dropped to 47% from 88% six months after the second dose, according to data
published on Monday that U.S. health agencies considered when deciding on the
need for booster shots. The data, which was published in the Lancet medical TSX SECTORS
Source: FactSet (5pm EDT)
journal, had been previously released in August ahead of peer review. The
analysis showed that the vaccine's effectiveness in preventing hospitalization
and death remained high at 90% for at least six months, even against the highly
contagious Delta variant of the coronavirus. The data suggests that the drop is
due to waning efficacy, rather than more contagious variants, researchers said.
THINGS TO KNOW
Source: Bloomberg Finance L.P.
President Joe Biden yesterday could offer no guarantee the U.S. wouldn’t breach
its legal debt limit in two weeks. There are increasing signs that the efforts by
authorities in Beijing to ringfence China Evergrande Group may already be
failing. Facebook Inc. said it has found no evidence that user data was
compromised during yesterday’s hours-long outage of its social media apps.
While there is some dip-buying of technology stocks this morning, the uncertain
outlook means global equity gauges are putting in a very mixed performance.
NOT FOR DISTRIBUTION TO THE UNITED STATES. This publication is a general market commentary and is provided for informational purposes only. The author(s) is not a Research Analyst and this
communication is not the product of Canaccord Genuity Corp.’s Research Department. It should not be construed as a research report or investment advice.
For important information, please see the Important Disclosures beginning on page 9 of this document.
CANADIAN EQUITIES OF INTEREST
Listed Alphabetically by Symbol
Altus Group Limited.* (AIF: $61.07), Net Change: -$0.87, Change: -1.40%
Roadshow Notes: 2022 growth inflection
• Management remains confident Altus Analytics (AA) will reach its $400 million aspirational 2023 goal primarily via double-
digit organic growth with sustained mid-90% retention
• The company has ample dry powder for acquisitions following its $172 million equity raise and management believes it now
has the ability to move quickly on any acquisitions that might emerge in either AA or Tax. Altus' target leverage range is 2.5x
to 3.0x but would go to 3.5x for the right acquisition if they had a clear view of deleraging below 3.0x within twelve months
• Management sees the opportunity to take share in all three of its core geographies but especially in the US and the UK and
continued margin improvement should be driven by leveraging data to drive success (and contingencies) and using technology
to increase productivity and revenue repeatability
Artemis Gold Inc.* (ARTG: $5.41), Net Change: $0.02, Change: 0.37%
Blackwater site tour – key takeaways
• Artemis acquired the Blackwater project (P+P: 8Moz Au) from New Gold in mid-2020 and total consideration included (1)
$190M in cash, (2) 7.4M common shares, and (3) an 8% gold stream at 35% spot, reducing to 4% after 279,908oz
• Relative to New Gold (2014 FS), Artemis rescoped the Blackwater project, which centred on a multi-phased ramp-up, reduced
the initial CAPEX ($645M vs $1,963M), increased the starting grade (Years 1-5: 1.62g/t vs 0.84g/t) and materially improved
overall economics
• The project’s initial CAPEX is estimated at $645M which, net of a pending $360M in debt (Q4/21) and projected H1/22 cash
position, leaves a funding gap of ~$100-150M
• With project EAs approved, IBAs negotiated, and permits to commence construction expected in Q1/22, the Blackwater
project has one of the clearest paths to construction amongst comparable late-stage developers
US EQUITIES OF INTEREST
Listed Alphabetically by Symbol
Maxar Technologies* (MAXR: $28.39), Net Change: -$0.45, Change: -1.56%
GEOINT Delivery contract option awarded by the NGA
• This morning, Maxar Technologies (MAXR) announced that it has been awarded the second-year contract option for the G-
EGD contract
• Under the terms of the Global Enhanced GEOINT Delivery (G-EGD) program, Maxar provides more than 400k US government
employees with rapid, on-demand access to an unclassified library of more than 125 petabytes of historical satellite imagery
• The second option year of the three option years available is worth $44M in revenue to Maxar, while the entire program has
a combined value of $176M
• Maxar’s Legion satellite fleet, in addition to its current fleet of WorldView satellites, remains the highest-resolution
commercial Earth observation satellites in existence, with the ability to collect imagery as crisp as 29 cm using exquisite
telescopes manufactured by Raytheon
Nerdy* (NRDY: $10.04)
Strong foundation for leading two-sided marketplace; product expansion and marketing set to fuel growth
• Varsity Tutors, Nerdy's flagship brand launched in 2007, introduced what it calls a personalized, high-quality, affordable, and
convenient online learning experience, and its technology platform, "AI for HI" (or Artificial Intelligence for Human
Interaction) enables continuous improvement for Nerdy's Learner-Expert matching algorithm
• Nerdy has built an extensive Expert network by sourcing from talent pools including teachers, professors, working
professionals, graduate and college students, retirees, and the self-employed
• Nerdy also continues to launch products that address new use cases, having recently rolled out Summer Camps, After School
Clubs, and Varsity Tutors for Schools, a solution to help school districts address COVID-related learning loss
Tuesday, October 5, 2021
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
2INDUSTRY UPDATE
Oil
Market – Bloomberg/Reuters
• WTI (November) is up 0.5% to $77.98, Brent (December) is up 0.6% to $81.77 and WTI is higher again after finishing up 2.3%
on Monday at the highest level since 2014
• Yesterday's OPEC+ meeting ended with no changes to its output beyond the previous agreement for a 400K bpd monthly
increase, as expected
• Yesterday's gains also came as the Bloomberg Commodity Index hit a record high yesterday amid the combination of a
resurgence in demand for raw materials and supply constraints
• Hedge funds and other managers purchased the equivalent of 42M barrels in the six most important petroleum futures and
options contracts in the week to 28-Sep
• Purchases over the past six weeks have totaled 170M barrels, reversing more than half of the sales over the previous 10
weeks
• Buying included 21M barrels of WTI and 9M barrels of Brent and total short positioning fell to the lowest level since 2019,
with the article saying that fears over coronavirus hitting oil demand have evaporated
OPEC+ – WSJ
• OPEC+ agreed to continue increasing its production by 400K bpd in monthly installments, continuing its previously agreed
plan to return output to pre-COVID levels
• Some analysts speculated that the recent rise in prices may have pushed the group to increase its production more
significantly, especially given the minimal threat from US frackers stepping up production as those companies rein in spending
instead of raising output
• However, the OPEC technical committee said last week that the market could still face excess supply by the end of the year,
while Saudi Arabia privately signaled that it is seeking higher prices now to make up for lost revenue last year
Global Markets – NY Times
• Producers are still scarred by the price crash early in the pandemic, while Wall Street is even less enthusiastic given losses in
recent years as well as commitments to fight climate change
• Oil executives contend that while prices may seem high, there is no guarantee they will stay elevated, while dozens of
companies have gone bankrupt or loaded up on debt since the pandemic began
• Analysts said that OPEC would likely raise production if the balance of supply and demand tightens from here, though that
could make US producers even more reluctant to drill
US and Canada – Bloomberg
• Canada invoked a 1977 agreement that said the country and the US must allow natural gas and crude oil to flow between the
two countries in an effort to stop Michigan from shutting down an Enbridge pipeline under the Great Lakes
• Canada is seeking to delay a court decision on the pipeline while the two countries negotiate; this comes after weeks of court-
ordered mediation between Enbridge and Michigan Governor Whitmer collapse
• The 540K bpd Line 5 pipeline provides half the oil and propane used in Ontario and the US Midwest, and was ordered shut by
the Michigan governor in May on environmental concerns
Source: FactSet
Tuesday, October 5, 2021
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
3MORNING INK REPORT
Wealth Minerals stock gets a charge
Source: INK Research
As of Monday, October 4, 2021
Company Highlight: Wealth Minerals (WML)
• WML is focused on battery-related minerals, primarily lithium, and the company's two core assets are the Atacama and
Ollague lithium properties located in Chile
• On October 15, 2019 the company signed a strategic memorandum of understanding (MOU) with Uranium One Group (U1G)
that provides for the potential acquisition by U1G of up to a 51% ownership interest in the Atacama project
• The MOU provides for a period during which U1G can conduct due diligence on the project and the MOU was extended for
one year on October 14, 2020, so its current deadline appears to be fast approaching
• Uranium One is a subsidiary of Russian state firm Rosatom, one of the world’s largest uranium producers, and while investors
wait for an update on the MOU, the WML share price has been on the rise along with other battery metals names
• It hit a 52-week high of $0.70 on September 27 and as of Friday (close: $0.53), the stock is up 55.9% over the past month
• From June 9 to August 12, Wealth Minerals (WML) Director David Lies bought a total of 170,426 common shares at an average
price of $0.34 and he is the largest insider equity holder at the company with 5.77% of shares outstanding
Wealth Minerals (WML)
Source: INK Research
Tuesday, October 5, 2021
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
4MARKET MOVERS
Source: FactSet
CANADA 52-Week Highs CANADA 52-Week Lows
TSE Total 52-Week Highs 43 TSE Total 52-Week Lows 23
TSXV Total 52-Week Highs 6 TSXV Total 52-Week Lows 28
Baytex Energy Corp. BTE 3.75 Apollo Healthcare Corp. Class B AHC 1.69
Canadian Natural Resources Limited CNQ 47.94 Burcon NutraScience Corporation BU 1.83
Canadian Western Bank CWB 37.30 Canopy Growth Corporation WEED 16.27
Cardinal Energy Ltd. CJ 4.20 CloudMD Software & Services, Inc. DOC 1.40
Cenovus Energy Inc. CVE 13.12 Dorel Industries Inc. Class B DII.B 10.80
Crescent Point Energy Corp. CPG 6.17 EMX Royalty Corp EMX 3.12
Crew Energy Inc. CR 3.32 Fortuna Silver Mines Inc. FVI 4.95
Enerplus Corporation ERF 10.55 HEXO Corp. HEXO 2.17
Freehold Royalties Ltd. FRU 10.76 Liberty Gold Corp LGD 0.87
MEG Energy Corp. MEG 10.22 Maverix Metals Inc MMX 5.48
Methanex Corporation MX 61.58 Seabridge Gold Inc SEA 19.48
Paramount Resources Ltd. Class A POU 18.97 Silvercorp Metals Inc. SVM 4.75
PHX Energy Services Corp. PHX 4.88 SilverCrest Metals, Inc. SIL 8.68
Secure Energy Services Inc. SES 5.12 Stella-Jones Inc. SJ 40.40
Vermilion Energy Inc. VET 13.22 Xebec Adsorption Inc. XBC 2.72
U.S. 52-Week Highs U.S. 52-Week Lows
NASDAQ Total 52-Week Highs 65 NASDAQ Total 52-Week Lows 128
NYSE Total 52-Week Highs 130 NYSE Total 52-Week Lows 43
Bank of America Corp BAC 43.34 Brown-Forman Corporation Class B BF.B 67.14
CBRE Group, Inc. Class A CBRE 99.04 Coupang, Inc. Class A CPNG 26.05
Cheniere Energy, Inc. LNG 102.30 FedEx Corporation FDX 217.87
ConocoPhillips COP 71.49 Incyte Corporation INCY 66.32
Dell Technologies Inc Class C DELL 105.24 IPG Photonics Corporation IPGP 153.19
Devon Energy Corporation DVN 38.76 Lufax Holding Limited Sponsored ADR Class A LU 6.88
Fifth Third Bancorp FITB 43.51 Oak Street Health, Inc. OSH 41.53
Hilton Worldwide Holdings Inc HLT 138.51 PACCAR Inc PCAR 78.77
Horizon Therapeutics Public Limited Company HZNP 111.56 StoneCo Ltd. Class A STNE 33.15
JPMorgan Chase & Co. JPM 166.95 Teladoc Health, Inc. TDOC 122.40
Liberty Media Corp. Series A Liberty Formula One
FWONA 47.81 UiPath Inc Class A PATH 51.35
Netflix, Inc. NFLX 603.35 Vertex Pharmaceuticals Incorporated VRTX 177.40
ONEOK, Inc. OKE 60.06 Wix.com Ltd. WIX 179.72
Pioneer Natural Resources Company PXD 178.97 Zillow Group, Inc. Class C Z 85.38
Raymond James Financial, Inc. RJF 93.38 Zoom Video Communications, Inc. Class A ZM 259.58
Tuesday, October 5, 2021
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
5ASSET CLASS PERFORMANCE
Source: FactSet
*All numbers presented on the table below are based on total return
Tuesday, October 5, 2021
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
6MACRO-EVENT SCHEDULE
Source: Bloomberg Finance L.P.
EARNINGS
Source: Yahoo Finance
Tuesday, October 5, 2021
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
7MOST READ NEWS
Source: Bloomberg Finance L.P.
1)U.S. Futures Rise as Energy, Tech Stocks in Demand: Markets Wrap
2)Facebook Blames Huge Outage on Network Configuration Change
3)China Developer Assets Drop on Payment Stress: Evergrande Update
4)Global Energy Crisis Shows Fragility of Clean-Power Era
5)Ex-Credit Suisse Trader Lemssouguer Targets $1 Billion Fund
6)Oil Trader Andurand’s Hedge Fund Surges 50% as Commodities Boom
7)Griffin Sees Young People Making ‘Grave Mistake’ Working at Home
8)Ex-Goldman Bankers’ Trading App Scalable Expands in Europe
9)China’s Developers Priced for Meltdown as Contagion Risk Spreads
10)Manhattan Homebuyers Send Sales Soaring to Best in Three Decades
THE LAST DROP: “Success consists of going from failure to failure without loss of enthusiasm.”
- Winston Churchill
Tuesday, October 5, 2021
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
8Appendix: Important Disclosures
While this product is drawn from sources believed to be reliable, the accuracy and completeness of the information contained herein is not guaranteed. Any reference
to a research report or a recommendation is not a solicitation to purchase or sell any security and it does not consider the individual investment objectives, financial
situation, suitability or risk tolerance of any person or corporation. Accordingly, investors should obtain advice based on their own specific circumstances before making
any investment decision. Canaccord Genuity Wealth Management is a division of Canaccord Genuity Corp. Member – Canadian Investor Protection Fund (CIPF) and the
Investment Industry Regulatory Organization of Canada (IIROC).
Quest®: Canaccord Genuity’s proprietary online valuation and analytical tool which combines consensus market figures with the Quest® Discounted Cash Flow (DCF)
Valuation Model.
Quest® triAngle is Canaccord Genuity’s proprietary 15-factor, stock-picking tool, which systematically measures Value, Quality and Momentum and presents the results
in a simple, easy to understand score. It takes a multi-pronged approach to Value, Quality and Momentum using five factors for each component, which adds more
consistency of performance unlike a reliance on one single measure. It uses a mix of historic and forecast data, and combines absolute valuation data with comparisons
relative to history. The triAngle is designed to generate stock ideas and provide a consistent framework for analysis of portfolio holdings.
Quest® Methodology
Quest® is an analytical tool that involves use of a set of proprietary quantitative algorithms and value calculations to derive a number of corporate performance and
valuation metrics, including assigning a Default Quest® value per share and generating a triAngle Score, which is a relative ranking based on a number of operational
and valuation metrics. These algorithms and value calculations are consistently applied to all the companies included in the Quest® database. Third-party data (including
consensus earnings estimates) are systematically translated into a number of default variables and incorporated into the algorithms. The source financial statement,
pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure the underlying economics
of firm performance. These adjustments provide consistency when analyzing a single company across time, or analyzing multiple companies across industries or national
borders. As the third-party data are updated, the triAngle Score generated by Quest®, and the Default Quest® value per share may change. The default variables may
also be adjusted by the user to produce alternative values, any of which could occur. Additional information about the Quest® methodology is available on request.
Canaccord Genuity Quest® Disclosures
Quest® is at this stage registered in the UK and in the USA, and common law trade mark rights are asserted in other jurisdictions. Quest® is non-independent research
and is a marketing communication under the FCA Conduct of Business rules. All rights reserved. Quest®, CITN®, Companies in the News™, CFROC®, and triAngle™ are
all trademarks of Canaccord Genuity Limited. E&OE. © Canaccord Genuity Limited. For important information and company-specific Quest® disclosures please see
Important Disclosures at the following website (provided as a hyperlink if this report is being read electronically): https://disclosuresquest.canaccordgenuity.com/.
Please note that analyst data and Quest® data may differ due to different sources and calculation methods. The Quest® platform may be found at the following website
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* Canaccord Genuity and its affiliated companies may have a Corporate Finance or other relationship with the company and may trade in any of the Designated
Investments mentioned herein either for their own account or the accounts of their customers, in good faith and in the normal course of market making. The authors
have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Corporate Finance activities, or to coverage contained
in the Morning Coffee.
Canaccord Genuity is the global capital markets group of Canaccord Genuity Group Inc. (CF : TSX)
The recommendations and opinions expressed in this research report accurately reflect the Investment Analyst’s personal, independent and objective views about any
and all the Designated Investments and Relevant Issuers discussed herein.
Canaccord Genuity (Australia) Limited is the Australian affiliate of global capital markets group Canaccord Genuity Group Inc. (CF : TSX). The recommendations and
opinions expressed in this research report accurately reflect the Analyst’s personal, independent and objective views about any and all the designated investments and
relevant issuers discussed herein.
Tuesday, October 5, 2021
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
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