Inside the Market’s roundup of some of today’s key analyst actions
Royal Bank of Canada’s (RY-T) “dimmed” outlook now contrasts with its valuation, according to National Bank Financial analyst Gabriel Dechaine, leading him to lower his rating for its shares to “sector perform” from “outperform” previously.
"We are cutting our forecasts modestly to reflect higher PCLs and weaker loan growth,“ he said in a client note. As a result, our target goes to $177 from $179, derived using a 12.7 times multiple (unchanged) on our 2026 estimates. We are not able to justify using a higher valuation multiple considering the weaker credit and growth outlook, both factors reflected in RY’s commentary (and not unique to RY). Given the tight return to our target price, we believe a Sector Perform rating is appropriate.”
Shares of RBC fell 3.5 per cent on Thursday after it said it has earmarked more money for loan losses as trade and policy uncertainty in the United States increases risks among consumers and businesses. In its fiscal second quarter, RBC set aside $1.42-billion in provisions. That was higher than analysts anticipated, and included $568-million against loans that are still being repaid – up from $68-million in the previous quarter.
In justifying his new view from an investing perspective, Mr. Dechaine emphasized the bank’s in-quarter credit performance “sent mixed signals” to the Street.
“On the one hand, the bank delivered an optimal combination of lower than expected impaired PCLs and a conservative performing PCL build (i.e., 23 basis points vs. 15 bps peer average),” he said. “On the other hand, a 13-per-cent quarter-over-quarter GIL [gross impaired loans] increase that followed Q1/25’s 34-per-cent sequential increase suggests to some that RY’s conservatism was warranted. We disagree, if only because 40 per cent of in-quarter GIL additions will reverse next quarter, and because RY’s track record of credit management is strong. What was less mixed, and more important in our opinion, was management pushing back its ‘peak PCLs’ timeline into fiscal 2026. This shift marks the third time ‘peak PCLs’ timing has been deferred over the past three years, highlighting the uncertainty and challenges facing the Canadian economy.”
He also noted RBC’s Capital Markets performance lagged peers during the quarter, with negative pre-tax pre-provision and earnings growth.
“One challenge was a lower degree of trading revenue outperformance (i.e., 11 per cent above our forecast vs. 25-per-cent average positive deviation for peers),” he said. “The bank highlighted challenging Credit trading markets, which is relevant considering FICC generates 6 per cent of RY’s trading revenues. The bank aims to gain market share in equity/derivatives trading over the medium term.”
Mr. Dechaine’s new target for RBC shares of $177 falls below the current average on the Street of $179.89, according to LSEG data.
Elsewhere, other target changes include:
* TD Cowen’s Mario Mendonca to $179 from $174 with a “hold” rating.
“RY’s funding advantages support solid NIM and double-digit NII growth in 2025. Operating leverage should remain strong as the bank benefits from HSBC synergies. Credit was disappointing for the second consecutive quarter, but we do expect GIL formations to check back quickly next quarter. While RY remains the premium bank in the sector, this quarter does not support a widening of the premium,” said Mr. Mendonca.
* CIBC’s Paul Holden to $182 from $174 with an “outperformer” rating.
“RY reported a PTPP beat, but EPS that was in line with consensus. Concerns on credit losses have the stock trading lower, but when we take a step back we have to note that RY produced a lower impaired PCL than the group average both this quarter and historically. Also, RY was more conservative with performing provisions than any peer this quarter. We have not materially changed our forward PCL assumptions,” said Mr. Holden.
* Scotia Capital’s Mike Rizvanovic to $186 from $188 with a “sector outperform” rating.
“While we expected RY’s share price to underperform on a headline EPS miss, we believe the market’s reaction was overdone, and perhaps more reflective of lofty expectations,” he said. “Among the many moving parts, the market appeared to be largely fixated on the credit miss and the more cautious forward guidance on PCLs, despite the impaired loan PCL ratio falling sequentially and actually coming in comfortably below expectations. We expect credit losses to remain very manageable for RY in the coming quarters, as well as for the peer group more broadly, and we are not of the view that RY will underperform peers on PCLs in a stressed macroeconomic environment. We still like the bank’s positioning across its business lines in the domestic market, its proven resilience over the longer-term, and we still see solid upside underpinned by HSBC Canada synergies.”
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While he thought Canadian Imperial Bank of Commerce (CM-T) had a “good” quarter, Mr. Dechaine thinks it is “time to take a pause” from an investing perspective, downgraded its shares to “sector perform” from “outperform” previously.
“We are increasing our estimates to reflect stronger NII [net interest income] growth, primarily in the Canadian P&C segment,“ he explained. ”Our target goes to $98 from $95, derived via an 11.5 times P/E (unchanged) multiple on 2026. We could, theoretically, increase our target multiple to reflect CM’s strong record of financial performance (which provides relatively greater confidence in our forecasts). However, we are increasingly wary of the domestic credit and growth outlooks, which has relatively greater implications for CM given its business mix.”
CIBC shares closed down 0.3 per cent on Thursday despite reporting “impressive” Canadian bank results, according to Mr. Dechaine, with 12-per-cent PTPP growth (vs. approximately 4 per cent on average from its peers), reflecting 9-per-cent revenue growth and 3-per-cent operating leverage.
He also pointed to “another quarter of below guidance loan losses.”
“We view CM’s Q2/25 credit performance as good, with flat GILs and an impaired PCL ratio of 33 bps below mid-30s guidance for the second quarter in a row,“ he said. ”Although the 10 bps performing PCL ratio was below peers this quarter, we note that CM provisioned at a higher rate than peers during Q1/25 (i.e., 9 bps vs. 5 bps average), rendering any Q2/25-specific comparison too simplistic. The bank reiterated its mid-30s impaired PCL guidance for the year, also indicating that the loss rate could tick up during Q3/25. Management would not provide any ‘peak PCL’ timing estimates. In our view, we believe current (higher) impaired PCL ratios will persist into 2026, which is what we have reflected in our forecasts."
His new target of $98 exceeds the average on the Street of $94.89.
Other analysts making target revisions include:
* TD Cowen’s Mario Mendonca to $102 from $99 with a “buy” rating.
“We view the quarter favourably in several respects: a) solid PTPP despite elevated spending, particularly in the U.S.; b) good NII and NIM performance; c) good growth in market-sensitive, higher ROE business; and d) solid credit metrics. In our view, results support a higher relative P/E. CIBC repurchased 6.0mm shares in Q2/25 and stated its intention to complete the NCIB,” said Mr. Mendonca.
* RBC’s Darko Mihelic to $116 from $108 with an “outperform” rating.
“CM’s results were stronger than we expected across the segments with solid PPPT growth bolstered by capital markets. CM’s performing PCL build in Q2/25 might seem ‘light’ relative to the group, but its performing ACL ratio remains above pre-pandemic levels and GIL formations decreased meaningfully for the first time in a year. We see PPPT growth slowing in 2026 (we assume capital markets growth to be slower) but lower PCLs create above average EPS growth,” he said.
* Desjardins Securities’ Doug Young to $100 from $96 with a “buy” rating.
“Cash EPS and adjusted pre-tax, pre-provision (PTPP) earnings were above our expectations and consensus, and it was a relatively clean quarter all things considered—exactly what we want to see,” he said. “The messaging around NIMs, expenses, credit and buybacks was encouraging. We adjusted our estimates, increased our target to C$100 (from C$96) and maintained our Buy rating.”
* Scotia’s Mike Rizvanovic to $101 from $98 with a “sector outperform” rating.
“We were surprised by the market’s muted reaction to CM’s results this quarter, which we believe were positive overall and stronger than what we saw relative to most of the bank’s peers,“ said Mr. Rizvanovic. “We also found the forward guidance constructive on key metrics such as the bank’s margin trajectory and its PCL ratio, which was a group-low among the large banks in Q2, prompting us to modestly increase our EPS expectations through F2026. We expect the bank to continue to successfully execute in the coming quarters, supported by a discounted relative P/E multiple that we don’t believe reflects its strong run of solid, consistent results, that now spans almost 2 years.”
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In a client note titled Even in the penalty box we see value here, RBC Dominion Securities analyst Darko Mihelic predicted short-term volatility in shares of EQB Inc. (EQB-T) until it can “definitively say they have reached peak PCLs and guide to lower PCLs thereafter.”
The Toronto-based bank dropped 7.4 per cent on Thursday after it reported adjusted earnings per share for its second quarter of $2.31, falling below both Mr. Mihelic’s forecast of $2.37 and the consensus expectation of $2.55. That miss was primarily due to higher-than-anticipated impaired provisions for credit losses (PCLs) of $24.5-million (versus the analyst’s estimate of $12.4-million.
“We are concerned that credit issues may persist at the bank. Previous credit issues for the bank were centered on the equipment financing portfolio, but we believe credit issues may be becoming more systemic,” said Mr. Mihelic. “Total PCLs were $30.2 million, up 62 per cent quarter-over-quarter on a reported basis, above our forecast of $15.7-million mainly due to higher than expected impaired PCLs. The quarter-over-quarter increase in impaired PCLs was primarily driven by the commercial (excluding equipment financing) and personal (excluding consumer lending) portfolios. Impaired PCLs in equipment financing were down sequentially but we believe there is still risk of weaker credit performance given tariff uncertainty and its remaining exposure to the Pride Group.
“EQB previously adjusted PCLs to exclude provisions related to the Pride Group; no adjustments were made in Q2/25 and we do not include these adjustments in prior figures in this section of the note for better comparability.”
To reflect higher impaired PCLs as well as lower loan growth for the remainder of the year, which he said is similar to the large Canadian banks in our coverage), Mr. Mihelic reduced his 2025 and 2026 EPS estimates to $10.56 and $11.80, respectively, from $10.70 and $12.11. He also introduced a 2027 projection of $13.69.
With those changes, his target for EQB shares slid to $124 from $147. The average is $118.70.
“[We] maintain our Outperform rating acknowledging that shorter term we expect the stock to be volatile and in the penalty box until credit quality stabilizes,” said Mr. Mihelic.
“We still like the long term growth story.”
Elsewhere, Desjardins Securities’ Doug Young cut his target to $110 from $120, keeping a “buy” rating.
“There were a number of items that leaned against EQB this quarter (higher PCLs, higher expenses and lower NIR), which provides management with some confidence that results should improve in 2H FY25,” said Mr. Young. “But patience is required.”
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While its first-quarter fiscal 2026 results largely fell in line with the Street’s expectations, Stifel analyst Martin Landry raised his recommendation for BRP Inc. (DOO-T) to “buy” from “hold” previously, citing “an improved outlook.”
Shares of the Valcourt, Que.-based recreational vehicle manufacturer soared 12.7 per cent following the premarket release of its quarterly report, which included a revised full-year financial outlook that hints at a return to growth in the near future but points to a $60-million to $70-million hit to the company this year as measured by cost of goods sold due to tariffs, up from a previous $40-million estimate. It also announced decades-long leader José Boisjoli plans to retire by the end of January.
“BRP reported depressed Q1FY26 results with sales down 8 per cent year-over-year, the seventh consecutive quarter of declining sales,“ he said. ”However, this trend could end next quarter as the outlook is improving and Q2FY26 sales could increase year-over-year. Admittedly, this change in outlook arrives earlier than expected but is the catalyst that we have been waiting for to turn more positive. Our forecasts now call for revenues to increase year-over-year in each of the next three quarters and for EBITDA margins and EPS to increase in H2/FY26. BRP is expected to return to a growth mode, despite the industry still being depressed as the company has mostly completed its inventory depletion and will lap easier comparable periods. The risk of tariffs being a structural issue for BRP has also abated significantly. In addition, valuation is compelling at 6x forward EBITDA, a discount of 35 per cent to Polaris forward consensus (PII, $39.89, NC). Hence, we are upgrading our rating.”
Mr. Landry said the change of his stance on BRP is ”not predicated on demand improving yet" while emphasizing the company’s inventory depletion is “near completion.
“Our current scenario is for the North American industry demand to continue to decline low-to-mid single digits for the remainder of the year,” he said. “This is also a scenario entertained by the management team. The improved outlook rather comes from healthier inventory levels at dealership for BRP, which indicated that the inventory depletion process started 18 months ago is almost complete. The company will be comping easier periods (2HFY25) of significant inventory depletion, which should bring back earnings growth. Hence, we believe the expected change in outlook is less risky given it is not dependent on a recovery in demand.
“BRP’s network inventory declined 21 per cent year-over-year exiting Q1FY26, with double-digit reductions across all product categories. The company expects to complete its inventory depletion for Year-Round products by the end of Q2FY26, while inventory for Seasonal products is projected to be reduced by 20 per cent by year-end. This progress should position BRP well to better align wholesale shipments with retail demand through H2FY26. Additionally, only 70 per cent of BRP dealers’ lines of credit are currently utilized, which could serve as a potential tailwind when the demand environment begins to recover.”
With its guidance suggesting a return to revenue growth in the current quarter, which would end seven consecutive declines, Mr. Landry believing earnings growth could appear by the second half of the year, leading him to raise his full-year earnings per share projection by 11 per cent to $3.70 from $3.33.
“A better alignment between wholesale and retail demand, combined with the launch of new products in August, positions BRP to benefit from revenue growth and a more favorable product mix in H2FY26,” he said. “The company expects this setup to drive double-digit revenue growth in H2FY26 and significant year-over-year improvements in both EBITDA and EPS, even in the context of a declining industry at retail. While Q3FY26 is expected to show some margin improvement, the more substantial gains are anticipated in Q4FY26, supported by at least a 5-per-cent.
Also increasing his fiscal 2027 EPS estimate by 3 per cent (to $5.65 from $5.50), which would represent a 53-per-cent year-over-year increase, he hiked his target for BRP shares by $19 to $68. The average on the Street is $62.47.
“We are raising our valuation multiples to reflect increased visibility on earnings growth and increased conviction that earnings have bottomed,” he concluded.
Elsewhere, two other analysts upgraded BRP:
* Touting its “impressive execution in a tough environment,” Desjardins Securities analyst Benoit Poirier moved its shares to a “buy” recommenation from “hold” with a $78 target, rising from $77.
“Overall, we were impressed with management’s execution in 1Q (inventory network down 21 per cent year-over-year, flat retail performance in 1Q, solid FCF generation, lower-than-expected impact from tariffs) and encouraged by comments for 2Q and 2H FY26 (end of inventory rightsizing with double-digit top-line growth expected in 2H, driven by new products),” he said. “With strong FCF generation, an attractive valuation and increased confidence that the worst is over, we are upgrading DOO to Buy (from Hold).”
* “As inventory headwinds ease, providing a path to revenue growth/margin expansion,” TD Cowen’s Brian Morrison moved the manufacturer to “buy” from “hold” with a $70 target, up from $65.
“With visibility to the inventory channel normalizing, we anticipate key headwinds of promotional activity/mix to ease, leading to a Q4/F26 earnings inflection,” he said. “We may be early, as we maintain improving consumer retail demand/lower rates are key catalysts to drive meaningful share-price appreciation that may not take hold until C2026. With earnings power well above current levels, and visibility to trough earnings, we no longer believe a trough valuation multiple is warranted.”
Others making target adjustments include:
* RBC’s Sabahat Khan to $68 from $69 with an “outperform” rating.
“BRP reported good Q1 results, with the company one step closer to right- sizing dealer inventory levels (expected to be complete by Q2). Looking ahead, while industry demand remains soft (N.A. retail powersports sales -5-per-cent year-over-year ex. Snow), we expect BRP to generate sales growth and EBITDA margin expansion in H2 (and beyond) as the company’s wholesale volumes more closely match retail demand going forward,” said Mr. Khan.
* National Bank’s Cameron Doerksen to $66 from $61 with a “sector perform” rating.
“With its dealer network inventory reduction to be largely complete by the end of Q2 and an expected strong lineup of new product introductions set to boost wholesale later in F2026, we are likely at the trough for BRP from an earnings perspective,” said Mr. Doerksen. “However, there remains significant uncertainty around how consumer demand will ultimately recover and the tariff situation, while manageable for now for BRP, remains a risk. As such, although we see limited downside for the stock from current levels, we remain on the sidelines for now as we await more tangible signs that retail demand has bottomed.”
* CIBC’s Mark Petrie to $66 from $64 with a “neutral” rating.
“BRP remains hurt by excess industry inventory and cautious consumer demand that skews away from its strengths. Management is bullish on upcoming product innovation driving growth higher than the industry, and its track record supports this. However, we ultimately see a broader demand recovery as the key to more normalized margins and a healthier valuation, and believe this will take time,” said Mr. Petrie.
* Scotia’s Jonathan Goldman to $67 from $66 with a “sector perform” rating.
“With signs that earnings are stabilizing, the debate now shifts to the pace and slope of the recovery,” he said. “We expect the key debate on DOO shares over the next six to nine months to center on management’s comments about DD% [double-digit] top-line growth in the 2H. Year-to-date trends, including powersports industry retail down 5 per cent ex Snow and wholesale volumes below retail, combined with challenging macro (tepid consumer, still intense competitive environment), suggest a more conservative approach. But, management believes new product launches and lapping inventory right-sizing last year (network inventory reduction expected to be complete by 2Q) should support $300 million to $400 million of volume growth in 4Q (up 7.5 per cent to 10 per cent year-over-year), assuming no change in the current retail environment. We’re not ready to fully underwrite that scenario just yet, which we reflect in a lowered valuation multiple.”
* Citi’s James Hardiman to $60 from $49 with a “neutral” rating.
“Shares of DOO were up 13 per cent on Thursday (vs. up 40 basis points for S&P), in that despite incremental tariffs, macro uncertainty and near-term headwinds from reduced shipments and heightened promotions from competitors on non-current units, DOO has done a commendable job in its inventory management, which should put the company in a position of relative strength in 2H. As such we are raising our estimates and price target,” he said.
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In other analyst actions:
* In a report titled Can you take me higher?, Stifel’s Cole McGill initiated coverage of Atex Resources Inc. (ATX-X) with a “buy” rating and $3.50 target. The average is $3.10.
“Just as Creed’s platinum-certified ‘Higher’ drove a rediscovery in 2024, so did ATEX’s discovery of the higher grade, higher elevation B2B Zone,” he said. “Already sporting a 22Blbs CuEq resource at Valeriano, we think the B2B Zone (ATXD23A cut 1,220m @ 0.91-per-cent CuEq, would rank third best hole at $2.6B NGEX’s Lunahuasi to date) drives mispriced value. With PCD’s becoming lower grade and deeper, driving consolidation, our investment thesis on ATX is underpinned by i) an efficient (read: highly competitive) discovery rate leading to resource growth momentum, and ii) mispriced development optionality. We think Valeriano’s porphyry root provides district scale critical mass, while the emerging B2B Zone provides a starter operation that increases tension for the asset. Paired with a drill bit that is currently approximately 3.5 times more efficient that porphyry competitors, we see a combination of value and momentum for ATX shares, currently trading at 0.42 times P/NAV.”
* Separately, Mr. McGill initiated coverage of Firefly Metals Ltd. (FFM-T) with a “buy” rating and $1.60 target. The average is $3.10.
“FireFly’s main asset is the 100-per-cent-owned Green Bay Cu-Au project in Newfoundland, home of the Ming mine, which suspended operations in early 2023,” he said. “Since acquiring the asset, FireFly has been aggressively drilling Ming and consolidating land and infrastructure around the project, setting the stage for an upsized and re-envisioned Ming that can properly and efficiently exploit the expanded (and still open) orebody. With a significant infrastructure head-start, potential for accelerated permitting and expanded regional land package dotted with past-producing (Au+) mines, we see a dual track de-risking/drilling investment opportunity. Driven by a high horsepower management team with proven experience in resource growth and project development from early exploration to production, we see a value creation story in its early innings.”
* Mr. McGill also gave Meridian Mining UK Societas (MNO-T) a “buy” rating and $2 target. The average is $2.20.
“We see outsized asymmetry in Meridian, trading at 0.20 times spot P/NAV for a low cost, buildable open pit volcanogenic massive sulphide (VMS), even before taking a view on belt scale geology,” he said. “MNO combines what we like best about the development stories: a nimble, low-cost mine build layered with exploration potential in an under explored belt – a potentially company-building combination if history is a guide. We see the company’s flagship gold-weighted Cabaçal deposit providing an initial hub that could serve to connect future spokes across a substantial land package, now being actively targeted by the company for additional exploration. In addition to drilling, we see a catalyst-rich near-term that could see the stock’s heavily discounted shares begin to re-rate; with ample room to the upside given our current valuation estimate of just 0.20 times on a spot P/NAV.”
* KBW’s Tim Switzer cut his Versabank (VBNK-T) target by $1 to $21, below the $22.17 average, with an “outperform” rating.