Inside the Market’s roundup of some of today’s key analyst actions
Desjardins Securities analyst Robert Mann thinks balance sheet flexibility and stronger commodity prices has provide Canadian energy companies with a “much clearer avenue for accelerated development activity and production growth than we have seen in recent years.”
“Adherence to capital discipline and the return of meaningful capital to shareholders must remain central to producer frameworks in the years ahead, despite an increasingly constructive sector backdrop in Canada,” he added. “We expect capital allocation to be among the most important themes this reporting season and view it as a potential inflection point for the sector, with how producers deploy their strong balance sheets and growing cash balances top of mind for investors.”
In a client report released Friday, Mr. Mann cautioned his views “remain preliminary ahead of formal corporate survey updates and management catch-up calls,” but he predicted consensus estimates will “continue tightening” as the third quarter draws to an end.
“We have marked-to-market our 3Q26 estimates and updated our commodity price outlook to reflect another quarter of elevated pricing amid continued volatility across energy markets,” he said. “While September pricing is not yet final and our quarterly catch-up calls with management teams remain ahead, this early preview provides investors with a directional view on where earnings expectations are tracking relative to the Street, where revision risk appears highest and how we would position into the quarter today.
“In our view, producer messaging alongside 3Q results regarding ongoing commodity price volatility, Canadian policy tailwinds (as framed in our recent note) and 2027 budgets will be top of mind for investors. With balance sheets across the coverage group in excellent shape and commodity prices remaining elevated for a second consecutive quarter, several producers are now positioned to act counter-cyclically should prices retreat following a potential US-Iran conflict resolution or other geopolitical developments.”
With his refreshed estimates and revisions to his 2027 base commodity-price deck, Mr. Mann made a series of target price increases to stocks in his coverage universe.
“we expect 2027 outlooks and capital-allocation commentary to ultimately carry greater weight with investors than the quarter itself,” he added.
For large-cap stocks, his changes are:
* Canadian Natural Resources Ltd. (CNQ-T, “hold”) to $73 from $70. The average is $73.36.
Analyst: “We are not expecting any material surprises from CNQ’s 3Q results and anticipate broadly positive estimate revisions across the Street, driven primarily by strong SCO pricing and realizations during the quarter. The company’s $13-billion net debt target, which would trigger the return of 100 per cent of excess free cash flow to shareholders, now appears achievable by year-end or early 2027 at current strip pricing. Looking beyond the quarter, investor focus remains squarely on CNQ’s views regarding future production growth and associated capital spending requirements.”
* Cenovus Energy Inc. (CVE-T, “buy”) to $52 from $50. Average: $52.44.
Analyst: “Strong oil sands volumes and a solid contribution from the U.S. downstream business, despite maintenance at Lima beginning in September, should position Cenovus to reach its $4-billion net debt target in early 4Q26 at current strip pricing. Achieving that milestone would shift the return-of-capital framework to 100 per cent of excess free cash flow vs 75 per cent currently. Combined with positive estimate revision potential and the company’s upcoming January 2027 investor day, we see a favourable setup heading into results.”
* Imperial Oil Ltd. (IMO-T, “hold”) to $165 from $160. Average: $160.80.
Analyst: “Our CFPS estimate for IMO sits below current Street consensus, reflecting lower production due to planned maintenance at Syncrude and Cold Lake, partially offset by a large downstream contribution despite utilization rates that we expect to land between 87–88 per cent. The return to normal operations at the Strathcona refinery following planned maintenance in 2Q26 should support results, particularly given current diesel crack spreads and renewable diesel pricing. Investor focus this quarter is likely to centre on a return to normal operating performance across both the upstream and downstream businesses, alongside any indication of a potential substantial issuer bid (SIB) and incremental growth initiatives given the company’s strong balance sheet.”
* Suncor Energy Inc. (SU-T, “buy”) to $110 from $107. Average: $102.86.
Analyst: “We have lowered our production expectations modestly; however, we continue to expect a meaningful downstream contribution from Suncor for a third consecutive quarter as its integrated downstream, marketing and commercial capabilities remain key differentiators. While not our base case, we would not be surprised to see another increase to the company’s monthly buyback program, currently running at approximately C$500m per month, announced alongside results. With net debt continuing to trend lower, capital allocation remains a key area of focus for investors.”
* Tourmaline Oil Corp. (TOU-T, “hold”) to $69 from $68. Average: $70.36.
Analyst: “Our production estimate now sits at the low end of the company’s annual guidance range, reflecting weak Canadian natural gas pricing that prompted Tourmaline to actively store gas and pace turn-in-line activity toward quarter-end. That said, we suspect much of the quarterly softness will be overlooked following the company’s recent monetization of half its Topaz Energy stake and the addition of buybacks as a more meaningful component of the return-of-capital framework. Investor focus is likely to remain centred on capital allocation, buyback execution and commentary surrounding 2027 development plans, including management’s willingness to curtail volumes should natural gas pricing remain weak.”
* Whitecap Resources Inc. (WCP-T, “buy”) to $23 from $22. Average: $21.56.
Analyst: ‘We are anticipating another quarter of strong operating performance from Whitecap following several quarters of beat-and-raise execution. Our CFPS estimate moves modestly lower, driven primarily by higher royalties and cash taxes, and now sits slightly below Street expectations. However, we suspect investor focus will remain on the company’s operating momentum, accelerated net debt reduction and progress toward completion of the Lator project."
Heading into third-quarter earnings season for Canadian aerospace and diversified industrial companies, RBC Dominion Securities analyst James McGarragle reaffirmed Chorus Aviation Inc. (CHR-T) as the “top idea” in his coverage universe, calling it “the perfect combination of value and growth.”
“We reiterate CHR as our top idea, underpinned by the $500-550-million four-year capital allocation framework (2026–2029) remaining on track,” he said. “We model for a 6-per-cent FCF yield in 2026 and are calling for this FCF to compound at a 25-per-cent CAGR [compound annual growth rate] out to 2029 – with Chorus exiting 2029 debt free. Key is that the CPA’s fixed-fee structure continues to insulate Chorus from macro and tariff uncertainty, with the 80- aircraft minimum through 2035 providing a durable earnings floor – this stability gives us confidence in our out-year estimates and will drive a re-rate higher in the shares in our view.
“Into Q3 we expect Chorus to beat consensus and raise guidance given strong Q2 trends and management’s indication that results will not slow sequentially, which we see as a nice near-term catalyst. We also flag M&A, Voyageur defence wins, and re-leasing of aircraft to Air Canada, which we see as highly likely given Air Canada is paying to refurbish these aircraft, as meaningful upcoming catalysts in 2027. Net-net, at a mid-teens 2029E FCF yield, we see CHR as an attractive value opportunity, with defence and M&A representing upside not reflected in street estimates, creating a compelling set-up.”
Mr. McGarragle has an “outperform” rating and $39 target for Chorus shares. The average is $36.58.
The analyst’s other two top picks are:
* No. 2: Russel Metals Inc. (RUS-T) with an “outperform” rating and $92 target. The average is $76.89,
Mr. McGarragle: “Best positioned for the Industrial economy inflection. The Industrial recovery is gaining momentum, with a key competitor earlier this month characterizing demand as robust across multiple end-markets including data centers, LNG, and energy, supported by tight industry inventories and extended customer lead times, which we see as the most important near-term leading indicator. Other leading indicators we track (e.g., U.S. and Canadian PMI) suggest demand will carry through into 2027, setting up a constructive outlook. Taken together, we have high conviction in near-term demand conditions and see higher volumes combined with recent increases to steel prices as setting the stage for significant operating leverage, which we expect to have an outsized impact on earnings in Q3 and Q4 – a meaningful near-term catalyst. Furthermore, we see Russel as very well positioned to benefit from an uptick in investment in Canada over the next several years which is not reflected in street expectations, in our view. Critically, we see significant upside to consensus estimates, and with valuation still lagging other torquey industrials in our coverage, we flag a compelling entry point.”
* No. 3: Bombardier Inc. (BBD.B-T) with an “outperform” rating and $406 target. The average is $370.63.
Mr. McGarragle: “We believe demand remains robust and see the current pullback as a buying opportunity. The demand environment remains a standout (book-to-bill of 1.5 times in Q2 and backlog up 25 per cent year-to-date) and we expect this strength to persist in the back half, which we believe will drive FCF this year ahead of street estimates. Key here is that we are flagging another strong book-to-bill in Q3 as an important upcoming catalyst. We see current demand levels as sustainable, as indicated by pre-owned inventory for Global models at 4.5 per cent of active fleet, further supported by defence opportunities building momentum on increased government spending, with only a portion of the pipeline reflected in current backlog. We continue to believe that demand fundamentals support higher production rates in 2028, and flag higher production rates as a key re-rating catalyst as this begins to be reflected in buy-side expectations. Additionally, we expect continued strength in services growth, which now represents over one-third of revenues, driven by a mix shift toward Challengers and Globals as well as strong fleet utilization and flying hours. We believe recent negative sentiment driven by comments from the U.S. administration that Bombardier cannot sell aircraft into the U.S. unless they are manufactured there is creating a buying opportunity, with shares trading at a 5.7-per-cent FCF yield despite line of sight to compound FCF at a low-teen CAGR out to 2030.”
RBC Dominion Securities analyst Keith Mackey thinks Total Energy Services Inc. (T0T-T) is “differentiated in its: geographic and segment diversification, acquisition track record, management alignment, and solid growth profile.”
However, initiating coverage of the Calgary-based energy services provider, he believes its current valuation “reflects the near-term fundamental tailwinds leaving the risk/reward proposition consistent with sector-perform rated stocks.”
“Near-term FCF remains limited,” he said in a client report. “Total’s near-term free cash flow yield of negative 1 per cent is below peers at 3 per cent, primarily driven by growth capex. Total’s 2026 capital plan of $145-million maps to 11 per cent of its 2026E revenue, well above OFS [oilfield services] peers. Total has not released its 2027 capital plan, but we have $120-million pencilled in, leaving capital relatively elevated.
“Recent stock performance limits near-term valuation accretion. Total is trading at 4.7 times NTM [next 12-month] EBITDA, and our 5.0x valuation multiple already incorporates 13-per-cent growth in CPS [Compression and Process Services], which is its highest multiple segment. We see two main avenues for Total to improve its valuation multiple, namely addressing its sub-scale U.S. drilling business and outperforming our expectations in CPS.”
While cautious about its valuation, Mr. Mackey emphasized Total possesses a platform that “outgrows its benchmarks” and touted its “successful 40+ acquisition track record enabled by alignment.”
“Since 1996, Total has grown into a four-segment business operating drilling and service rigs, oilfield rentals, and compression & process services across Canada, USA, and Australia,” he explained. “We believe its geographic diversification provides exposure to imperfectly correlated macro factors. Such exposure has enabled Total to grow revenue per share by 54 per cent since 2018 through a mix of acquisitions and organic expansion, versus a decline in industry rig counts.”
“Total’s strategy includes inorganic growth combined with capital investment to upgrade asset utilization. We believe TOT’s successful track record of acquisitive value creation is apparent in its counter-cyclical timing and absence of impairments. As a founder-led firm, management owns approximately 11.3 per cent, enhancing alignment and capital allocation scrutiny.”
Emphasizing its “revenue per share has generally outperformed industry rig counts,” Mr. Mackey set a target of $41 per share along with his “sector perform” rating. The average is $41.50.
“Capacity expansion drives earnings growth,” he said. “We estimate Total’s organic EBITDA per share to grow at 13 per cent on average over 2027 and 2028, broadly in line with oilfield services peers at 12 per cent. Our growth expectations are driven, in large part, by the Compression and Process Services (CPS) business, where the company is doubling capacity at its U.S. fabrication facility.”
Vecima Networks Inc’s (VCM-T) stronger-than-anticipated fourth-quarter results “appear to be evidence of the hyper growth anticipated over the next several years,” according to Acumen Capital analyst Jim Byrne, who thinks it nows “trade at very attractive valuation given the growth rates, improved margins, and stronger cash flow.”
Shares of the Victoria-based hardware and software solutions provider for broadband access, content delivery jumped 4.4 per cent on Thursday after it reported quarterly revenue of $91-million, a jump of 45 per cent year-over-year and exceeding Mr. Byrne’s $79.1-million estimate. Adjusted EBITDA reached a record level of $18.9-million, up from $6.2-million a year ago and well above the analyst’s $13.9-million projection, driven by an “anticipated surge in orders and record sales of Entra DAA products.”
“This growth was driven largely by record quarterly sales of EntraOptical as well as continued momentum gains from their ERM3xx RPD module shipments,” he added. “Management also noted that their vCMTS cloud-based solutions were progressing as they move deeper into trials and commercialization. The vCMTs product has now received seven contract wins including two with Tier 1 operators, which should drive longer term growth in FY28 and beyond. CDS revenue was up to $10.8-million compared to $8.6-million last year but was essentially flat from $10.7-million last quarter.
“As a reminder, VCM recently announced the sale of its Telematics business and the acquisition of Akleza’s assets. Notably, in the quarter VCM won several new customers and signed several agreements, one of which was with a large Tier 1 Canadian operator and advanced its trial activities with another Tier 1 customer.
With Vecima expecting to achieve revenue growth of 30-35 per cent and Adj. EBITDA margins of 20 per cent in the next fiscal year, Mr. Byrne raised his forecast for 2027 and now expects earnings per share of $1.34, up from his previous estimate of $1.05. He also introduced his 2028 projections, including EPS of $1.63.
“The company continues to increase customer engagement, with 150 MSOs worldwide compared to 136 last year,” he said. “Customers ordering Entra products now stands at 77.
“Management indicated that the quarter showed strong progress for their new vCMTS cloud-based solutions, with the product moving deeper into trials and commercialization with seven contract wins including two Tier 1 customers.
Keeping a “buy” rating on Vecima shares, he hiked his target to $24 from $18. The average is $16.50.
Elsewhere, Raymond James’ Steven Li increased his target to $19 from $18 with an “outperform” rating.
“4Q beat and raise with a new Tier1 operator in Canada announced for its vCMTS (software based broadband access core solution). We have rolled forward our numbers and target,” said Mr. Li.
While WildBrain Ltd.’s (WILD-T) fourth-quarter results fell short of the Street’s expectations and its outlook for fiscal 2026 also missed forecasts for both earnings and free cash flow, pointing to a “transition” year, National Bank Financial analyst Adam Shine sees “more optimism” moving forward.
“F2027 guidance calls for revenues of $270-$295-million (consensus estimate $288-million), Adj. EBITDA $28-$32-million (CE $37-million) & Adj. FCF (CE $20-million) positive ex-$30-million of investment in franchise marketing & content, technology & operating infrastructure, and leasehold & other capital spend - to support growth in owned-brand licensing, Content & advertising revenues, and to improve operating leverage,” he said.
“WILD expects Adj. EBITDA to roughly double from mid-point of f2027 outlook by the end of f2029 with this predicated on increased owned-brand licensing & advertising revenues, improved operating leverage, and moderation of f2027 investment spending.”
Shares of the Toronto-based media, animation studio, production, and brand licensing company fell 27 per cent on Thursday after it reported revenue from continuing operations for its fourth quarter of $55-million and earnings per share of 2 cents, both missing Mr. Shine’s projections ($69-million and 3 cents).
“4Q was impacted by several discrete items and strategic investments in its franchises,” he said. “F&GL [Franchise & Global Licensing] revenues declined 16 per cent due to lower licensing agency revenues at WildBrain CPLG due to timing differences and changes in certain partner relationships. Content revenues fell 40 per cent as a result of lower live-action production activity and reduced distribution revs in the face of a tough comp. Gross Margin of 39 per cent vs. 41 per cent given drop in distribution & licensing revs and increased franchise marketing investment. SG&A rose 8 per cent driven by higher staff costs within F&GL and provisions for uncollected trade receivables related to certain licensing customers. At the end of f2026, WILD had $89-million in cash, $52-million of interim production financing, and $10-million of lease liabilities.”
Keeping a “sector perform” rating for WildBrain shares, Mr. Shine trimmed his target to $1.50 from $1.75. The average is $2.
Elsewhere, ATB Cormark’s David McFadgen cut his target to $1.35 from $1.70 with a “sector perform” rating.
While acknowledging the retail sector’s recent valuation multiple compression, RBC Dominion Securities analyst Irene Nattel continues to see Aritzia Inc. (ATZ-T) as “a natural compounder with sector-leading KPIs” ahead of the release of its quarterly results on Oct. 8.
“Channel checks and management commentary point to Q1 momentum carrying into Q2,” she said.
Ms. Nattel is forecasting quarterly earnings per share for the Vancouver-based clothing retailer of $1.06, up 80 per cent year-over-year and broadly in line with the consensus forecast on the Street, with results also near the high end of guidance ranges on revenue and margins.
“Q2E revenue $1.125-billion (up 38.5 per cent year-over-year), consensus $1.117-billion, predicated on i) Q1 momentum carrying into Q2 with management noting a slight acceleration; ii) contribution from new boutique openings; iii) continued digital momentum led by the mobile app; and iv) strong client response to fall/winter assortments,” she said. “Forecasts incorporate solid margin expansion: GM percentage up 290 basis points driven by IMU improvements, occupancy leverage, and lower markdowns and SG&A per centage down 70 basis points on expense leverage and smart spending initiatives. Adjusted EBITDA $190-million, up 54 per cent year-over-year, margin 16.9 per cent.”
Ms. Nattel said her full-year fiscal 2027 and 2028 forecasts “are essentially unchanged as ATZ continues to execute across all dimensions.” She also introduced her preliminary fiscal 2029 forecasts, expecting an EBITDA compound annual growth rate of 26.0 per cent from 2026.
Reiterating her “outperform” rating for Aritzia shares, she cut her target by $11, or 5 per cent, to $191 to reflect broader sector compression. The average on the Street is $184.
“Investor Day in October could serve as a catalyst for re-rating,” she added. “F27 revenue target achieved one year early and EBITDA margins tracking above original plan. Based on prior strategy plans, we would expect updated multi-year revenue, margin, and store count targets alongside next phase of U.S./ first international store expansion, digital growth, and capital allocation priorities.”
In other analyst actions:
* Acumen Capital’s Trevor Reynolds initiated coverage of Auxly Cannabis Group Inc. (XLY-T) with a “buy” rating and $5 target, exceeding the $4 average on the Street.
“Based on its leading position in dried flower, pre-rolls, and vapes, XLY is very well positioned to emerge as a winner in a market that continues to mature and consolidate,” said Mr. Reynolds. “While many competitors have shifted their focus internationally, management remains committed to winning at home until international markets evolve and stabilize. To that end, XLY has been focused on and successfully gaining market share in Canada (7.7 per cent in Q2/26, up from 5.9 per cent in Q1/25) where the TAM is forecast to grow from $5.6-billion in 2025 to $7.4-billion by 2030 (5.7-per-cent CAGR). Notably, management recognizes the international opportunity and is very well positioned when the time is right with a global strategic partner, Imperial Brands PLC. (4th largest tobacco company globally).”
* Resuming coverage following the closing of its $57.5-million bought-deal offering, National Bank’s Alex Terentiew raised his target for First Mining Gold Corp. (FF-T) to $1.50 from $1.30, keeping an “outperform” rating. The average on the Street is $1.75.
“Higher commodity prices and Springpole de-risking drive the target increase,” he said. “We have incorporated the financing, rolled our model forward and updated our commodity assumptions following our Commodity Price Update. As First Mining is a development-stage company, our valuation is driven by our long-term gold price, which we increased to US$3,400/oz from US$3,200/oz. The higher long-term gold price and improved development visibility at Springpole more than offset the financing dilution and support our $1.50 target.”
Editor’s note: An earlier version of this article incorrectly said WildBrain was located in Halifax. It moved its head office to Toronto.