Inside the Market’s roundup of some of today’s key analyst actions
While he thinks Alimentation Couche-Tard Inc. (ATD-T) reported fourth-quarter financial results that “look better than the headline number suggests,” Stifel analyst Martin Landry will “also need to generate a strong operational performance” in order to “recharge” the price of its shares.
The Laval, Que.-based convenience-store giant closed narrowly higher on Thursday after it announced quarterly earnings per share of 46 cents, down 4 per cent year-over-year and a penny below the estimates of both Mr. Landry and the Street. Merchandise same-store-revenues rose in Canada and Europe and “remained depressed” in the U.S., declining 0.4 per cent year-over-year south of the border, in line with the analyst’s expectation of a decline of 0.5 per cent and consensus’s expected 0.4-per-cent drop.
“While EPS declined 4.3 per cent year-over-year in Q4FY25, the comparable period had an abnormally low tax rate, and the current period had nonrecurring items which were not adjusted,” said Mr. Landry. “Adjusting for these, EPS would have been up 6-7 per cent year-over-year, as opposed to down 4.3 per cent. Above ATD’s operational performance, investors have symptoms of ‘deal fatigue’ in relation to the potential acquisition of Seven & i Holdings. Several investors, including ourselves, do not expect a transaction will materialize and are waiting for the announcement that ATD walks away. We believe a decision will be announced in the coming months. With several Canadian consumer staples stocks near 52-week highs, ATD stands out as an outlier.”
Mr. Landry said he sees “encouraging” trends this far in the company’s first quarter of its fiscal 2026 after U.S. merchandise same-store revenues rose throughout the past quarter with the last month (April) showing year-over-year growth.
“This trend has continued in Q1FY26 leading us to raise our U.S. merchandise assumption to growth of 0.5 per cent, from a 0.5-per-cent decline,” he added. “Management seems to be getting traction with its meal deals as the company is on its way to reach the impressive threshold of 1 million meals sold each week.
“Normalized SG&A expenses increased 4.9 per cent year-over-year, the fastest pace of the last two years and faster than management’s ambition of growing SG&A expenses slower than inflation. Cost savings are expected to kick in in the coming quarters which should alleviate the impact of investments in technologies and bring back the growth of SG&A more aligned with inflation.”
Also predicting the “Seven & i saga” could end in the near term after management indicated that “it does not want to drag this saga any longer than needed,” Mr. Landry cut his fiscal 2026 EPS forecast by 9 per cent to “reflect higher depreciation expenses, higher SG&A expenses and more muted merchandise gross margin expansion,” leading him to lower his target for Couche-Tard shares by $3 to $81 with a “buy” rating. The average target on the Street is $81.80, according to LSEG data.
Elsewhere, other analysts making adjustments include:
* Desjardins Securities’ Chris Li to $80 from $82 with a “buy” rating.
“As expected, 4Q results reflect ongoing macro challenges weighing on U.S. merch SSSG, partly offset by encouraging fresh food sales momentum. Combined with stabilizing consumer demand, we believe an inflection in U.S. merch SSSG could be several quarters away and a potential catalyst. Clarity on the 7&i situation (likely in a few months) and a share buyback resumption (assuming no deal) are other key catalysts, which we believe will improve investor sentiment and drive outsized performance,” said Mr. Li.
* Scotia’s John Zamparo to $78 from $80 with a “sector outperform” rating.
“FQ4 revealed softer organic growth and higher spending, but we expect conditions to improve from here: U.S. comps lap two years of negative results next quarter, Europe keeps winning share, and Canada has two more quarters of growth from beverage alcohol,” said Mr. Zamparo. “Furthermore, nicotine and the U.S. fuel margin are proving resilient, and management expects SG&A growth to moderate. Perhaps most importantly, it seems a conclusion is imminent on Seven & i; we consider a withdrawn bid a near-term positive.”
* Jefferies’ Corey Tarlowe cut his target to $87 from $90 with a “buy” rating.
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Citing an “increasing optimism” that CAE Inc. (CAE-T) can drive outsized EPS growth and valuation upside, CIBC World Markets analyst Kevin Chiang upgraded its shares to an “outperformer” recommendation from “neutral” on Friday.
“On June 2, CAE announced the appointment of Matthew Bromberg as President and CEO effective August 13, and that Calin Rovinescu will be Executive Chairman of the Board,” he said. “A key question we receive from investors is: what are the implications of these executive changes for CAE’s medium- to long-term growth? We expect CAE will provide more granular detail around the drivers of its long-term earnings outlook after Mr. Bromberg and Mr. Rovinescu have settled into their roles”
Touting the “winds of change,” Mr. Chiang added: “Mr. Bromberg is a seasoned executive with experience that aligns with CAE’s civil and defence segment. Mr. Rovinescu was President and CEO of AC and is a familiar name to investors, with a proven track record. We see both Mr. Bromberg and Mr. Rovinescu as change agents and believe they can evaluate CAE’s long-term growth strategy with a focus on areas where the company has a strong competitive moat, and on driving higher FCF conversion and ROIC. On these last two points, we highlight AC’s FCF conversion and ROIC from 2010 to 2019, just before the pandemic and when Mr. Rovinescu was CEO of the airline. We can see how AC’s reported ROIC nearly doubled from 2012 to 2019 while its FCF conversion and generation significantly improved after the company completed its major fleet investment. Conversely, looking at CAE’s Civil segment’s SOI/capital employed ratio as a proxy for ROIC within this segment, it has gone from 16 per cent in F2018 to 10 per cent in F2025. We recognize that CAE was in the midst of a growth period but as growth capex slows, this suggests an opportunity to improve returns, especially when considering Civil SOI margins have improved during this period.”
The analyst’s target for CAE shares rose to $44 from $38. The average is $39.98.
“CAE is currently trading at 10.5 times our fiscal 2027 estimate EBITDA,” said Mr. Chiang. “We argue that aerospace & defense companies that have resilient revenue models and strong market positioning can trade up into the mid-teens, and maybe higher.”
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TD Cowen analyst John Mould initiated coverage of Canada’s utility sector on Friday, seeing valuations “powered by electricity.
“We believe that secular electrification trends favour the opportunity set for electric utilities and support premium valuations,” he said in a client report. “We believe jurisdiction is an important differentiator, as some markets are materially more constructive.
" While the broader thematic favours electric utilities, our top pick is AltaGas given its #1 position on forecasted growth, valuation expansion potential, and exposure to broader Canadian energy tailwinds. We believe that key themes are supportive of further valuation expansion for the sector. 1) A return to electric load growth as a result of data centre demand, re-shoring of manufacturing, and electrification. 2) Investments to support growth must be made with a view to customer affordability. 3) Governments are incentivized to expand energy infrastructure that supports economic growth. 4) We anticipate ongoing decarbonization through investments for ratepayer benefit (lower costs and volatility). 5) We expect gas utilities will remain essential for meeting winter peaks."
For AltaGas Ltd. (ALA-T), which he highlighted as his preferred choice in the group, Mr. Mould set a “buy” rating and $45 target, exceeding the $41.70 average on the Street.
“Although ALA is 100 per cent gas on the utility side, we believe AltaGas offers investors the potential for attractive valuation expansion (approximately 2 turns) and the highest EPS growth among the Canadian utility group (three-year CAGR of 8 per cent),” he said. “This is partially due to a higher-growth midstream business that AltaGas has derisked through contracting/tolling.”
Mr. Mould also initiated coverage of these stocks:
* Fortis Inc. (FTS-T) with a “buy” rating and $74 target. Average: $69.36.
“Fortis scores in the top three in all categories as a result of its group-leading track record and an asset base that is both weighted towards electricity and arguably the most diversified across jurisdictions among the pure-play utilities. We see these characteristics as supportive of a higher valuation,” he said.
* Emera Inc. (EMA-T) with a “buy” rating and $69 target. Average: $63.88.
“Emera’s business is heavily weighted to Florida; potentially the most attractive jurisdiction in which Canadian-listed utilities operate. We view its attributes as supportive of multiple expansion,” he said.
* Atco Ltd. (ACO.X-T) with a “hold” rating and $56 target. Average: $55.86.
“We forecast more muted growth for ATCO relative to utility peers. ATCO trades at a discount to its historical average; we believe its current valuation appropriately reflects its utility asset base, growth outlook for its non-utility businesses, and holding company structure.,” he said.
* Canadian Utilities Ltd. (CU-T) with a “hold” rating and $40 target. Average: $40.14.
“We forecast more muted growth for CU relative to peers. CU trades at a discount relative to CDN peers and its historical average; we believe the opportunity for further multiple expansion from this level is limited given the company’s growth outlook and asset base (gas comprises 46 per cent),” he said.
* Hydro One Ltd. (H-T) with a “hold” rating and $52 target. Average: $49.89.
“We believe Hydro One deserves its current premium valuation given its 100-per-cent electric weighting, robust and transparent EPS growth through 2027, and financial flexibility,” he said. “HOL trades at a premium to almost all North American utilities and a wide premium to its historical average; we view it as fairly valued.”
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In a research report released before the bell titled Chipping away in all the right places, Stifel analyst Ian Gillies called AtkinsRéalis Group Inc. (ATRL-T) “catalyst rich” and continues to see its shares as “undervalued” following the close of the sale of its interest in Highway 407 for net proceeds of $2.5-billion and the repurchase of 7.0 million shares for $636-million fromCaisse de dépôt et placement du Québec.
“We have a positive view on the use of proceeds.“ he said. ”The company’s current M&A playbook is focused on small to mid-sized deals like the US$300-million David Evans acquisition, which was executed on February 19, 2025. As such, ATRL would have required a number of years to work through its underlevered balance sheet. This share repurchase from La Caisse is being executed at 2026E multiples of 11.8 times EV/EBITDA and 21.8 times P/E. In our view, these valuation metrics are comparable to what the company would need to pay for well functioning mid-sized engineering businesses. Meanwhile, ATRL does not have to take on the execution risk of M&A. As such, we view it as a good use of capital.
“This share repurchase augments an already active NCIB: The shares repurchased from La Caisse will not count against the company’s current NCIB of 13.5 million shares. Moreover, ATRL has been very active with the NCIB through 2Q25 with our estimate being that the company has repurchased a further 1.5 mm shares at an average price of $80.75/sh. This data was compiled from SEDI and is up to June 20, 2025. The combination of the NCIB and La Caisse repurchase will lower ATRL’s share count by 4.9 per cent compared to the 1Q25 end of period share count of 174.5-million.”
Mr. Gillies thinks the Montreal-based firm continues to possess “ample spare capacity to keep on being active on M&A and the NCIB” and touted “significant flexibility to continue acquiring mid-sized engineering firms and executing on its NCIB.”
Reiterating a “buy” rating for its shares, he raised his target by $1 to $109. The average on the Street is $102.23.
“Our positive investment thesis has five main components: (1) above-average revenue growth driven by nuclear creates a unique opportunity; (2) Engineering Services EBITDA margins still have room to expand; (3) sum-of-the-parts suggests significant upside; (4) bolt-on M&A activity could augment growth in the near-term; and (5) asset sales will continue to help optimize the business, providing capital flexibility for M&A or other capital allocation initiatives in the medium-term,” he said.
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Vizsla Silver Corp.’s (VZLA-T) “step change” in liquidity through its $136-million bought deal financing “de-risks development financing,” according to National Bank Financial analyst Don DeMarco, seeing well-funded to advance its mine program and ongoing exploration at its 100-per-cent-owned Panuco silver-gold project in Sinaloa, Mexico.
“Opportunity to bolster liquidity with shares up 33.7 per cent over the last two months (vs. S&P TSX Gold Index up 5.5 per cent, silver price up 10.8 per cent),” he said in a note following Thursday’s announcement of the close of the deal, which came with the issuance of 33.33 million units at $4.09 each.
“After updating our model with the financing and our revised metal price forecasts, our NAVPS [net asset value per share] edged higher by 7 per cent to $5.52 (was $5.16”
Maintaining his “outperform” rating for the Vancouver-based company’s shares, Mr. DeMarco bumped his target to $6 from $5.75. The average is $5.43.
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In a separate report, Mr. DeMarco called a recent tour of Alamos Gold Inc.’s (AGI-T) Island Gold District “as snapshot in time of growing resource, production and FCF.”
The 100-per-cent-owned District in northern Ontario is comprised of the adjacent Island Gold and Magino mines and accounts for 55 per cent of the analyst’s mining net asset value for the Toronto-based company.
“Overall the Island District shows a world class resource with material upside; with visibility for best-in-class operations, build quality and team upon execution of the Base Case; and Tier 1 jurisdiction providing additional favourable differentiation,” said Mr. DeMarco. “All vectors are pointing to a generational, best-in-class asset, however, of acute interest to us is the next 3 years (N3Y) with forecast 20-per-cent production CAGR [compound annual growth rate] and 57-per-cent FCF CAGR, and upon execution provides opportunity to drive valuation re-rate.”
After raising his net asset value per share model by 9 per cent to $38.82 (from $35.50), he moved his target for Alamos shares to $52.25 from $51.75, keeping an “outperform” rating. The average is currently $49.31.
“Overall, we ascribe a neutral bias for the tour given limited new and material information, which is typical of tours as they are primarily to provide a firsthand perspective and Q&A with the team,“ said Mr. DeMarco. ”We remain constructive on AGI, with visibility for high grade Resource and Reserve growth, production growth, costs near lower decile of peers, driving elevated cash flow. Alamos also benefits from a portfolio heavily weighted to Canada.”
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In other analyst actions:
* ATB Capital Markets’ Tim Monachello reduced his target for shares of North American Construction Group Ltd. (NOA-T) to $34 from $37 with an “outperform” rating. The average on the Street is $39.86.
“As Q2/25 draws to a close, we update our model to reflect a tempered view of Canadian segment margins due to an abrupt three-week shut down at a major customer operation in the oil sands in May, and the non-cash impact of a roughly one-percentage-point retrospective reforecasting of NOA’s Fargo Moorhead JV profitability that we believe will weigh on Q2/25 results,” he said. “Specifically, 2Q25 adj. EBITDAS estimate is cut by $16-million (15 per cent) to $90-million from $107-million previously ($100-million consensus), and reduce our full-year 2025 adj. EBITDAS estimate by $20-million (4 per cent) to $419-million from $439-million previously ($426-million consensus) which is toward the bottom end of NOA’s guidance ($415-million-$445-million). While we believe Q2/25 results will be considerably weaker than previously expected, and this could weigh on NOA shares over the near-term, we believe the impact to oil sands margins is largely transitory, and the impact to JV results is non-cash, and largely historical in nature. Further, we believe NOA’s Australian operations continue to perform well, including a roughly $2.0bn contract extension in Australia (not incremental), and multiple potential civil infrastructure projects that could provide upside in 2026 and beyond. While NOA’s Canadian oil sands business remains susceptible to variability in customer activity, NOA’s exposure at roughly 25 per cent of EBIT is considerably lower than it was historically, and we continue to believe that the downside to our model is limited following NOA’s recent oil sands contract award.”
* Stifel’s Ian Gillies trimmed his Secure Waste Infrastructure Corp. (SES-T) target to $17 from $18 with a “buy” rating. The average on the Street is $17.20.
“We visited SECURE’s metals recycling and waste processing facilities in Edmonton, Alberta on June 17, 2025 and came away impressed by the quality and efficiency of the assets,” he said. “Volatility in the macro environment year-to-date has caused SES headwinds which leads to us modestly reducing 2025E EBITDA by 1.5 per cent to $505-million. Nonetheless, the company is forecast to deliver a healthy 24-26 EPS CAGR [compound annual growth rate] of 13 per cent. We believe there is upside to 2026E estimates from additional NCIB activity and acquisitions. We continue to like SECURE’s assets and view the cash flow profile as more defensive than previous cycles.”