Inside the Market’s roundup of some of today’s key analyst actions
National Bank Financial analyst Gabriel Dechaine thinks Royal Bank of Canada’s (RY-T) return on equity of 17.6 per cent in the first quarter may be “underappreciated” by the Street.
“RY’s ROE expansion (i.e., 60 basis points quarter-over-quarter) wasn’t as impressive as what we saw from peers this quarter (i.e., 150 bps average),” he said. “However, performance was still above expectation and marked the fourth time over the past five quarters that it exceeded the 17-per-cent mark, which is the bank’s medium-term target. Importantly, RY’s ROE performance could be relatively resilient, considering that it relied on a relatively minor amount of ROE expansion in the Capital Markets segment (i.e., up 30 bps quarter-over-quarter).”
On Thursday, RBC shares closed down 2.1 per cent despite reporting a rise in first-quarter profit, topping analysts’ estimates on a jump in earnings in personal banking and wealth management. Adjusted earnings per share of $4.08 exceeding both Mr. Dechaine’s $3.90 estimate and the consensus forecast of $3.85, which he attributed to “a mix of stronger revenue generation, mainly from Trading revenues, lower expenses, and lower provisions for credit losses, offset by a higher tax rate.”
“All-bank NIM [net interest margin] ex-trading was up 1 basis points quarter-over-quarter,” he added. “Of note, Canadian P&C NIM was flat sequentially, below the group average of up 4 basis points this quarter. Moreover, RY’s Canadian P&C segment NIM could compress in the upcoming quarter as the benefits of HSBC Canada purchase accretion fade (i.e., quantified as a 4 bps NIM headwind). RY’s flat margins didn’t hurt its bottom-line growth, however, with its Canadian P&C segment PTPP [pre-tax, pre-provision] up 12 per cent on the year compared to an 8-per-cent peer average. Assuming NIM stabilizes post-Q2 (and potentially expands if mortgage spreads remain favourable) RY should maintain this level of outperformance.”
After adjusting his estimates to reflect “stronger operating leverage trends,” Mr. Dechaine increased his target price-to-earnings multiple to “reflect RY’s superior ROE generation,” leading to a new target for RBC shares of $257, up from $241, with an “outperform” rating. The average on the Street is $249.19, according to data compiled by LSEG.
Elsewhere, other analysts making revisions include:
* Canaccord Genuity’s Matthew Lee to $260 from $255 with a “buy” rating.
“Our key takeaway from the quarter was management’s focus on driving profitable growth, with an emphasis on both optimizing product mix and improving the underlying ROE of each of its businesses. For F26, management now expects somewhat slower loan growth as the mortgage market remains soft and commercial clients delay a return to growth. On credit, RY maintained its expectation for 35 to 40bps of impaired PCLs and noted that the current macroeconomic environment is very much within their forecast. Post quarter, we have raised our estimates very modestly on capital markets offset somewhat by lower loan growth and credit,” said Mr. Lee.
* Scotia’s Mike Rizvanovic to $247 from $242 with a “sector outperform” rating.
“We had a positive view on RY’s results overall this quarter, with the EPS beat not driven exclusively by market-sensitive businesses but rather by broad-based strength across the bank’s business lines, particularly Personal Banking, which showed solid sequential gains in NII and lower expenses that drove a record efficiency ratio. We remain constructive on RY’s medium-term outlook as we expect the bank to maintain its superior ROE through our forecast period, and we believe the share price underperformance relative to peers today was overdone, and likely related to a more tepid approach to share repurchases, the bank’s already group-high P/E multiple heading into earning season, and a group-low EPS beat of 6 per cent vs. consensus (the peer avg was 10 per cent). Our estimates move up modestly post-quarter and our PT increases, while our SO rating is unchanged,” he said.
* TD Cowen’s Mario Mendonca to $259 from $260 with a “buy” rating.
“Buoyant capital markets activity (trading) supported top line growth and operating leverage was very strong. However, the quarter was overshadowed by weaker than peer credit trends. We do not expect RY to be an outlier over the course of ’26; and we believe RY’s scale & business mix will continue to support a premium ROE. The 17-per-cent-plus ROE provides greater flexibility for growth & buybacks,” said Mr. Mendonca.
* Desjardins Securities’ Doug Young to $250 from $247 with a “buy” rating.
“Overall, a solid beat on cash EPS and adjusted PTPP earnings. It recorded a cash ROE of 17.8 per cent (above its medium-term target of 17 per cent plus). We like management’s emphasis on balancing ROE and growth, and there was no change to its impaired PCL rate guidance for FY26, despite higher GILs. We increased our cash EPS estimates,” said Mr. Young.
Following a “solid result” in the first quarter, RBC Dominion Securities analyst Darko Mihelic raised his forecast for Toronto-Dominion Bank (TD-T), predicting it will possess “among the highest operating leverage in 2027 in the bank group due to the restructuring program and we believe stronger loan growth (should that develop) might accentuate its operating leverage advantage.”
“TD’s results were stronger than expected across most segments except for Wealth Management and Insurance. Total revenues, total PCLs, and non interest expenses all came in better than our forecasts,” he said following Thursday’s premarket release, which sent TD shares higher by over 1.6 per cent.
The bank reported adjusted earnings per share of $2.44, blowing past both Mr. Mihelic’s $2.21 estimate and the Street’s projection of $2.26. He attributed the beat to “higher than expected results across all segments except for Wealth Management and Insurance which was essentially in line. ”
“Canada Personal and Commercial, Corporate, and Wholesale adjusted earnings were particularly strong versus our forecasts,” he added. “Total revenues were higher than our anticipation, and total PCLs and expenses were lower than we expected.
“We primarily model higher core earnings estimates in Canadian Personal and Commercial Banking and Wholesale Banking, partially offset by lower estimates in Wealth Management and Insurance. Our core EPS estimates increase to $9.54 (was $9.19) in 2026 and $10.46 (was $10.38) in 2027.”
Keeping his “outperform” rating for TD shares, Mr. Mihelic raised his target to $148 from $133. The average is $137.46.
Other revisions include:
* Scotia’s Mike Rizvanovic to $142 from $132 with a “sector outperform” rating.
“We are more constructive on TD’s growth outlook coming out of the quarter, which was highlighted by a strong revenue beat, with both NII and fee-based revenue well above our expectations, and solid results for market-sensitive businesses, consistent with what we saw for the bank’s peers. As such, our forecasts move up for TD post-quarter, and we expect the bank to make further gradual progress towards its ROE target of 16 per cent (by F2029) through our forecast period, including in U.S. Retail, which does not appear to be hindered meaningfully by the current asset cap. However, our SP rating is unchanged given TD’s relative forward P/E multiple, which is already sits at the higher end of the peer group,” he said.
* Raymond James’ Stephen Boland to $141 from $138 with a “market perform” rating.
“While near-term earnings remain solid, we stay neutral as the bank continues to progress through AML remediation. Given the current valuation, we are maintaining our Market Perform rating,” said Mr. Boland.
* National Bank’s Gabriel Dechaine to $146 from $138 with an “outperform” rating.
“Following a ‘catalyst-heavy’ fiscal 2025, we believe most TD investors view execution on the 2025 Investor Day strategy as the long-term stock driver,” said Mr. Dechaine. “There are several high-level ‘deliverables’ (e.g., cost savings, ROE expansion) and we believe they will be most impactful if delivered in the Canadian P&C segment. On that front, Q1/26 was encouraging. The segment delivered positive operating leverage, which was underpinned by low single-digit expense growth and 170 bps of sequential ROE expansion. On the latter point, we estimate the segment contributed nearly 40 per cent of consolidated ROE expansion this quarter. If there’s a sticking point, it’s that TD’s Canadian P&C PTPP growth continues to lag peers (i.e., 7 per cent vs. 9-per-cent average), though we expect this gap to narrow over the course of fiscal 2026.”
* Canaccord Genuity’s Matthew Lee to $147 from $141 with a “buy” rating.
“Our key takeaway from the quarter was the firm’s updated outlook featuring (1) faster-than-expected cost rationalization, (2) continued strength in fee businesses, and (3) a CET1 target of 13 per cent by the end of F27. In combination, we believe these factors should accelerate EPS growth and lead to the bank achieving an ROE of 16 per cent plus before its F29 target. Building off this quarter’s 14.2 per cent, we expect the reduction of capital alone will drive upwards of 100 basis points of ROE. Overall, we came away from the quarter incrementally more positive on TD with our estimates adjusted upwards slightly. We continue to expect the bank to surpass its 6-8-per-cent EPS growth guidance in F26 with momentum persisting in F27.,” said Mr. Lee.
* Desjardins Securities’ Doug Young to $145 from $139 with a “buy” rating.
“Cash EPS and adjusted pre-tax, pre-provision (PTPP) earnings were above our estimates and consensus. Management remains confident in delivering if not exceeding the FY26 targets from its recent investor day, obviously depending on a stable macro environment. We increased our estimates,” said Mr. Young.
* CIBC’s Paul Holden to $140 from $136 with a “neutral” rating.
“Results were mostly good, with upside from capital markets, U.S. NIM expansion and expense efficiencies. Credit results were a little more mixed. The case for early delivery of a 16-per-cent ROE is becoming more clear. TD is trading at a 3-per-cent premium to the group on F2027E P/E (consensus). Valuation is a bit of a challenge for the relative upside, in our opinion,” said Mr. Holden.
* BMO’s Sohrab Movahedi to $144 from $135 with an “outperform” rating.
“Our upgrade of the stock to Outperform in December 2024 was predicated on a favourable upside/downside skew; we continue to favour the name. U.S. AML remediation and financial asset repositioning remain on track. TD’s rich CET1 and reserve levels provide comfortable downside protection given the current complex operating environment,” he said.
In the wake of stronger-than-anticipated first-quarter results, TD Cowen analyst Mario Mendonca thinks fundamentals and return on capital support Canadian Imperial Bank of Commerce (CM-T) trading at a “premium” price-to-earnings ratio.
“We view the quarter favourably in several respects: a) stability in PCLs (slightly higher in commercial); b) strong growth in Canadian P&B PTPP; c) strong capital markets; and d) ongoing NIM expansion,” he explained. “In our view, results support a P/E better than most peers.”
CIBC shares rose 2.9 per cent on Thursday after it reported adjusted earnings per share of $2.76, up 26 per cent year-over-year and well above Mr. Mendonca’s $2.47 estimate as well as the Street’s expectation of $2.50. Pre-tax, pre-provision earnings grew 19 per cent, topping the analyst’s 11-per-cent-projection, “with all major revenue lines ahead of our estimates, partially offset by higher expenses.”
“CM continues to deliver solid relative net interest income growth and net interest marhin performance,” he said. “The all-bank NIM, up 6 basis points quarter-over-quarter, benefited from better NIM in Canada P&C (up 10 bps q/q) and the U.S. Commercial (up 17 bps q/q). Tractor benefits, loan mix (lower mortgage growth), and a focus on margin over volumes continue to support NIM. We still see all-bank NIM increasing gradually, but at a slower pace than 2025.”
Also seeing “better” wholesale credit trends than its peers and believing it “appears more committed to return of capital than most,” Mr. Mendonca raised his forecast for CIBC by approximately 5 per cent to reflect a “better” revenue outlook. That led him to increase his target for its shares to $153 from $142, keeping a “buy” rating. The average target on the Street is $138.73.
“CIBC delivered another quarter of solid underlying results and continues to trade at a discount P/E,” he said. “The market remains sensitive to CIBC’s domestic focus in the context of tariffs. We believe CIBC’s consistently good PTPP growth, strong NIM profile, capital strength (announced NCIB in Q3/25), and steady credit metrics support a higher P/E multiple relative to most of its peers.”
Others making changes include:
* Raymond James’ Stephen Boland to $148.50 from $135 with a “market perform” rating.
“Overall, we remain positive on CM through FY26 and into FY27. We expect continued NIM expansion to support ROE, with structural efficiency gains driving further operating leverage. Credit trends remain manageable, and with CET1 at 13.4 per cent, the active buyback program provides additional support to earnings and capital returns in the near term,” said Mr. Boland.
* BMO’s Sohrab Movahedi to $150 from $135 with an “outperform” rating.
“We like CM’s momentum in its domestic franchise and believe its strength will persist, supported by its persistent focus on its affluent customer acquisition strategy even after a CEO transition in FY26. The consistent and stable execution of its more Canadian-centric strategy should be rewarded by further improvements in its valuation metrics. We see ROE expansion through FY27,” he said.
* Scotia’s Mike Rizvanovic to $153 from $138 with a “sector outperform” rating.
“CM put up another strong set of results in Q1, continuing to show solid execution that has been a consistent theme for roughly the past three years that has helped the bank to gradually close its valuation discount relative to peers. While Capital Markets was the key driver for the EPS outperformance this quarter, CM’s other business lines also reported solid results as lending margins came in well above our expectations, and loan volumes were constructive, including in the U.S. business, which had much better volumes sequentially. Our forecasts increase for CM coming out of the quarter, as does our PT, while our SO rating is unchanged as we continue to see a favorable outlook for the bank across its business lines,” he said.
* RBC’s Darko Mihelic to $158 from $134 with an “outperform” rating.
" CM’s results were stronger than anticipated across the board especially in Capital Markets and Canadian Personal & Business Banking reflecting solid revenues and strong NIMs, and slightly lower than expected PCLs (performing and impaired). We increase our earnings estimates, Q1/26 remains the strongest quarter of the year in our model. We view CM as relatively better positioned for the current low loan growth environment and also see its strong (pro-forma) capital position as a strength too," said Mr. Mihelic.
* Canaccord Genuity’s Matthew Lee to $145 from $136 with a “hold” rating.
“CM reported solid Q1 results [Thursday] morning with EPS beating our estimates as capital markets strength was complemented by another quarter of industry-leading NIM expansion. While trading revenue reflected a strong market that also benefited peers (but better), we were once again surprised by the firm’s NIM strength. Management highlighted the combination of business mix, tractors, and product margins (roughly 1/3 each) contributing to the improvement, but suggested that the trajectory should be flatter from here with some seasonal headwinds impacting Q2. Credit was also robust in the quarter, which gives credit to management’s expectation of a downward sloping PCL trajectory throughout the year. Overall, we came out of the quarter more constructive on CM, which continues to demonstrate prudent cost management and good top-line growth,” said Mr. Lee.
* National Bank’s Gabriel Dechaine to $150 from $131 with a “sector perform” rating.
“All-bank NIM (excl. trading) rose 6 basis points quarter-over-quarter, led by double-digit expansion in both Canadian and U.S. P&C banking,” said Mr. Dechaine. “CM has outpaced margin expectations for over a year, as loan (e.g., slower mortgage growth) and deposit (demand>term) origination mixes have been more favourable than expected. Moreover, securities re-investment yields have been a tailwind, and should continue to be one until mid-2027. We are modelling flatter NIM performance during Q2/26, with low single-digit upside thereafter.”
In response to a nearly 70-per-cent jump in its share price over the last 12 months, TD Cowen analyst Vince Valentini lowered his recommendation for Quebecor Inc. (QBR.B-T) to a “hold” recommendation, saying “there is no longer enough return to our target to qualify as a Buy.”
On Thursday, shares of Quebecor dipped 2.4 per cent after it revealed adjusted earnings per share for its fourth quarter of 2025 of 99 cents, exceeding Mr. Valenini’s forecast by a penny and the Street’s expectation by 3 cents. The beat came even though it logged weaker-than-anticipated wireless net additions.
“We have almost no concerns about the strength of Q4 results and the growth outlook for 2026,” he said. “This is a best-in-class wireless growth story, and we expect both ARPU [average revenue per user] and sub growth to continue to drive over 9 per cent growth in both wireless service revenue and wireless EBITDA.”
“The cable segment is barely growing (this was never an issue for TMUS), and cable still accounts for 55 per cent of telecom segment EBITDA in 2025 (52 per cent on 2026 estimate), so we see some limits on how much of a valuation premium QBR.B can sustain versus peers (currently 8.0 times 2026 estimated EBITDA, versus Rogers/BCE/TELUS at 6.5-7 times, and Cogeco below 5 times).
Mr. Valentini emphasized he has been “used to be able to point to a double-digit FCF yield for QBR that was much higher than
peers," however he said his 2026 estimates point to a yield of only 7.5 per cent, “noting that FCF in 2025 was boosted by over $300M in working capital, which is not expected to fully recur in 2026.”
“Before adding more shares in this name, we believe investors should wait for either the EBITDA to grow into the valuation, or some evidence that overall wireless industry growth in Canada is improving (either better population growth, or more sustained evidence of better pricing discipline),” he added.
“Lastly, we appreciate the strong balance sheet, share buybacks (we assume 8 million shares repurchased per year), and dividend growth, but even after a 14-per-cent dividend increase, the yield of 2.9 per cent is unlikely to screen well for investors looking for telcos that offer simple safety and yield.”
The analyst raised his target to $60 from $58. The average is $53.64.
“Quebecor continues to effectively manage both capex and FCF, as it expands both revenue and EBITDA as a result of its acquisition of Freedom. In time, we are confident that QBR will accentuate Freedom’s quality with additional marketing initiatives, as opposed to relying on pricing. Meanwhile, Quebecor can continue to expand through a potential MVNO offering, its Fizz wireless brand, and bundling opportunities. In other countries, we have seen the newer entrant and faster growing wireless carrier trade at a meaningful premium to incumbents (notably T-Mobile in the U.S.), consistent with what we are currently seeing with Quebecor. However, the cable segment is barely growing, which was never an issue for T-Mobile, and it still accounts for more than half of telecom segment EBITDA. Given the stock price has increased significantly over the LTM [last 12 months], there is no longer enough return to justify a Buy rating. As such, we have a HOLD rating on QBR.B shares.”
Elsewhere, other revisions include:
* Scotia’s Maher Yaghi to $54.50 from $51.25 with a “sector perform” rating.
“With Q4/25 reporting period now completed, the aftermath of the intense pricing pressure in the Canadian market over the last two years can be clearly seen in results. Taking a step back, we don’t see a material difference in telecom top-line growth among the four largest competitors (BCE, T, RCI, and QBR) with results in a tight range of negative 2 per cent to a gain of 1 per cent, with Quebecor reporting flat growth y/y. We do expect a slight improvement in results in 2026, however that is dependent upon pricing continuing to show some improvement, an expectation that keeps getting challenged by price discounting in wireless, such as the reduction this week following flare-ups in late January. We continue to argue that until either these discounting actions stop or companies move away from reporting wireless net adds/ARPU and toward reporting more wholesome account additions (broadband/wireless) and ARPA, multiples in the sector will likely stay pressured. We have made a few changes to our QBR estimates, but until the better pricing profile improves, we are not likely to increase the 7.5 times multiple we apply on telecom EBITDA,” said Mr. Yaghi.
* Desjardins Securities’ Jerome Dubreuil to $61 from $54 with a “buy” rating.
“QBR’s wireless growth story is showing no signs of a slowdown, with ARPU growth now turning positive and the company continuing to lead wireless market share gains. While most catalysts we were anticipating are now behind us, namely (1) positive ARPU growth, (2) continued improvement in Internet revenue growth, and (3) FCF guidance above expectations, it is hard to bet against a company that is currently firing on all cylinders, with an advantageous capital structure, even in the context of its premium valuation,” said Mr. Dubreuil.
* CIBC’s Stephanie Price to $61 from $57 with an “outperformer” rating.
“Quebecor posted 9.5-per-cent wireless service revenue growth in Q4 and positive ARPU growth. In wireline, Quebecor saw the second consecutive quarter of positive internet revenue growth as our channel checks suggest slightly less price aggression from Quebecor’s largest competitor. We view Quebecor as the primary winner of the current wireless pricing wars, with Quebecor gaining 34 per cent of industry wireless net adds in Q4,” said Mr. Price.
* BMO’s Tim Casey to $60 from $58 with an “outperform” rating.
“Quebecor has an enviable wireless growth opportunity and balance sheet position. Wireless revenues increased 9.5 per cent (1.8-per-cent beat), reflecting leading share gains (34 per cent) and ARPU growth (1.4 per cent). Cable continues to improve. The company has balanced capital priorities including network investments, debt reduction, share buybacks and dividends (increased 14.3 per cent) with leverage already under 3 times,” said Mr. Casey.
* RBC’s Drew McReynolds to $57 from $52 with a “sector perform” rating.
“Despite strong performance driven mainly by multiple expansion (from 6.1 times FTM [forward 12-month] EV/EBITDA at the beginning of 2025 to 7.4 times currently), we continue to see a reasonable risk-adjusted return profile for the stock,” said Mr. McReynolds. “We believe the driver of further upside in the shares from current levels will be primarily NAV growth (bolstered by healthy FCF generation and a relatively low payout ratio), albeit with the potential for further multiple expansion should the company deliver a sustainable step-up in EBITDA growth from 2-3 per cent currently to mid-single digits bolstered by the flow-through of renewed wireless and Internet ARPU growth.”
* National Bank’s Adam Shine to $57 from $54 with a “sector perform” rating.
* ATB Cormark Capital Markets’ David McFadgen to $63 from $57 with an “outperform” rating.
While WSP Global Inc. (WSP-T) had another “solid” quarter, logging its 20th beat in a row, and in-line guidance, driven by “good backlog visibility” and the promise stemming from its $4.5-billion acquisition of U.S. power and energy consulting and engineering firm TRC Companies, Scotia Capital analyst Jonathan Goldman warns “it seems unlikely the AI overhang will abate any time soon.”
“WSP is the cheapest of CAD peers by 1 times and has the best fly-wheel, in our view: best organic growth profile underpinned by power exposure (1/3 of platform has direct exposure to AI infra build-out with POWER Engineers, TRC, legacy P&E business); best-in-class margins supported by scale and operational execution; strong FCF conversion; and a perennial willingness to deploy capital towards large-scale M&A,” said Mr. Goldman, lowering his valuation multiple for the Montreal-based professional services provider.
“Shares may be range-bound, or only recover slowly, as AI plays out, but at a 4.6-per-cent FCF yield on our 2026E/2027E, which is growing at double digits, we like the risk/reward here and are willing to be patient.
On Thursday, WSP closed up 6 per cent after it reported revenue for its fourth quarter of 2025 of $3.673-billion, up 8 per cent year-over-year and 1 per cent higher than the Street’s forecast of $3.631-billion. Adjusted earnings per share came in at $2.65, above the consensus projection of $2.61, as organic growth gained 5.9 per cent from the same point a year ago with all its operating segment showing gains.
For the current year, the firm’s outlook came in at the midpoint of its previous guidance, exceeding the Street by 2 per cent on revenue gains on further organic momentum.
“U.S. organic growth is expected to reaccelerate in 2026 in the mid-to-high single-digits range and the company appears to be winning more than its fair share given strategic focus on high impact clients,” said Mr. Goldman. “CEO Alexandre L’Heureux gave lengthy prepared remarks setting the record straight on AI (a must-read), underlining that while technology will automate some design and consulting tasks, AI cannot design on asset on its own.
“It can assist with preliminary sizing and drafting, parametric optimization, code lookups, and scenario generation, but it cannot guarantee compliance, verify safety, carry legal liability, produce deterministic proofs, ensure physical correctness, explain every step with guaranteed traceability, sign and seal drawings, or engage with the physical world and all stakeholders — not to mention professional accreditation and domain expertise are table stakes. The reality on the ground of the backlog build and real-time customer discussions about what else WSP can provide with AI runs contrary to the dystopian scenarios circulating online. But fear seems to be dominating current discourse.”
Keeping his “sector outperform” rating for WSP shares, Mr. Goldman trimmed his target to $284 from $320 with his reduced valuation. The average is $335.89.
Elsewhere, other changes include:
* Stifel’s Ian Gillies to $320 from $360 with a “buy” rating.
“In our view, management did a commendable job providing context to why AI risk is overblown, and it should be enough to provide a relief rally. We think the next 12-24 months will be like the game Whac-a-Mole. For those that don’t know this game, the mole suddenly appears and you whack it (AI risk) on the head to make it go away. If successful making the mole (AI risk) go away, there’s a prize at the end (higher share price for WSP). There’s going to be fits and starts to the AI narrative, but we do think the valuation is too inexpensive for WSP in 2027E at 17.6 times P/E, and that it is well-equipped to manage change,” said Mr. Gillies.
* National Bank’s Maxim Sytchev to $309 from $304 with an “outperform” rating.
“Management provided a comprehensive outline of where the engineering consulting industry differs vs. other business services industries on a potential disruption scale, a message that we believe was well received by investors (i.e., physical products, complexity, professional and legal liabilities, complex interfacing with multiple parties, changing scopes as projects advance, idiosyncratic nature of projects and proprietary data sets trained on WSP’s years of execution),” said Mr. Sytchev. “All in, the litmus test to regain investor confidence is consistent execution (which are getting) and accelerated growth (which we will get on less U.S. volatility and easy comps in Nordics / APAC + consistent momentum in Power, mission-critical, transit, water, defense, etc.). Valuation has compressed by ~ -500 bps since last summer, making the expectations hurdles much more palatable. We continue to view engineering consulting peers as an attractive part of an industrial portfolio and WSP in particular.”
Following Stantec Inc.’s (STN-T) “strong end” to 2025 and “upbeat” outlook for 2026, National Bank analyst Maxim Sytchev thinks “at some point, the market will need to care.”
“STN’s management laid out its thought process around AI which the company views as an enabler, not a replacement of human capital,” he said. “The bear thesis around time and materials exposure was also well addressed as public clients (except defined P3 projects) PREFER time and materials because often they don’t have a precise/defined scope, so giving fixed price projects in that environment does not make sense for them; recall that approximately 50 per cent of STN’s top line is for PUBLIC entities, something that the market tends to forget. All in, this was a strong end to the year and with expected acceleration of organic growth in the U.S. (more than half of revenues), an active M&A pipeline (power, Europe, AUS) we believe investors will start coming back to STN shares.”
Shares of the Toronto-based international professional services company in the design and consulting industry rose 5.5 per cent on Thursday after it reported quarterly net revenue of $1.64-billion, up 11 per cent year-over-year and in line with both Mr. Sytchev’s $1.624-billion estimate and the consensus forecast of $1.643-billion. Adjusted earnings per share of $1.25 fell 4 cents lower than the analyst’s projection but 3 cents above the Street.
“All geographic regions and business units expected to deliver positive organic growth in 2026,” he noted. “With all three core geographies expected to grow at mid-to-high single-digit rates this year, management also noted that all five business units should also deliver organic growth this year, led by the Water and Energy & Resources verticals (defence, especially in the Arctic, was also cited as a major emerging revenue opportunity). While timing / materiality of M&A is by nature uncertain, STN’s pipeline is active, though recent transaction activity has slowed vs. prior quarters as private valuations take time to adjust to the decline in the public equities space (management is also willing to buy back shares if warranted). Nevertheless, we expect future acquisitions to be financially and strategically accretive, bolstered by management’s strong integration track record. Positive operating leverage is expected, with margin expansion expected from a 50/50 combination of more efficient operational processes and the other from improved scale/efficiency.
“AI is a cost saver and productivity enhancer; engineering consulting has a significant moat to disruption. Stantec has already embedded a significant amount of AI capabilities to enhance back office processes to improve throughput and delivery quality, reduce errors, and allow engineers to focus on more value-added tasks where the differentiating elements of original/critical thought and human judgment are ultimately the differentiators. Legal and professional liability, customer relationships, experience in dealing with regulatory agencies, and ultimately a ‘real world’ environment with physical constraints are significant barriers to disruption for Tier 1 E&C players (consolidation is not expected to let up). Management prefers to develop technological solutions internally vs. acquisitions given the high valuations (and often nonexistent profitability) of attractive targets in the AI/digital space.”
Keeping his “outperform” rating for Stantec shares, Mr. Sytchev raised his target to $163 from $161. The average on the Street is $165.
Elsewhere, others making changes include:
* Scotia Capital’s Jonathan Goldman to $146 from $162 with a “sector outperform” rating.
“While shares are afflicted by the same AI overhang, the differentiators in the story, to us, is the more near-term M&A optionality (as peers integrate/delever) and upside to margins,” said Mr. Goldman. “We forecast leverage decreasing to 0.7 times exiting 2026, below the lower threshold of the comfort range of 1-2 times. We believe the company is also motivated to close a deal(s) in 2026 to backfill the shortfall in revenue guidance of $7.2-billion and 2024-2026 target of $7.5-billion (provided they are ‘value-accretive’). On the call, management noted it was ‘very active’ with ‘a number of conversations in the works” and ‘[a handful of larger firms] coming to market in the next couple of quarters’. The company hit its three-year EBITDA margin target of 17 per cent to 18 per cent a year ahead of schedule and there is likely upside to 2026 guidance – if only for the fact that the company beat on margins four quarters in a row now and expansion drivers seem structural (better project margins, higher utilization, back-office efficiencies, leveraging GTCs).”
* Stifel’s Ian Gillies to $154 from $173 with a “buy” rating.
“The focal point of this quarter’s update was undoubtedly management’s commentary on opportunities and risks related to AI. We found their views supportive of the view that disintermediation will be challenging, which should create a relief rally for the stock. With that said, we believe this is a complex issue that is likely to rear its head again. Operationally, the company continues to perform very well with a modest beat in the quarter and a 2026E guidance exceeding expectations. With respect to M&A, the company remains very engaged, but timing of a transaction is uncertain as buyer/seller expectations recalibrate,” said Mr. Gillies.
* Desjardins Securities’ Benoit Poirier to $178 from $173 with a “buy” rating.
“We do not group the engineers with AI-disrupted sectors like software. The industry has already navigated major tech shifts. Engineering still relies on on-site analysis, domain expertise, brand strength and, critically, liability-bearing design work that AI cannot assume. These factors limit commoditization and should drive consolidation as smaller firms struggle to keep up with tech investment. Overall, we see AI as another efficiency tool rather than a disruptive threat,” said Mr. Poirier.
In other analyst actions:
* Despite reporting stronger-than-anticipated quarterly results, ATB Cormark Capital Markets’ Sairam Srinivas downgraded NorthWest Healthcare Properties REIT (NWH.UN-T) to “sector perform” from “outperform” with a $6.25 target, matching the average and up from $5.50.
“Transactions through and post Q4 marked significant progress for NWH both on the strategic and financial fronts (projected proportionate leverage post the sale in Europe is expected to be below NWH’s 50-per-cent target) and position the REIT favorably in the long term. With these transactions and the expected allocation of capital we expect 2026 to be a transitory year for NWH. Thus, we are moving NWH down from Outperform to Sector Perform with a positive outlook,” he said.
* Citing valuation concerns, BMO’s Ben Pham downgraded Pembina Pipeline Corp. (PPL-T) to “market perform” from “outperform” while raising his target to $60 from $58. Target revisions include: CIBC’s Robert Catellier to $64 from $61 with an “outperformer” rating and TD Cowen’s Aaron MacNeil to $63 from $62 with a “hold” rating. The average target on the Street is $59.38.
“Overall, we have a positive view on PPL’s exposure to rising WCSB volumes, where its existing steel in the ground can lever new growth and rising utilization, as evidenced with Q4/25 results,” said Mr. Pham. “Also, the Alliance overhang has cleared and extension of multi-year guidance is likely around the corner. That said, we believe the recent 15-per-cent run-up in PPL shares leaves the stock reasonably valued in the context of its future organic pipeline (12 times EBITDA vs. peers 11.5 times).”
* Believing “divesting impaired loans in the current environment is a difficult task,” Canaccord Genuity’s Zachary Weisbrod downgraded Timbercreek Financial Corp. (TF-T) to “hold” from “buy” with a $7.30 target, down from $7.75, pointing to a limited expected return. The average is $8.
“For Q4/25, Timbercreek reported results that were below expectations as credit impairment and realized losses on dispositions overshadowed strong mortgage origination activity and distributable income growth,” said Mr. Weisbrod. “While the core multi-family mortgage portfolio maintained strong operating performance, there are impaired office, land and development loans that are temporarily dilutive to cash flow. We anticipate a more extended timeline than originally projected for management to exit impaired loan positions and redeploy capital into higher-yielding mortgages, though we expect this transition to eventually strengthen credit quality and cash flow, along with the balance sheet.”
* In a client report titled The Permanent Capital Advantage, CIBC’s Scott Fletcher initiated coverage of Brookfield Business Partners LP (BBU-N, BBU.UN-T) with an “outperformer” rating and US$44 target. The average on the Street is US$42.33.
“BBU units offer a unique value proposition by providing a liquid private equity LP return profile, while mitigating exposure to the concerns facing alternative asset management equities,” he said. “BBU’s proven track record, exposure to the broader Brookfield complex, and cornerstone Clarios all add to the investment case.”
* Mr. Fletcher initiated coverage of Trisura Group Ltd. (TSU-T) with an “outperformer” rating and $59 target, exceeding the $55.50 average.
“With the setbacks that weighed on the U.S. Programs segment now comfortably in the rearview, Trisura is operating from a position of strength. The core Specialty businesses continue to execute with runway for additional growth, and U.S. expansion adds a new growth channel, all while providing less cyclical insurance exposure,” he said.
* National Bank’s Patrick Kenny bumped his Canadian Utilities Ltd. (CU-T) target to $45 from $43, which is the current average, with a “sector perform” rating. Other changes include: RBC’s Maurice Choy to $49 from $43 with a “sector perform” rating and CIBC’s Mark Jarvi to $47 from $45 with a “neutral” rating.
“We like Canadian Utilities’ upgraded 6.9% rate base CAGR that is backed by a $12 billion, low-risk capital plan in 2026-2030, which will help the case for its stock to reduce the valuation gap versus its closest Canadian peers. Admittedly, there do not appear to be any changes ahead relating to the company’s shareholding structure and stock trading liquidity level. However, this improved outlook (with upside) should motivate certain non-investors to take another look at the stock, particularly those seeking exposure to real assets that are difficult to replace, and have a relatively sustainable, low-risk earnings profile.,” said Mr. Choy.
* Desjardins Securities’ Frederic Tremblay moved his Cascades Inc. (CAS-T) target to $15 from $13.50 with a “hold” rating, while TD Cowen’s Sean Steuart reduced his target to $15 from $16 with a “buy” rating. The average is $15.66.
“While Packaging’s 4Q performance was consistent with expectations, Tissue had a difficult quarter as efficiency shortfalls and a power outage drove an adjusted EBITDA miss. We expect 2026 to be a busy year, with its share of positives (eg profitability improvement initiatives, non-core asset dispositions, deleveraging) being mitigated by risks and uncertainties (eg economic environment, containerboard demand and pricing). The latter and a softer-than-expected 1Q outlook keep us on the sidelines,” said Mr. Tremblay.
* Mr. Tremblay increased his 5N Plus Inc. (VNP-T) target to $35.50 from $30 with a “buy” rating. The average is $32.75.
“Just like it consistently proves its supplier-of-choice status with customers in the western world, VNP continues to prove it is a go-to stock for exposure to secular growth trends in the critical materials sector. We remain constructive on VNP’s ability to execute in strategic end markets like solar energy, space, healthcare and defence,” he said.
* In a client note titled Jack & Diane, Scotia Capital’s Jonathan Goldman bumped his CCL Industries Inc. (CCL.B-T) target to $98 from $96 with a “sector perform” rating. Other changes include: CIBC’s Hamir Patel to $100 from $102 with an “outperformer” rating, ATB Cormark Capital Markets’ David McFadgen to $101 from $94 with an “outperform” rating, Raymond James’ Michael Glen to $100 from $95 with an “outperform” rating and RBC’s Arthur Nagorny to $99 from $94 with an “outperform” rating. The average is $99.50.
“There was some positive commentary on the call, but we don’t think it changes much in the way of numbers or narrative,” said Mr. Goldman. “Despite weather-related impacts in 1Q, management expects low-to-mid single-digits growth in the core label business this year despite lapping tough comps (4.9 per cent). We took up our organic growth estimates by 100 basis points (for 2027 too), but given the sheer scale, it does little to move the needle. The ASPP [automatic securities purchase plan] makes buybacks more programmatic and management plans to be ‘in the market every day, purchasing shares, regardless of the price’. But, it was never a question of powder, but of policy, namely the conservative leverage range of 1 times to 3.5 times. We forecast FCF of $800-million this year, the dividend consumes $250-million. Using the balance for buybacks, and maintaining leverage at the low-end of the comfort range, implies more than $900-million of deployable capital. At that rate, the company could reduce shares outstanding by 6 per cent this year – which is how we modeled it.”
* TD Cowen’s Aaron MacNeil hiked his Enerflex Ltd. (EFX-T) target to $39, exceeding the $28.46 average, from $28, reaffirming a “buy” rating. Other changes include: ATB Cormark Capital Markets’ Tim Monachello to $39 from $26 with an “outperform” rating, Raymond James’ Michael Barth to $34 from $26 with an “outperform” rating and National Bank’s Dan Payne to $31.50 from $29 with a “sector perform” rating.
“We are meaningfully increasing our price target to $39 to reflect our increased estimates, the company’s growing power demand opportunity and to reflect broader energy sector multiple expansion,” said Mr. MacNeil. “EFX is deserving of a premium valuation in our view, given its contracted cash flows and direct leverage to growing natural gas/power demand. EFX remains our Top Pick in the Energy Services sector.”
* RBC’s Darko Mihelic raised his EQB Inc. (EQB-T) target to $131 from $111 with an “outperform” rating. Other changes include: Scotia’s Mike Rizvanovic to $122 from $105 with a “sector perform” rating and Desjardins Securities’ Doug Young to $130 from $125 with a “buy” rating. The average is $115.39.
“Results were weaker than expected mainly driven by higher than expected PCLs. We continue to model EQB similar to the other banks with lower PCLs in H2/26. We assume that weaker residential mortgage vintages become less impactful over time to overall losses and we also believe commercial loan losses will decline from recent levels in the absence of a weaker economy. We continue to view the PC Financial acquisition as transformative and accretive and the main reason for owning the stock,” said Mr. Mihelic.
* Ahead of its quarterly release on March 4, TD Cowen’s Michael Van Aelst raised his George Weston Ltd. (WN-T) target to $121, above the $115.33 average, from $108 with a “buy” rating.
“With the upside we see in Loblaw and Choice Properties, and WN returning significant capital to shareholders, we continue to view WN shares as attractive,” said Mr. Van Aelst. “We have a preference to own Weston (23-per-cent expected total return) over Loblaw (18-per-cent expected total return) as we believe the holdco discount could contract from the current 16 per cent (vs. 14-per-cent average) closer to the 12 per cent we use in our NAV calculation.”
* Citi’s Paul Lejuez raised his target for Gildan Activewear Inc. (GIL-N, GIL-T) to US$69 from US$63 with a “neutral” recommendation. Other changes include: Scotia’s Himanshu Gupta to $100 from $94 with a “sector outperform” rating, Canaccord Genuity’s Luke Hannan to US$75 from US$79 with a “buy” rating, National Bank’s Vishal Shreedhar to $100 (Canadian) from $97 with an “outperform” rating and TD Cowen’s Brian Morrison to US$80 from US$77 with a “buy” rating.
“Gildan’s Q4/25 release outlined their strategic initiatives for 2026, which appear to understandably weigh upon the immediate-term financial performance but provide upside potential to its 2027/2028 outlook. Attractive EPS growth maintained, strong FCF outlook, formal sale process of Australia de-levering balance sheet, and reasonable valuation all support our ongoing positive investment thesis,” said Mr. Morrison.
* TD Cowen’s Sam Damiani raised his Granite REIT (GRT.UN-T) target to $96 from $94 with a “buy” rating. Other changes include: BMO’s Michael Markidis to $97 from $87 with an “outperform” rating, Canaccord Genuity’s Mark Rothschild to $100 from $88 with a “buy” rating, Desjardins Securities’ Kyle Stanley to $100 from $95 with a “buy” rating and National Bank’s Matt Kornack to $102.50 from $100 with an “outperform” rating. The average is $100.
“We expected a strong quarter to end 2025 and Granite delivered with NOI exceeding our estimate by 2 per cent in the quarter driving a similar quantum variance to FFO/unit. Underlying this was an improvement to 98-per-cent occupancy with committed levels approaching 99 per cent combined with solid leasing spreads and embedded rent escalations. The good news doesn’t end there as 2026 guidance is calling for an additional 6-per-cent organic growth driving 7-per-cent FFO/unit improvement. On the transaction front GRT has been more actively recycling capital with a focus on improving its growth profile at a time when the gap in achievable cap rates is conducive to pursuing broader portfolio high-grading,” said Mr. Kornack.
* Raymond James’ Michael Glen bumped his High Liner Foods Inc. (HLF-T) target to $17 from $16 with a “market perform” rating, while Canaccord Genuity’s Luke Hannan cut his target to $17 from $17.50 with a “buy” rating. The average is $20.75.
“Overall, Q4/25 provided a healthy degree of evidence that the company’s long-term growth trajectory remains intact, in our view, with low-single-digits year-over-year volume growth expected to continue in the near term, complemented by price adjustments to combat tariffs/inflation,” said Mr. Hannan.
* Following Wednesday’s announcement of a plan to invest $1-billion in a Canadian multi-suite residential real estate portfolio currently owned by TD Asset Management Inc., RBC’s Jimmy Shan, currently the lone analyst covering Morguard Corp. (MRC-T), increased his target to $145 from $140, keeping a “sector perform” rating.
“Having been a ‘sleepy’ story, the TDAM transaction should grab some attention. We expect MRC to have paid ‘full’ price, but we view the transaction as having several positive implications: 1) It significantly enhances fee stream and represents a solid endorsement to MRC platform by an institutional investor, 2) It is the first major transaction since Angela Sahi took over as CEO, perhaps a sign of things to come, 3) It evolves MRC as an increasing multi-residential play now with scale across Canada. We estimate 6-per-cent accretion to 2025 FFO (annualized) with modestly higher leverage,” said Mr. Shan.
* Seeing “momentum building into a pivotal 2026,” National Bank’s Baltej Sidhu moved his Northland Power Inc. (NPI-T) target to $25 from $24 with an “outperform” rating. Others making changes include: CIBC’s Mark Jarvi to $24 from $22 with an “outperformer” rating., ATB Cormark Capital Markets’ Nate Heywood to $24 from $22 with an “outperform” rating, TD Cowen’s Sean Steuart to $23 from $21 with a “hold” rating and Desjardins Securities’ Brent Stadler to $21 from $19 with a “hold” rating. The average is $24.33.
“Solid execution, a constructive 2026 outlook and continued de-risking should catalyze a re-rating in the shares,” said Mr. Sidhu.
* RBC’s James McGarragle moved his target for Stella-Jones Inc. (SJ-T) to $95 from $89 with a “sector perform” rating, while Desjardins Securities’ Benoit Poirier increased his target to $107 from $102 with a “buy” rating. The average is $93.51.
“Key for us from Q4 was commentary on the 2026 outlook. On one hand, Pole momentum was very strong, with Q3 strength continuing in Q4 and (in our view) into early 2026, pointing to upside to Stella’s MSD revenue outlook this year. We also viewed positively the incremental colour on the spot pole pricing versus contract dynamic, which demonstrates resilience in the company’s contract-centric model in our view. On the other hand, we see the Tie outlook as uncertain given aggressive pricing behaviour from Stella’s main competitor. Continue to see risk/reward as balanced,” said Mr. McGarragle.