Inside the Market’s roundup of some of today’s key analyst actions
Investors reacted positively to BCE Inc.‘s (BCE-T) quarterly results and long-awaited dividend cut on Thursday, sending its shares up 5.3%. This morning, its analysts’ turn for reaction.
Overall, it’s been relatively upbeat, but still cautious.
Bell slashed its dividend by 56% and also eliminated its dividend reinvestment discount program. It also said it struck a partnership on Ziply with PSP Investments that will see the Ottawa-based pension plan invest US$1.5-billion to expand the fiber network from 1.3 million to up to eight million potential customers.
The deal will relieve BCE of much of the capital-expenditure burden of building out the Ziply network and improve the company’s free cash flow forecast by $1-billion between 2026 and 2028.
PSP Investments, a public-sector pension fund with $265-billion in assets, will own a 51-per-cent equity stake in the new Network FiberCo business, to build fiber infrastructure outside of Ziply’s incumbent footprint. BCE will continue to own 100 per cent of the existing Ziply business.
Desjardins securities analyst Jerome Dubreuil raised his price target to C$39 from C$36 while maintaining a “hold” rating. He called it “a historic day” for the company.
“This [dividend cut] decision, along with the InfraCo announcement, addresses pressing capital structure issues and enables the company to invest sufficiently to enhance its future EBITDA growth profile. However, we warn that altering the capital distribution profile may come with changes in the shareholder base that are not all reflected on day one. We do not expect a step-function improvement in the Canadian operations,” Mr. Dubreuil said in a note to clients.
Mr. Dubreuil noted the the dividend cut means BCE’s payout ratio will gradually improve but will still be relatively high.
“While we were encouraged by BCE’s board decision to cut the dividend by more than 50%, we note that the payout still remains somewhat elevated in the near term for a company that just cut its dividend. ... We forecast BCE’s dividend payout, based on our free cash flow definition, to be 83% in 2026. Greater flexibility would have been useful for management in the near term, especially amid challenged EBITDA growth in Canada―one never knows for sure when the next opportunity will arise. However, as Ziply’s FCF profile improves, the payout rapidly decreases and we therefore do not expect additional pressure on the dividend in the foreseeable future," the Desjardins analyst said.
Canaccord Genuity analyst Aravinda Galappatthige raised his price target to C$32 from $31.50 but maintained a “hold” rating.
“We were encouraged by the broad-based efforts to improve the balance sheet, which includes the PSP arrangement, which in turn reduces capital commitments in the US, and the recent buyback of bonds which were trading at a discount,” Mr. Galappatthige said. “The key issue remains the soft operating results, which was evident again in the Q1 sub [subscriber] numbers.”
“Although we fully expected lower sub trends in wireless and wireline across the industry, BCE’s sub adds were noticeably weaker. We note, in particular, the broadband net adds figure of 9.5k, which suggests virtually a flat sub base. This compares with a track record of mid-single-digit growth in internet revenues, which would rely heavily on pricing going forward. There was also a notable loss of share in wireless, especially in postpaid, with the company reporting a postpaid net sub loss for the first time,” he added.
On the bright side, he noted that for the fourth successive quarter, BCE reported positive revenue growth in its media operations and a notable 36% growth in EBITDA in Q1/25. “While the headwinds in the traditional media industry persist, we see encouraging early results from management’s efforts to strengthen the segment through a focus on digital media and content. Cost reductions (and divestures) a central part of the thesis: In light of the challenging industry conditions, we believe that execution on BCE’s cost reduction plans is key,” he said.
Scotia analyst Maher Yaghi trimmed his price target by 50 cents to C$39, citing higher than expected leverage that the company has guided to come at the end of this year.
Still, he believes BCE is making appropriate steps and reiterated a “sector perform” rating.
“BCE took yhe right decisions to cut the dividend and establish a capital light strategy towards funding its US expansion by partnering with PSP. Both actions, coupled with removing the discount on the DRIP are in our view shareholder friendly and will protect and solidify the outlook of the balance sheet,” Mr. Yaghi said. “We now see a sustainable path for BCE to de-lever organically.”
“As it stands, and given the high correlation between distribution ratios and dividend yields relative to the treasury curve, we believe fair valuations for the stock in the current interest rate environment is to trade at a dividend yield of 5-6.5% given the new distribution ratio,” Mr. Yaghi added.
“In order for the stock to trade higher towards our target price management still needs to solve for a higher organic growth outlook. A few things stand in the way 1) ongoing pricing and subscriber pressure in wireless and 2) pending decision by the CRTC on FTTH regulation. We think the stock will likely trade in the $27-35 range until we get more clarity on those two issues,” he said.
RBC analyst Drew McReynolds cut his price target to $35 from $37 and reiterated a “sector perform” rating.
Mr. McReynolds said the lower price target mostly reflects the trimming of target multiples arising from a more challenging business environment and factoring in a slightly slower de-levering trajectory. Still, he said BCE “is ticking most of the boxes on the anticipated ‘reset’.”
The average price target is now C$34.23, down from C$34.81 a month ago, according to LSEG data.
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ATB Capital Markets upgraded Shopify Inc. (SHOP-T) to an “outperform” rating while raising its price target to C$160 from C$155 in the wake of the company’s earnings Thursday.
Shopify reported first quarter consolidated revenue of $2.360 billion, up 26.8% and beating consensus of $2.359 billion.
But gross margin of 49.5% represented a 189 basis point decline from a year earlier, and it was a touch below consensus of 50.2%. Gross profit grew slower than revenues, at 22.2% year over year.
“We believe that the margin pressure is tied to trends that are growing new merchants, GMV (gross merchandise value) and ultimately revenue and profits,” ATB analyst Martin Toner said in a note. “The relatively in-line Q2 guidance, and commentary on the quarter to date, provides us confidence in the growth outlook in light of new tariff policies. .... At the same time, we see margin pressures persisting in the coming quarters as low-margin payments grow as a % of mix. We raised our 2025 and 2026 revenue estimates given the positive near-term outlook, though reduced our gross margin estimates to account for the structural pressures in place. With the stock down about 29% from February highs, we now see a favourable risk/reward setup.”
The average price target is C$141.91, down from C$145.24 a month ago.
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ATB Capital Markets downgraded Kinaxis Inc. (KXS-T) to “sector perform” from “outperform”, citing the stock’s 22% rally over the past month. However, ATB analyst Martin Toner maintained his C$210 price target.
Kinaxis reported first quarter results this week, with revenue rising 11.2% from a year earlier, inline with consensus. The company reported gross profit of $86.5 million, above consensus of $85.4 million, while gross margin of 65.2% (vs. consensus of 64.4%) expanded from 60.6% in the prior quarter.
KXS reported record adjusted EBITDA of $33.1 million, which came in at a 25% margin and beat consensus of $31.0 million. Annual recurring revenue (ARR) growth of 14% was about 220 basis points higher on a sequential basis.
“We raised our 2025 and 2026 revenue and gross margin estimates given the beat vs. our expectations this quarter and the ongoing ARR momentum. The impact on our price target, however, is offset by a weaker USD,” he said.
“Though we like the long-term growth story, we are waiting for more evidence of a growth inflection that is necessary to drive the stock further,” Mr. Toner added.
There were price target increases elsewhere, however. RBC raised its target price to C$225 from C$210 and Stifel raised its target price to C$225 from C$195.
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Canaccord Genuity analyst Tania Armstrong-Whitworth upgraded Knight Therapeutics Inc. (GUD-T) to a “buy” rating following its first-quarter results, believing Thursday’s sell-off has introduced value in the stock.
“We have incorporated Q1 results into our forecast, which results in our 2025 revenue forecast increasing to $400.6M from $397.9M,” the analyst said in a note to clients. “This is above the midpoint of management’s guidance of $390.0-405.0M. Our adjusted EBITDA estimate increases ever-so-slightly to $51.9M (13% margin) from $51.7M (13% margin). Our margin estimate is in line with guidance.”
The analyst reiterated a C$6.50 price target. “Continuing to value shares in line with peers has us increasing our target multiple to 7.5x EV/EBITDA from 7.0x previously,” she said.
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Several analysts raised their price targets on Canadian Tire Corp. Ltd. (CTC-A-T) following the retailer’s quarterly results Thursday that revealed surprisingly resilient consumer demand in the face of the trade war.
Desjardins raised its price target to C$175 from C$170; Jefferies raised its target to C$164 from C$140; TD Cowen raised its target to C$181 from C$170; and BMO raised its target to C$175 from C$170.
The average price target is now C$165.91, up from C$160.91 a month ago.
“CTC reported a solid 1Q, with improvement across all banners in retail,” commented Desjardins Securities analyst Chris Li.
But he warned despite the solid performance, the company faces several headwinds for the rest of the year, including continued macro uncertainty, elevated freight and foreign exchange issues, “and a step-up in SG&A investments relating to the True North strategy.”
“However, successful execution of True North should drive attractive earnings growth over the longer term. We expect CTC’s strong financial position to provide some downside support through share buybacks and dividends,” Mr. Li said.
He maintained a “buy” rating, adding, “Despite near-term macro uncertainties, we maintain our positive long-term view.”
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BMO raised its price target on Emera Inc. (EMA-T) to C$65 from C$60 while reiterating an “outperform” rating following the utility’s first-quarter results.
Analyst Ben Pham called it a strong quarter and sees further dividend growth ahead.
“EMA reported Q1/25 adj. EPS of $1.28 ($0.76 in Q1/24), well above our $1.04 and consensus of $1.02. Some of the variance was due to lower quality Marketing ($69M vs. our $60M) but a large delta was also due to its premium Florida utility franchise with new rates and USD F/X tailwinds ($164M vs. our $148M),” Mr. Pham said in a note to clients.
“EMA’s growth outlook remains intact,” he added.
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Some price targets have also gone up for Hydro One Ltd. (H-T) following its quarterly results. RBC raised its target price to C$53 from C$46 and BMO raised its target to C$50 from C$46.
“Q1/25 illustrates another quarter of above-average growth for H,” commented BMO’s Ben Pham. “Part of the EPS growth of 20%+ YoY was due to weather (Ontario peak demand +7%) but the other driver was solid cost control (+3%) and steady rate base expansion (about $8.7B capex program through 2027 intact). Similar to what we have done with Canadian utility peers, we are notching up the target P/E to 22x (vs. 21x and historical average of 19x).”
Mr. Pham is maintaining a “market perform” rating, mostly due to an approximate 35% premium valuation versus its peers.
The average price target is now C$49.04, up from C$46.04 a month ago.
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In other analyst actions:
Jamieson Wellness Inc. (JWEL-T): RBC raises target price to C$42 from C$40
Lundin Gold Inc. (LUG-T): BMO raises target price to C$62 from C$45
Premium Brands Holdings Corp. (PBH-T): Desjardins raises target price to C$98 from C$93
George Weston Ltd. (WN-T): Desjardins raises target price to C$300 from C$251
IGM Financial Inc. (IGM-T): Scotiabank raises target price to C$51 from C$49
Sun Life Financial (SLF-T): Barclays cuts target price to C$86 from C$87
Stella-Jones Inc. (SJ-T): TD Cowen raises target price to C$90 from C$88