Inside the Market’s roundup of some of today’s key analyst actions\
BofA Securities analyst Ebrahim Poonawala has “increased confidence” that Toronto-Dominion Bank’s (TD-T) new leadership team, led by CEO Raymond Chun, can fix its U.S. anti-money laundering issues “while driving the franchise toward improved profitability” relative to his current forecast.
Accordingly, following Friday morning’s announcement of the bank’s management changes and overhaul of its board of directors, he upgraded his rating for TD shares to “buy” from “neutral” previously.
“Our management meeting with CEO Ray Chun on Tuesday increased our confidence that the new leadership appreciates the frustration among shareholders tied to management execution (marked by the terminated U.S. bank deal due to the AML issues) and the poor messaging to the Street around management’s strategy,” said Mr. Poonawala in a note titled New CEO means business. “While the Street awaits a strategic update with new financial targets later in the year, we don’t think Chun is likely to wait until then to execute on his priorities (such as potentially monetizing the Schwab stake and redeploying capital). While we were initially skeptical that appointing a TD lifer as CEO would bring the cultural change that the bank needed, our discussion with Chun and his messaging starting with 4Q24 earnings has eliminated this concern and we are now more inclined to see him as an internal activist.”
“We view today’s announcement of pulling forward the CEO transition (to Feb 1) along with a slew of changes to the Board of Directors (Chairman Alan MacGibbon stepping down Dec 31, 2025) as likely to be received positively by investors who have sought more accountability from TD leadership. TD announced the addition of four new Board members, each should be well received in our view given strong industry experience at top firms including, KPMG, CDPQ, JPMorgan, and Morgan Stanley.”
The analyst hiked his price objective for TD shares to $92 from $78. The current average target on the Street is $84.79, according to LSEG data
“Our PO implies 15-per-cent upside potential that combined with a 5.3-per-cent dividend yield implies 20-per-cent total return potential,” he explained. While uncertainties remain, a lot discounted with TD trading at 10.2 times 2025 P/E vs. 13.3 times for Royal-RY and 11.7 times peer median. We believe the stock is more than adequately discounting downside risks, while giving little credit for improved execution.”
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Following the recent completion of the sale of its leasing business and subsequent deleveraging transactions, Chorus Aviation Inc. (CHR-T) is now “a much simpler business,” according to National Bank Financial analyst Cameron Doerksen, who thinks it should now be “a steady generator of free cash flow with shareholder value generation through ongoing share buybacks and potentially acquisitions in the aviation services sector.”
“With the conclusion of the sale of Chorus’s aircraft leasing business in Q4, the company executed on several transactions in December including the repayment on maturity of $86-million worth of Series A Debentures and the redemption of all the outstanding Preferred Shares (US$363-million),” he said. “In Q1/25, Chorus plans to redeem its Series B ($73-million) and Series C ($85-million) Debentures. The only remaining debt on the balance sheet will be aircraft-related amortizing debt related to planes on lease under the company’s CPA with Air Canada that carry an average interest rate of 3.3 per cent. We forecast 2025 year-end leverage at 1.0 times.
“We forecast that Chorus will generate $111-million in free cash flow in 2025 (for a FCF yield of 20 per cent). The company has been active with its NCIB recently (0.9 million shares repurchased at an average price of $3.00/share under the current NCIB that began mid-November 2024), and we see the potential for the company to pursue M&A with a focus on related aviation services businesses that would fit with its Voyageur Aviation subsidiary. Our forecast does not assume any M&A.”
In a research report released Friday ahead of the Feb. 19 release of its fourth-quarter 2024 financial results, Mr. Doerksen made “minor” adjustments to projections for both the quarter and full-year and 2025 to “reflect the slightly earlier than expected deleveraging transactions and some other minor adjustments.” He also introduced 2026 estimates which he said are “consistent with management’s guidance items for the fixed fee and leasing revenue expected under the CPA (both of which step down in 2026) and some assumed growth and margin expansion in the Voyageur business.”
For the fourth quarter, he’s now projection revenue of $349-million, down from $353-million previously, and adjusted earnings per share of 7 cents (unchanged). The Street is expecting $362.20 and 7 cents, respectively.
Reiterating an “outperform” recommendation, he cut his target to $3.75 from $4. The average on the Street is $3.79.
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Desjardins Securities analyst Brent Stadler saw Capital Power Corp.’s (CPX-T) as a “net positive” after its cash flow forecast came in better than expected.
“CPX provided 2025 adjusted EBITDA guidance of $1.340–1.440-billion ($1.390-billion midpoint),” he said. “This was 2–3 per cent below our prior $1.420-billion estimate; the Street was at $1.438-billion (estimates ranged from $1.317–1.515-billion). AFFO guidance of $850–950-million ($900-million midpoint) was 9 per cent ahead of our prior $824-million estimate (Street at $850-million). We have updated our updated our model and are now in line with guidance.”
Seeing the potential for more value from its operating merchant fleet in Alberta, “which could be unlocked on a recontracting announcement,” and its U.S. M&A opportunities remaining “robust,” Mr. Stadler raised his 2025 and 2026 cash flow expectations. That led him to increase his target for its shares by $1 to $66 with a “buy” rating. The average on the Street is $63.09.
“In our view, CPX has a high-quality gas platform which is in high demand, with a number of near-term catalysts that could power the stock higher,” he said. “CPX remains confident in its ability to contract with data centres and/or recontract with existing counterparties on assets in the U.S. and Canada. We view current levels as attractive, with the stock trading at an 11.2-per-cent FCF yield (2026).”
“In our view, CPX offers investors deep value and exposure to a balanced approach to the energy transition, and is a top way to play the AI/data centre theme.”
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Stifel analyst Cole McGill said he does not see price as a material catalyst for lithium equities in 2025.
“While this may come as little surprise to investors, strategic interest in assets remain healthy, as evidenced by continued corporate, OEM, and conventional energy interest in the sector - almost always at a premium,” he explaine. “In 2024, average M&A transactions were 47 per cent above undisturbed stock prices.
“This was no more apparent than Rio’s pending acquisition of Arcadium Lithium, at a 90-per-cent premium. Rio’s interest in Arcadium was driven by scale, product diversification, and geographic diversification. Arcadium’s basket of assets included Argentinian brine, Argentinian DLE, and Canadian hardrock projects. It provided exposure to high-grade assets insulated from discovery dilution, and arguably much of the value can be attributed as an endorsement of long-viewed tricky direct lithium extraction technology.”
In a baseball-themed research report release Friday titled Lithium Lessons from Billy Beane, Mr. McGill said there’s a void in the market without the departure of Arcadium and thinks investors can “benefit from a basket of stocks that recreate the aggregate.”
“‘We can’t do the same things the Yankees do. Given the economics, we’ll lose’- Billy Beane, 2002. With his 2001 Oakland A’s, Billy Beane couldn’t afford to keep superstars Giambi, Damon, and Isringhausen, so he recreated them in the aggregate - and it changed the game,” he said. “We think navigating the current lithium market ascribes the same wisdom. With pricing not a nearterm catalyst, we think cash is king for companies to drive bid tension. While investors know lithium stocks are cheap, the hawks are circling - as evidenced by Rio’s 90-per-cent premium offer for Arcadium. With Arcadium-type exposure now nonexistent in the market - we think recreating Arcadium’s portfolio in the aggregate provides investors with a basket to benefit through the cycle. Buying LAAC (low-cost production = operating leverage), SLI (high-grade DLE = competitive cost base on the doorstep of Exxon), and PMET (scalable resource, arguably better than Rio’s assets in province) provide similar exposure - and let investors recreate bid tension in the aggregate - just like Billy Beane. Consensus counted Oakland out in 2002 - and they went on to win the most games in the league.”
He added: “Given this, we think a basket of Lithium Argentina, Standard Lithium, and Patriot Battery Metals provide investors exposure to a similar-type asset base as Arcadium in the aggregate - and would note all three saw strategic interest in 2024, backstopping this thesis. While the selection of LAAC, SLI, and PMET naturally has a higher risk profile than Arcadium, we think the combination of quality asset bases, experienced management teams, strategic interest, and cash provide asymmetric risk/reward profiles, allowing investors to ‘get on base’ at bottom cycle multiples.”
Mr. McGill made a series of target price adjustments to stocks in his coverage universe. They include:
- Critical Elements Lithium Corp. (CRE-X, “buy”) to $1.25 from $2.65. The average is $1.84.
- Frontier Lithium Inc. (FL-X, “buy”) to $2.50 from $3. Average: $2.75.
- Lithium Americas (Argentina) Corp. (LAAC-N/LAAC-T, “buy”) to US$7 from US$10. Average: US$5.42.
- Lithium Americas Corp. (LAC-N/LAC-T, “buy”) to US$7 from US$8.50. Average: US$5.07.
- Patriot Battery Metals Inc. (PMET-T, “speculative buy”) to $8 from $15. Average: $11.
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After a “good” 2024 for Canadian energy equities. CIBC World Markets analysts Dennis Fong, Jamie Kubik and Christopher Thompson continue to expect “a focus on free cash flow allocation to shareholder returns, although this year will feature new challenges for the sector to navigate.”
“The looming threat of U.S. tariffs is likely to be a near-term challenge for the Canadian energy sector,” they said in a report release Friday. “We have seen oil differentials widen as investors price in tariff risks, with the equities having followed suit. We expect cash flows for companies with Canadian-domiciled refineries to be resilient and to help moderate political risk and commodity price volatility. North American gas inventories enter 2025 above the seasonal average; however, LNG export projects in Canada and the U.S. should see demand rise over the coming 12 months, and there’s also a positive backdrop for rising demand from data centres. We expect gas prices to improve in 2025, but we still maintain a preference towards liquids-weighted producers.
“Our top ideas include ARX and SU for large caps and KEL and LGN for small-cap E&Ps.”
The analysts made a series of target price adjustments to stocks in their coverage universe on Friday. These companies saw increases:
- Advantage Energy Ltd. (AAV-T, “neutral”) to $11.50 from $11. The average on the Street is $13.50.
- Arc Resources Ltd. (ARX-T, “outperformer”) to $35 from $34. Average: $32.22.
- Birchliff Energy Ltd. (BIR-T, “neutral”) to $6 from $5.75. Average: $6.42.
- Enerflex Ltd. (EFXT-N/EFX-T, “neutral”) to US$11.50 from US$8.75. Average: US$11.38.
- Imperial Oil Ltd. (IMO-T, “neutral”) to $108 from $105. Average: $100.59.
- Kelt Exploration Ltd. (KEL-T, “outperformer”) to $11.50 from $10. Average: $8.98.
- NuVista Energy Ltd. (NVA-T, “outperformer”) to $19.50 from $18. Average: $17.39.
- Peyto Exploration & Development Corp. (PEY-T, “neutral”) to $17.50 from $17. Average: $18.50.
- Strathcona Resources Ltd. (SCR-T, “outperformer”) to $37 from $35. Average: $34.88.
- Tamarack Valley Energy Ltd. (TVE-T, “outperformer”) to $6.50 from $5.75. Average: $5.69.
- Topaz Energy Corp. (TPZ-T, “outperformer”) to $32 from $31. Average: $31.69.
- Tourmaline Oil Corp. (TOU-T, “outperformer”) to $80 from $75. Average: $78.18.
Mr. Fong made these reductions:
- Baytex Energy Corp. (BTE-T, “neutral”) to $5 from $6. Average: $5.75.
- Veren Inc. (VRN-T, “outperformer”) to $12.50 from $13. Average: $11.39.
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National Bank Financial analyst John Shao thinks Blackline Safety Corp.’s (BLN-T) fourth quarter of 2024 “appeared clean” and sees Calgary-based company remaining on “on track to achieve consistent market share gains while strengthening its market leadership through continued investments.”
“Blackline Safety’s FQ4 results were mixed, with macro-related deal slippage leading to a miss in product revenue,” he said. “However, the company more than offset this loss through gross margin expansion and capital discipline, resulting in better-than-expected adjusted EBITDA.”
“As discussed on the earnings call, delayed deals from geopolitical uncertainties and potential tariffs create unnecessary ‘noise’. When this occurs, it tends to increase stock volatility, particularly considering BLN’s rally in recent months. If anything, we believe such volatility could present an opportunity for new investors in the near term. In the longer term, we remain optimistic about a company with solid execution and significant growth opportunities ahead.”
Before the bell on Thursday, Blackline, which designs and manufactures employee safety monitoring technology, reported revenue of $35.7-million, narrowly below the $37.8-million estimate of both the analyst and Street. However, adjusted EBITDA of $2.0-million topped expectations ($1-million and $1.1-million, respectively).
“Hardware revenue came in at $16.1-million, below our estimate of $18.8-million,” he said. “Our projection was based on the view that FQ4 tends to be the strongest quarter of the year. While that seasonality still held, the quarterly variance did seem to moderate compared to previous years. Based on discussions with Management, it was due to delayed deals related to geopolitical uncertainties as well as due to certain M&A among customers. It’s now expected those deals to stabilize and eventually get through in F2025. Tariffs under a new U.S. administration also pose a risk, but we’d note Blackline maintains its own production facility and thus has the ability/flexibility to set up a new production line in the U.S. (potentially as part of its expansion project) if that threat materializes.
“The services segment continued to post strong results with FQ4 revenue up 31 per cent to $19.6-milllion, above our $19.0-million forecast. Other than the steady conversion of product revenue into service revenue (up 29 per cent to $17.0-milllion), FQ4 also saw a 46-per-cent increase in rental revenue to $2.6-million. Initially started as a small unit, the rental business has grown to become an important growth driver, paving the way for future product sales.”
Seeing Blackline in “much better shape,” Mr. Shao raised his target by $1 to $7.50 with an “outperform” rating. The average on the Street is $8.07.
“We believe Blackline’s technical edge comes from its connectivity that enables flows of data for greater visibility of employee activities and their work environment,” he concluded.
Elsewhere, other analysts making target adjustments include:
* ATB Capital Markets’ Martin Toner to $8 from $7.50 with an “outperform” rating.
“In our view, the positive highlight of the quarter was the wide margin beat, which we think shows strong operating leverage and effective cost management,” he said. “We maintain the view that the Company can continue to grow and become the dominant player in the gas detection industry with modest operating expense reinvestment, which should drive margins higher over time. We raise our near-term margin estimates and terminal growth rate to account for an expanded international expansion runway, driving our PT increase.”
* Ventum Capital Markets’ Amr Ezzat to $8 from $7 with a “buy” rating.
“Born from a relentless commitment to innovation, Blackline has emerged as the undisputed industry leader in true connected safety solutions,” said Mr. Ezzat. “Since F2014, Blackline has reinvested 26 per cent of its sales into product development resulting in a differentiated product line and a three- to five-year technological lead over competitors. Yet, despite its clear market leadership, investors often pigeonhole this trailblazer as merely a hardware provider to the Canadian energy sector. This narrow view overlooks a much richer narrative. Over the years, Blackline has diversified both its revenue streams and its global reach, with 84 per cent of business now outside Canada and only 36 per cent tied to oil and gas — a far cry from the Company’s beginnings. At the core of Blackline’s strategy is its unique business model that fully integrates high-margin service revenues with each hardware sale and has led to a 31-per-cent/34-per-cent sales/ARR CAGR over the last five years. In fact, Blackline has cemented its position as one of the fastest-growing Canadian tech companies over the past several years. As Blackline continues to scale, this model is set to unlock substantial margin expansion, with GM-percentage expected to rise to 62 per cent by F2028 from 58.3 per cent (F2024), fuelling aggressive earnings growth. We foresee Blackline evolving from a breakeven EBITDA business to a 15-per-cent-plus EBITDA margin business by F2028, with further expansion expected in our longer-term projections.”
* Canaccord Genuity’s Doug Taylor to $8 from $7 with a “buy” rating.
“While our near-term hardware expectations are modestly lower, there are positive offsetting changes to our margin figures and the ongoing metrics for the recurring services base. We see Blackline’s competitive leadership, driven by ongoing product innovation, supporting years of positive top-line growth (25 per cent plus). This growth profile, now with a stronger margin profile and balance sheet foundation, underpins our BUY rating. We see further upside as the company grows into its ‘rule-of-40′ aspirations with a profitability profile, which should broaden its investor appeal,” he said.
* TD Cowen’s David Kwan to $8.50 from $7.50 with a “buy” rating.
“We believe near-term upside to the stock could be limited, driven by increased growth investments that could temporarily limit further margin gains. However, we believe a stronger demand outlook for H2/F25, aided by new product releases, should help drive a pickup in organic growth and margins later this year that we think could drive the stock back toward its all-time high,” said Mr. Kwan.
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In other analyst actions:
* Haywood Securities initiated coverage of F3 Uranium Corp. (FUU-X) with a “buy” rating and 55-cent target. The average is 73 cents.
* Cutting his estimates for 2025 “deeper”, ATB Capital Markets’ Tim Monachello lowered his Ag Growth International Inc. (AFN-T) target to $57 from $63 with a “sector perform” rating. The average is $63.25.
“While we reduced our 2025 adj. EBITDAS estimate by 18 per cent on January 14, 2025, and reduced our rating from Outperform to Sector Perform, following additional channel checks, we reduce our estimates further given a more dramatic view of weakness in North American farm demand,” he said. “Specifically, we understand that AFN’s early order program for portable Farm equipment has been extremely weak, and will likely lead to at least modest year-over-year declines in consolidated adj. EBITDAS in H1/25, most notably in Q1/25 ($47-million ATB estimate, vs $50-million Q1/24 reported). We believe the weakness in U.S. Farm is now also being felt in the Canadian Farm segment, which showed relative outperformance in 2024; for context, we forecast Canadian Farm revenue to be down 3.5 per cent year-over-year in 2024e, and U.S. Farm revenue to be down 28 per cent. Looking to 2025, our revised forecasts assume U.S. Farm revenue to be down 23 per cent and Canadian Farm revenue to be down 19 per cent. While the depth and duration of the North American farm downcycle is highly uncertain, we believe a recovery at some point is inevitable. Overall, given lower estimates we reduce our price target to $57.00 from $63.00. We maintain our view that the medium-term risks facing AFN are significant, and will continue to overshadow the longer-term upside potential for investors until there is better visibility to a recovery in North American farm demand.”
* BMO’s Brian Quast lowered his Aris Mining Corp. (ARIS-T) target to $8 from $9.50 with an “outperform” rating. The average is $10.92.
* Barclays’ Brandon Oglenski cut his Canadian National Railway Co. (CNR-T) target to $160 from $162 with an “equal-weight” rating and Canadian Pacific Kansas City Ltd. (CP-T) to US$91 from US$97 with an “overweight” recommendation. The averages are $173.75 and US$88.68, respectively.
“Transport vertical remains mostly in value territory; but another round of generally lower 4Q EPS revisions weighs on sentiment as investors await some improvement in core industrial growth and trucking freight rates. We remain patient and like CPKC, UNP, SAIA and FDX in early 2025,” he said.
* Coming off research restriction following the completion of the acquisition of Gatos Silver Inc., National Bank’s Don DeMarco trimmed his First Majestic Silver Corp. (AG-T) target to $10.25 from $11.25, keeping a “sector perform” rating. The average is $10.08.