Inside the Market’s roundup of some of today’s key analyst actions
TD Cowen analyst Mario Mendonca sees Royal Bank of Canada’s (RY-T) second-quarter results as “more balanced than peers” based on contributions from all its operating segments and “not just capital markets.”
“The knock on the result is that beat came largely from lower PCLs [provisions for credit losses],” he added. “We were impressed with the 45-million share NCIB and what sounded like a renewed interest in buying back stock. Credit trends looked better than last quarter. RY’s scale & business mix continue to support a premium ROE and capital flexibility.”
A breakdown of the big banks’ second-quarter earnings
RBC shares closed down 0.4 per cent on Thursday after it reported adjusted earnings per share of $3.90, a gain of 25 per cent year-over-year and exceeding both Mr. Mendonca’s $3.84 estimate and the Street’s forecast of $3.80.
“Impaired PCLs were lower than expected and down $168-million quarter-over-quarter mostly from lower capital markets,” he said in a client note. “Domestic personal and commercial PCLs were also lower. Formations also checked back from elevated levels. Similar to peers, consumer trends in Canada are softening, as evidenced by higher delinquency trends, especially in Ontario. We raised our PCLs forecasts across the group but only slightly because we expect domestic consumers to exhibit resiliency supported by wage growth, government support, and lower rates.
“Operating leverage was strong at 2.9 per cent (3.2-per-cent forecast) in Q1 as all revenue lines continued to grow. NIX dropped almost 150 basis points year-over-year in Q2/26. Importantly, NIX in domestic banking is below 40 per cent. HSBC synergies should support further efficiency gains in 2026. Management continues to guide to positive operating leverage in 2026, with 1-2 per cent in Canadian banking. AI initiatives should also support positive operating leverage going forward. We model for 2.3-per-cent operating leverage in 2026. Across the group, however, we expect operating leverage to moderate in 2027 as CMRR slows.”
While he lowered his 2027 forecast by 1 per cent to “reflect weaker fee income (cards, WM),” Mr. Mendonca said he expects ”the market to migrate back to RY as domestic credit conditions soften and investors’ appreciation for capital flexibility increases.“
Keeping a “buy” rating for RBC shares, he raised his target to $272 from $267. The average target on the Street is $260.16, according to LSEG data.
“Over the past 5-10 years, Royal has traded at a 6-11-per-cent premium to the group,” said Mr. Mendonca. “We expect expense actions, the HSBC deal, and business mix (large, dominant positions in several business lines) and NIM advantages to support superior PTPP growth and higher relative ROE and ultimately support RY’s premium valuation.”
Elsewhere, other analysts making target revisions include:
* Raymond James’ Stephen Boland to $270.50 from $265.50 with a “market perform” rating.
“We continue to view RBC as a scaled, diversified franchise with a lower-volatility earnings profile. We believe RY’s Capital Markets and Commercial Banking segments are well positioned to benefit from structural market trends. However, we maintain our Market Perform rating largely due to valuation, with RY trading at approximately a 1.5 times P/E premium to the peer group (excluding RY) and near five-year highs,” said Mr. Boland.
* Canaccord Genuity’s Matthew Lee to $280 from $270 with a “buy” rating.
“RY reported Q2 results [Thursday] morning that featured solid growth across every segment and ROE of 17.4 per cent remaining above the firm’s 17-per-cent-plus medium-term target. In our view, the quarter demonstrated many of RBC’s ‘premium’ qualities with credit largely in check, underlying Canadian Banking NIM expansion adjusted for PPA, and a renewed buyback program. Looking forward, our biggest question on Royal is the firm’s ability to deliver another leg of growth given already-solid performance and industry-leading profitability. Management highlighted opportunities for further cost efficiencies across the firm, additional revenue levers in capital markets, and a potential reacceleration of P&C lending as key drivers of earnings growth, which we view as indications that the bank can sustain an ROE above its 17-per-cent target, particularly as AI implementation progresses. Overall, we came away from the quarter modestly more constructive on RY and note that given the year-to-date equity performance of the Canadian banks, RY’s relative premium appears modest versus the quality and durability of its results,” said Mr. Lee.
* Desjardins Securities’ Doug Young to $275 from $262 with a “buy” rating.
“Cash EPS and adjusted PTPP earnings were 2 per cent above and in line with our estimate (3 per cent and 1 per cent above consensus), respectively,” said Mr. Young. “End of the day, the bank was able to generate a 17.2-per-cent ROE with a 13.5-per-cent CET1 ratio, which we believe speaks volumes. We slightly increased our FY26 cash EPS estimate.”
* CIBC’s Paul Holden to $279 from $258 with a “neutral” rating.
“RY reported a better quarter vs. FQ1. The stock has regained its premium multiple and is now trading at 15.4 times P/E (next 12-month consensus), a 7-per-cent premium to the group. Our estimates move modestly higher on NII and asset-based fees. We increase our price target to $279 (from $258) based on a higher EPS estimated and a higher industry multiple,” said Mr. Holden.
* Barclays’ Brian Morton to $260 from $245 with an “overweight” rating.
Mr. Mendonca thinks Canadian Imperial Bank of Commerce (CM-T) remains “a premium name” following its earnings release, he he warns its net interest margin and consumer credit performances “warrant caution.”
CIBC shares dropped 5.4 per cent on Thursday reported a 23-per-cent increase in fiscal second-quarter profit that beat analysts’ estimates, announced a deal to sell its Caribbean division for US$1.6-billion and shuffled its top executive team.
“Given recent performance & relative valuation, a moderating outlook for NIM, domestic consumer stress & the nature of the beat (heavy in capital market), we understand why the stock checked back,” said Mr. Mendonca. “Having said that, we feel good about CM’s strong capital position (including NCIB), improving loan growth (in CAD/US commercial) and low LTVs [loan-to-value ratios] on the large mortgage book.”
For the quarter, CIBC reported adjusted earnings per share of $2.54, up 24 per cent year-over-year and topping the $2.46 estimate of both Mr. Mendonca and the Street. Pre-tax, pre-provision earnings rose 18 per cent, which the analyst attributed to “much stronger trading revenue and better NIM, offset by weaker fee income (WM, credit fees).”
“CM continues to deliver solid relative net interest income growth and net interest margin performance,” he said. “The all-bank NIM, up 1 basis point quarter-over-quarter (better than expected) benefited from better NIM in Canada P&C (up 1 basis point quarter-over-quarter). 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, and we have NIM flat starting in H2/27 as the roll-on rate for mortgages and tractors approach roll-off rates.
“NEGATIVE: Although CM’s impaired PCLs came in better than expected, there are clear signs of deterioration in domestic consumer credit across CIBC and its peers. The bank’s large credit book and the material increase in impaired PCLs clearly is a cause for concern. We would, however, caution against looking to BMO’s trends for guidance on CM. As we demonstrated in a recent report (slides 58 & 60 here; more details on BMO’s card NCOs here), CM’s credit card exposure is higher quality than BMO’s. Additionally, we remain confident that higher delinquencies on CM’s large domestic mortgage book will not result in a spike in PCLs (LTVs remain low).”
Trimming his 2027 projections to reflect the expectation for higher PCLs, Mr. Mendonca reduced his target for CIBC shares to $163 from $166, maintaining a “buy” rating. The average is $154.75.
“CIBC delivered another quarter of solid underlying results and continues to trade at a discount P/E,” he concluded. “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 of 30 million shares in Q2/26), and steady credit metrics support a higher P/E multiple relative to most of its peers.”
Others making changes include:
* Canaccord Genuity’s Matthew Lee to $158 from $153 with a “hold” rating.
“CM reported solid Q2 results [Thursday] morning with EPS beating our estimates as capital markets strength was partially offset by weaker credit. Our key takeaway was the bank’s flattish q/q NIM growth, which was largely in line with our forecast but still a significant deviation from the last several quarters. Management guided towards flattish to slightly upward NIM trends from here, which remains in-line with its previous guidance albeit off a lower base. In our view, CM must now demonstrate its ability to deliver earnings growth while remaining disciplined on its loan book expansion. On the credit front, PCLs were elevated in both the personal and commercial bank with management expecting the second half of the year to have a similar profile to the first. Overall, we continue to believe that CM is delivering quality execution but will look for further signs of durable growth before becoming more constructive,” said Mr. Lee.
* Raymond James’ Stephen Boland to $155.50 from $157.50 with a “market perform” rating.
“Overall, we remain constructive on CM through FY26. We expect commercial loan growth, stable to modestly higher NIM and structural efficiency gains to support the EPS outlook for 2H26,” said Mr. Boland.
Following Thursday’s quarterly release, National Bank Financial analyst Gabriel Dechaine emphasized a rebound in Toronto-Dominion Bank’s (TD-T) Canadian banking segment continues to “advance”, while the outlook for growth from its U.S. personal and commercial business has improved.
TD shares closed up 0.7 per cent after it reported adjusted earnings per share of $2.38, topping Mr. Dechaine’s forecast of $2.28 and the consensus of $2.26. The beat was driven by a “strong credit performance highlighted by lower than expected losses, lower new formations and GILs.”
“Canadian banking performance improvement trend continues,” said Mr. Dechaine. “We believe improved financial performance in TD’s largest segment is an important stock driver. And on that front, Q2/26 performance was encouraging: 1) 8-per-cent PTPP growth narrowed the relative gap, with peers averaging 9 per cent this quarter; 2) volume growth was positive, especially in the key amortizing HELOC and commercial lending verticals; and 3) NIM performance and outlook were also relatively strong. Although we saw a pickup in the segment impaired PCL, TD’s is still roughly 30 per cent below the peer average in this category.
“The narrative around TD’s U.S. P&C segment has been hyper-focused around its AML remediation efforts, and justifiably so. However, as the bank progresses through this process, we believe that growth strategies will become a bigger focal point. Importantly, though a US$434-billion asset cap has been imposed on the business, TD has created tens of billions of lending capacity through various balance sheet optimization strategies. Early indications are good. For starters, the core (i.e., excl. run-off portfolios) loan book grew 3 per cent year-over-year, its first period of growth since the AML remediation process began. Spot commercial balances were up 1 per cent sequentially. Assuming emerging U.S. C&I growth momentum evident across the industry continues, TD should be positioned to benefit.”
With an increase to his forecast to reflect stronger margins and markets revenue, Mr. Dechaine moved his target for TD shares to $162 from $157, reiterating an “outperform” rating. The average is $151.83.
Elsewhere, other target changes include:
* Desjardins Securities’ Doug Young to $160 from $154 with a “buy” rating.
“Cash EPS and adjusted PTPP earnings were 7 per cent and 4 per cent above our estimates, respectively,” he said. “Overall, a good quarter, and management continues to believe that it will outperform its 6–8-per-cent EPS growth and 13-per-cent ROE targets for FY26 (should macro conditions hold) and be able to achieve its medium-term ROE targets faster than it originally expected at its investor day. We increased our estimates."
* Raymond James’ Stephen Boland to $155 from $152.50 with an “outperform” rating.
“We remain positive on TD’s outlook. Core U.S. exposure supports loan growth and margin expansion, excess capital supports ROE improvement and buybacks, and AI should support sustainable cost reduction. We believe these factors can drive outperformance into the back half of FY26, assuming credit conditions remain stable.,” said Mr. Boland.
* CIBC’s Paul Holden to $164 from $151 with a “neutral” rating.
“TD reported a solid quarter, including in credit. Expense efficiencies were better than we had expected and we have revised our forward assumptions, resulting in higher EPS estimates. TD is trading at 15.3 times P/E (next 12-month consensus), a 6-per-cent premium to the group average and effectively in line with RY. We like the results, but valuation remains a challenge for us,” said Mr. Holden.
* Canaccord Genuity’s Matthew Lee to $169 from $158 with a “buy” rating.
“TD reported solid Q2 results [Thursday] morning with better-than-expected earnings on the back of strong capital markets revenue, steady credit, and improving P&C metrics. Our key takeaway was the firm’s increasingly constructive commentary around its ROE trajectory, with management reiterating that the bank is currently expected to reach 16-per-cent ROE before its 2029 target. In addition, TD highlighted additional near-term tailwinds from its structural cost program (110 bps) and the reduction of its CET1 ratio to 13 per cent (90 bps), which complement growth in capital markets and a recovery of US P&C loan growth. We come away from the quarter more positive on the TD story with the bank’s execution on both sides of the border helping to drive solid earnings growth despite the persistence of AML spending in the U.S. segment. As TD continues to deliver on its loan growth, AI, and credit ambitions, we believe that it will return to being a premium valuation story. We have raised our estimates on capital markets and moderated our expense expectations beyond F26. The net impact is an increase in our target,” said Mr. Lee.
* Barclays’ Brian Morton $140 from $135 with an “underweight” rating.
In a research report titled I Can See More Clearly Now, Scotia Capital analyst Jonathan Goldman admitted he’s struggled to provide a valuation for BRP Inc. (DOO-T) following Thursday’s release of its fourth-quarter fiscal 2026 results and restoration of its financial forecast after withdrawing it in mid-April over U.S. tariff changes.
“Certainly the restoration of guidance (the company must have some semblance of visibility) and more clarity around tariff impact is worth a premium vs. yesterday,” he said. “But, the highest the shares have ever traded since the 2013 IPO was 20.4 times P/E. Applying that multiple to our calendar 2026 and 2027 estimates – which we view as some variation of trough earnings – implies a share price of $83.
“Moreover, DOO shares are down 23.5 per cent since pulling guidance on April 14, which roughly matches the negative earnings revision implied by the midpoint of the new guide. Of course, that assumes no multiple compression. While we think shares are at best fairly valued, management clearly has the ability to surprise to the upside (macro notwithstanding). The company expects to generate FCF more than $600-million this year (before cash interest and inclusive of a factoring arrangement) which should support the buyback.”
Shares of the Valcourt, Que.-based recreational vehicle manufacturer rose 0.8 per cent after it reported quarterly revenue of $747-million, exceeding both Mr. Goldman’s $727-million estimate, the Street’s expectation of $736-million and at the top of its guidance range of $710-million to $750-million. Adjusted basic earnings per share of 36 cents fell under the analyst’s projection of 45 cents and the consensus of 44 cents despite a 30-per-cent year-over-year jump in sales.
Seeing “modest growth” in fiscal 2027, BRP now expects the company to generate normalized earnings before interest, taxes, depreciation and amortization of $925-million to $975-million this fiscal year, compared to a previous forecast at the end of March of between $1.18-billion to $1.28-billion. Adjusted earnings per share should come in at between $3 and $3.50 for the year, compared to an earlier forecast of between $5.50 and $6.50.
“It’s kind of remarkable that a company as large as BRP can find an extra $200-million of EBITDA in the span of six weeks,” said Mr. Goldman. “We don’t want to imply that it was easy: instead, we view the nominal price increases (less than low-single-digits) as a testament to DOO’s strong product line-up and brand (and more affluent household skew), while supply chain optimization and overhead reductions reinforce management’s reputation as a nimble, best-in-class operator. Moreover, management was adamant that these actions do not compromise the medium- to long-term growth trajectory.
“We were mostly correct on quantifying tariff impact, but our estimates go up on the back of the 1Q beat and stronger industry fundamentals (better-than-expected ORV trends; above-target snowmobile spring pre-orders; stronger PA&A orders; more favourable promotional environment; and improved product mix). We would also highlight strong share gains in SSV (more than 3 percentage points in premium current units) and ATV (more than 3 percentage points in current units).”
Keeping his “sector perform” rating for its shares, Mr. Goldman moved his target to $83 from $80. The average is currently $95.28.
“We believe earnings power is 15 per cent to 20 per cent higher than current run-rate,” he notes. “Actions taken in the quarter to right-size the Transportation facility footprint and reposition capabilities signals a readiness. Leverage decreased to 2.8 times (from 3 times) supported by strong w/c execution, which will invariably bring up conversations around a re-acceleration of M&A.”
Elsewhere, citing “tariff uncertainty which sets-up a potential binary outcome,” Stifel’s Martin Landry downgraded BRP to “hold” from “buy” and dropped his target to $85 from $92.
“We are changing our rating on BRP to HOLD on balanced risk/rewards,” said Mr. Landry. “In our view, BRP’s shares are facing a binary outcome due to the USMCA negotiations and uncertain tariff rates that could ensue. The upside scenario entails Section 232 tariffs being removed, which could bring consensus EPS estimates back to $8.00/share for FY28. Under such a scenario, shares could possibly reach $100, representing a multiple of 12.5 times in-line with historical levels. The downside scenario entails Section 232 tariffs staying at current levels or slightly lower, which could keep consensus EPS depressed around $4.00-5.00 for FY28. Under such a scenario, we believe shares of BRP could retest the $70 support levels seen in April. We adjust our forecasts to reflect mitigating measures implemented, which are not as high as expected. This results in a decrease of 30 per cent in our FY27 and FY28 EPS estimates.”
Analysts making target adjustments include:
* Citi’s James Hardiman to US$74 from US$75 with a “buy” rating.
“Shares of DOO were up 1 per cent on Thursday (vs. up 58 basis points for S&P), as the across-the-board Q1 beat put a modest dent into the massive $500-$550-million incremental tariff headwind, with an additional $200-million of identified mitigation allowing for reissued guidance that is better than we anticipated. Longer term, we would expect most of the [Section 232 tariff] headwind to moderate, with earnings power north of $8 excluding this unexpected blow. And so, while it is exceedingly difficult to know when and how much tariff relief is coming, we do believe a higher multiple is in order as we gain visibility, particularly given the strong trajectory of the business as evidenced by the exceptional Q1 performance,” said Mr. Hardiman.
* National Bank’s Cameron Doerksen to $84 from $80 with a “sector perform” rating.
“Although BRP’s tariff mitigation measures outlined with the Q1 report are positive, we nevertheless expect to see materially lower year-over-year earnings from the company in the coming quarters due to the Section 232 tariff changes. We also expect outlook uncertainty will remain a share price headwind until there is more clarity around a renegotiated USMCA agreement. After some modest upward estimate adjustments, our new target is $84.00,” said Mr. Doerksen.
* RBC’s Sabahat Khan to $113 from $107 with an “outperform” rating.
“BRP reported Q1 results above consensus and revised F27 guidance (following the suspension of guidance in April). Overall, while the impacts of tariffs and elevated energy levels are considerations, BRP appears to be navigating this backdrop relatively well with an upward revision to the prior revenue guide, notable tariff mitigation measures, share gains in current ORV/PWC units, and a favorable inventory setup,” said Mr. Khan.
* CIBC’s Mark Petrie to $94 from $90 with an “outperformer” rating.
“BRP exceeded expectations for FQ1 with consumer demand holding in better than feared. Management provided updated F2027 guidance including the effects of Section 232 tariffs, and metrics were also better than feared. While there is still substantial uncertainty on the specific path for tariffs, we
believe risk skews in BRP’s favour," said Mr. Petrie.
* TD Cowen’s Brian Morrison to $92 from $84 with a “hold” rating.
“The Q1/F27 release was high level, as expected, with strong financial results and a muted outlook the remainder of F2027 due to S232 impact. We maintain USMCA resolution visibility is required to take action to minimize tariff exposure but, until such time, could cause financial pressures. Encouragingly, share gains/prudent strategy provide comfort in growth outlook; timing remains key unknown,” said Mr. Morrison.
While continuing to see a “catalyst-rich story with many potential large contract wins likely,” ATB Cormark analyst David McFadgen downgraded MDA Space Ltd. (MDA-T) to “sector perform” from “outperform” based on valuation concerns.
“MDA is currently trading at EV/EBITDA multiples of 25.8 times and 22.2 times on 2026 and 2027 estimates, respectively,” he said. “We believe that MDA is fully priced. However, we believe there could be more upside due to the space theme and the SpaceX IPO. But at this point, we believe hoping for more upside carries significantly more risk.”
Mr. McFadgen hiked his target for MDA shares to $67 from $53. The average is $58.18.
Raymond James analyst Luke Davis thinks Tamarack Valley Energy Ltd.’s (TVE-T) $804-million sale of its Charlie Lake assets “streamlines the asset base, converting the company to a growth and return oriented Clearwater pure-play, which we expect should drive an immediate re-rate.”
Accordingly, he raised his rating for the Calgary-based company to “outperform” from “market perform” following the late Wednesday announcement of a definitive purchase and sale agreement with “an arm’s-length counterparty” as a dividend hike.
“The company brought in $804-million, moved to a more than $125-million pro forma net cash position, raised the dividend by 25 per cent, and outlined an updated 5-year plan underpinned by 8-10-per-cent annualized production growth, increasing corporate volumes to 75k+ boe/d by the end of the decade,” he said. “We view the update favourably and believe it meaningfully improves the quality of the business given lower declines, lower sustaining capital requirements, better netbacks, and increased flexibility around capital returns.”
The analyst now sees Tamarack “shifting back into growth mode” with its balance sheet becoming “the return lever.”
“The go-forward business is now a pure-play Clearwater platform with 55 mboe/d (9-per-cent liquids) of pro forma standalone production, and 208 MMboe of 2P reserves, along with plenty of growth optionality,” he explained. ”TVE increased the capital program by $75 million, with 40 per cent directed to waterflood. The 2026 exit water injection target moved to 70 mbbl/d, 16 per cent above the original budget, with more than 38 per cent of Clearwater oil production expected to be under waterflood by year-end. Although we believe the waterflood story is well understood, it is the primary mechanism for lower decline rates, lower sustaining capital, and ultimately drives higher-margin growth. Management expects to be able to reduce the corporate declines rate to a sustained rate of approximately 15-per-cent longer-term. Further, the company updated the 5-year plan and now targets 8-10-per-cent annual growth with volumes expected to exceed 75 mboe/d by 2030.
“TVE is now left with $125 million of net cash, $400 million of cash on hand, and $1.3B of available funding. The credit facility remains at $875 million and extends to May 2030, providing plenty of optionality. The dividend increased 25 per cent to $0.20/share annualized, and buybacks remain the swing factor for excess cash. The new capital allocation message is clear: grow the Clearwater, keep the dividend moving, and use balance sheet strength to compound returns via continued share buybacks. While we would not discount the potential for M&A longer-term, we expect management would keep it within the core given a relentless effort to high-grade the portfolio over the past several years.”
Mr. Davis’s target for Tamarack shares rose to $15 from $12. The average target is $14.60.
Elsewhere, Canaccord Genuity’s Mike Mueller raised Tamarack to “buy” from “hold” with a $15 target, up from $12.
“While the stock has comfortably outperformed the index year-to-date (up 62 per cent versus 38 per cent), we believe the outlook has improved between an improved asset makeup, sustained operating success in the Clearwater, and significant liquidity between a net cash position of more than $150-million and $875-million of available capacity on its undrawn revolver,” said Mr. Mueller. “As a result of the pro forma entity having a long duration asset base with a 25-year drilling inventory in the Clearwater and a proven ability to grow production while reducing its decline rates through secondary recovery, we believe the stock warrants a premium multiple and have upgraded our rating.”
Meanwhile, CIBC’s Jamie Kubik bumped his target to $15.25 from $14.25 with an “outperformer” rating.
“The sale of Tamarack’s Charlie Lake assets completes a material repositioning of the asset quality in this business, and should be supportive of the shares moving forward. The sale provides the company with meaningful financial flexibility and supports an immediate dividend raise of 25 per cent. We have updated our model to reflect the impact of the transaction, increasing our price target,” said Mr. Kubik.
National Bank Financial analyst Don DeMarco thinks Rio2 Ltd. (RIO-T) is positioning itself production-wise “in the high torque, small-cap producer wheelhouse and yet with risk-mitigating diversification benefits from a pair of mines.”
“We are initiating coverage on Rio2 Limited, a Peruvian-based, Vancouver-supported, Latin American producer with two operating mines: (i) the 100-per-cent-owned Fenix Gold mine, an open pit, heap leach operation located in Chile’s Atacama Region along the Maricunga gold belt, which delivered first gold pour on January 23, 2026; and (ii) the 99.1-per-cent-owned Condestable mine, an established underground copper mine in Peru, acquired on January 30, 2026, from privately-owned Southern Peaks Mining L.P.,” he said.
“Fenix rising, Condestable delivering. Fenix is RIO’s flagship mine and principal driver for production upside from a proposed expansion Prefeasibility Study (PFS) targeted for Q3/26, while Condestable provides immediate operating cash flow from stabilized operations, copper diversification and additional growth from throughput expansion and reserve conversion. Condestable also complements the company’s presence in Chile adding a second leading global mining jurisdiction in Peru, and re-anchors RIO to its historic success base with Rio Alto Mining Ltd. (Rio Alto).”
Giving Rio2 an “outperform” rating, Mr. DeMaco is projecting consolidated production of 350-400,000 gold equivalent ounces by 2031, which is a notable increase from the expectation of 113,000 ounces in 2026.
He said that increase sees “Fenix making an initial step-up to 100k ounces per year in 2027+ on reaching steady-state 20k tons per day ore stacked, then substantially to 300k oz/yr by increasing stacking to 80k tpd after unlocking water constraints as part of the proposed expansion.
“Additionally, we see opportunities to increase production at Condestable by stepping up the permitted underground mining rate to 10-12k tpd (from current 8.4k tpd) and potentially adding open pit production in the medium to long term,” he added.
“More ounces in the system than in the plan. Fenix boasts a large, open-ended oxide system where mineralization is 2.5 kilometres long, 750 metres wide and up to 600 metres deep, remains open at depth and to the east and southeast and only 1/3 of the resource is in reserves, hinting at significant conversion upside and continuity beyond the current pit shell. At Condestable, RIO has a stated mandate to grow resources and reserves, leveraging the potential of this established iron oxide copper-gold system.”
Modelling free cash flow inflection in the second quarter of 2026 following a “transition” quarter with it “stepping up” through fiscal 2027, Mr. DeMarco set a target of $5.50 per share, matching the average on the Street.
“RIO is trading at a P/NAV of 0.43 times versus a gold junior producer and developer average in our coverage of 0.60 times. In our view, RIO is positioned to re-rate to a junior producer multiple as it completes transition to diversified Latin American producer with a newly commissioned gold mine, a producing copper-gold-silver operation, and transformational internal growth,” said Mr. DeMarco.
In other analyst actions:
* Following “a repositioning quarter,” RBC’s Sabahat Khan trimmed his ATS Corp. (ATS-T) target to $50 from $51 with an “outperform” rating, while TD Cowen’s Cherilyn Radbourne raised her target to $49 from $48 with a “buy” rating. The average on the Street is $48.89.
“ATS delivered FQ4 results that were mixed vs. expectations, while the FQ1/full-year guidance commentary likely drove the meaningful negative share price reaction. In our view, management appears to be taking the right steps to drive margin improvement, FCF, and a stronger balance sheet. We believe the longer-term tailwinds in Energy (Nuclear) and Life Sciences remain intact, and expect continued progress through F27 on the margin front,” said Mr. Khan.
* Stifel’s Suthan Sukumar reduced his Coveo Solutions Inc. (CVO-T) target to $9 from $11 with a “buy” rating. The average is $7.03.
“Coveo reported an in-line FQ4 with a lighter F27 guide,” said Mr. Sukumar. “While ARR growth sustains at mid-double-digit levels, reflecting another record FQ4 for bookings and an inflection in customer deal sizes, the softer outlook speaks to incremental deal timing uncertainty given growing traction with larger, multi-use-case enterprise deals. We believe the steady pace of large customer wins/expansions validates Coveo’s differentiated value proposition by enabling intelligence across sophisticated enterprise AI stacks supporting our thesis for continued market/wallet share gains, with re-accelerated ARR growth in view as Coveo laps Salesforce-related headwinds this year and position for an expanding TAM as AI workflows transition to agentic. We see conservatism in the F27 guide, particularly with the arrival of a new sales chief in June and the emerging sovereign AI opportunity (upside to the guide). We maintain our Buy rating but lower our target to $9/share on lower estimates. At 1 times Sales, risk/reward remains attractive, in our view.”
* Raymond James’ Stephen Boland lowered his EQB Inc. (EQB-T) target to $123 from $127 with a “market perform” rating. The average is $120.60.
“We continue to view the PCF transaction as a positive strategic expansion of EQB’s product shelf and a meaningful opportunity to broaden its retail customer base. That said, we remain cautious on consumer credit,” said Mr. Boland.
* ATB Cormark’s Nate Heywood bumped his target for Rockpoint Gas Storage Inc. (RGSI-T) to $31 from $30 with a “sector perform” rating, while CIBC’s Robert Catellier bumped his target to $34 from $33 with an “outperformer” rating. The average is $31.33.
“RGSI shares traded up 0.6 per cent during the session following the release of its fiscal Q4/26 results and conference call,” said Mr. Heywood. “Overall, we view the update as directionally positive given the modest 4-per-cent EBITDA beat, dividend increase, brownfield project updates, and supportive macro commentary. Fiscal Q4/26 adjusted EBITDA of $109-million was down 3 per cent year-over-year but modestly beat our estimate of $105-milliom and consensus of $106-million. Messaging around both near- and long-term fundamentals continues to be optimistic, supported by high current inventories, the current weather pattern outlook, gas-fired generation for data centers and grid reliability, and LNG export capacity. On the growth front, RGSI sanctioned a $14-million battery project at Warwick and is tracking toward an FQ2/27 FID on a highly accretive, capital-light 5bcf expansion at Warwick. Backed by 6-per-cent growth in the fee-for-service revenue backlog and an attractive balance sheet, Management also announced a 5-per-cent dividend increase (yield: 4.3 per cent). With the update, we are increasing our price target.”