Inside the Market’s roundup of some of today’s key analyst actions
BofA Securities has reinstated coverage of Hydro One Ltd. (H-T) with an “underperform” rating and price objective of C$44.
BofA analysts led by Ross Fowler said Hydro One is well-run, with “high visible” earnings per share and rate base growth. But they see few near-term catalysts and note that other higher-growth utilities trade at lower multiples.
“We think Hydro One is well-run with among the strongest earnings and rate base growth visibility in our sector. However, its current valuation premium on 2026 EPS is 47% higher than the next-highest premium in our coverage. Catalysts for multiple expansion from here are further-dated than our twelve-month price objective, leading to unfavorable risk/reward skew,” the BofA analysts said.
BofA thinks investors will need to be patient if they want to see significant share price growth.
“H owes much of its strong valuation to the prior Joint Rate Application (JRAP) proceeding with the Ontario Energy Board (OEB) which leads to predictability of rate base and revenue growth through 2027. The next JRAP could validate the long-term growth thesis in Ontario, with C$ billions of potential transmission capex emerging into the 2030s. The JRAP filing is a meaningful catalyst that could enhance H’s relative premium, however it will not be filed until 2026 or decided until 2027, and carries inherent risks,” BofA said in a note to clients.
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Saputo Inc. (SAP-T) is well-positioned to see EBITDA growth accelerate in the coming year, but trade uncertainties will likely remain an overhang on the stock, said Desjardins Securities analyst Chris Li in reviewing the company’s fiscal third quarter 2025 results.
He lowered his target multiple to 8.1x from 9.1x for fiscal year 2027 EBITDA to reflect persistent market challenges and near-term uncertainties around tariffs and trade wars. His price target was cut to C$31 from C$34, although that would still represent a 33 per cent total return over 12 months.
He maintained a “buy” rating, concluding that “risk-reward is favourable but patience is required.”
He said Saputo’s third quarter results showed continuing strength in Canada and operational improvements in the U.S., but this was partly offset by pressures in Argentina and slower-than-expected recovery in Europe due to challenging market conditions, resulting in an impairment charge.
“SAP remains a ‘show me’ story but we are still constructive on the earnings set-up for FY26. Assuming market conditions stabilize later this year, we expect continuing network optimization benefits and easier milk-cheese spread comps to drive an acceleration in EBITDA growth to 13% in FY26 from 4% in FY25,” Mr. Li said in a note to clients. “While we believe SAP’s depressed valuation largely reflects uncertainties around tariffs/trade wars and dairy price volatility, we expect the stock to be range bound until there is better visibility.”
Elsewhere, CIBC also cut its price target on Saputo, moving to C$29 from C$32.
The average analyst price target is C$30.94, according to LSEG data.
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Canopy Growth Corp. (WEED-T) showed continuing operating improvements in its fiscal third quarter results but the company’s rush to raise equity dims the outlook for investors, said Canaccord Genuity analyst Matt Bottomley.
He cut his target price to C$1.5 from C$2.5 and reiterated a “sell” recommendation.
Canopy reported revenues of C$74.8-million in the quarter, up 18.7 per cent from the previous quarter and ahead of consensus estimates at C$69.1-million. Canadian adult-use sales sequentially increased about 15 per cent to C$21.2-million, with the company pointing to new product innovations and bulk cannabis sales as the main growth drivers.
Gross margin came in at 32 per cent, down modestly from the previous quarter’s 35 per cent. Adjusted EBITDA loss improved to C$3.5 million from a loss of C$5.5 million, although this was worse than consensus estimates.
Canopy ended the quarter with C$185.5 million of cash on hand, but that came at the cost of issuing a lot of equity.
“Canopy now has a gross debt balance of C$441.6M. Equity issuances to fund cash burn remain an elevated risk, in our view. Even though the company has made progress on a year-over-year basis to decrease corporate expenses and its overall cash burn, we note that the company has still printed ~C$140M of free cash flow burn YTD. As a result, the company has raised ~>$300M in equity this fiscal period with its share count up >30% in FQ3 alone. We believe this will continue to be required for at least the near/medium term, which will likely continue to weigh on the company’s equity valuation,” Mr. Bottomley said in a note to clients.
He noted that Canopy currently trades at an enterprise value of 2.6 times its calendar year 2024 revenues, well above its peers at 1.2 times.
Elsewhere, ATB Capital Markets lowered its price target to C$3.20 from C$4 and reiterated an “underperform” rating, noting that substantial deleveraging will be necessary to reach positive cash flows.
The average analyst price target is C$4.83.
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CIBC analyst Todd Coupland upgraded Verticalscope Holdings Inc (FORA-T) to an “outperformer” rating, expecting a number of positive developments in 2025.
“Our upgrade is based on accelerating Q1/25 web traffic trends of +5% (vs. +3% in Q4) that support our organic 2025E forecast,” he told clients. “We believe further upside could come from FORA’s planned resumption of selective tuck-in M&A this year. Additionally, we expect VerticalScope shares to benefit from its peer Reddit’s Q4 earnings release scheduled for February 12 after market close. The next catalyst for VerticalScope is its Q4 results on or around March 15.”
Mr. Coupland raised his target price to C$17 from C$10.
The average price target is C$14.69.
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Canaccord Genuity analyst Luke Hannan raised his price target on Canadian Tire Corp. Ltd. (CTC-A-T) to C$160 from C$157 as he looked ahead to the retailer’s fourth quarter results this Thursday. While he is maintaining a “hold” rating, he notes that the company will have the benefit of easier year-over-year comparisons and some tailwinds from improving consumer sentiment.
“During Q3/24, Canadian Tire faced a soft consumer spending backdrop that featured broad-based weakness across customer cohorts and a persistent shift towards value-oriented products. That said, there were green shoots of retail improvement including (1) a narrowing gap between the performance of essential and discretionary categories, and (2) a solid back-to-school selling season. Management suggested the latest interest rate cuts could be a potential catalyst to boost consumer sentiment and unlock discretionary spending,” Mr. Hannan said in a note.
“In our view, early indications imply that could be what’s currently taking place, as the Bank of Canada’s Q4/24 Survey of Consumer Expectations showed (1) improved consumer sentiment due to lower levels of financial stress, (2) more consumers planning to increase spending on higher-ticket durable goods (13.6% in Q4/24 vs 7.6% in Q3/24), and (3) greater credit availability for consumers.
“In our view, Canadian Tire entered the holiday selling season on solid footing as it rightsized its corporate inventory (-9% YoY as of Q3/24), with management expecting dealers to restock in line with POS trends. Moreover, we note the company is also up against a soft comparable period that featured comparable sales declines of ~6-7% across its banners, partially driven by an unseasonably warm winter,” he added.
For 2025, “Canadian Tire will have to contend with tougher gross margin and OPEX comps, a weaker Canadian dollar, a Canadian consumer still grappling with elevated housing costs, and forecasted population declines of 0.2% over the next two years, according to the Government of Canada. That said, we concede that these headwinds have the potential to be offset by improved consumer sentiment and, in turn, healthier discretionary spending.”
The average analyst price target is C$164.36.
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At least two banks raised their price targets on IGM Financial Inc (IGM-T) following the company’s fourth quarter results. BMO raised its target price to C$48 from C$47, while TD Securities raised its target to C$56 from C$51.
TD analyst Graham Ryding commented that the quarterly results were largely in line with expectations, but he saw “some encouraging momentum and fundamentals.” He reiterated a “buy” rating.
“IG Wealth is flowing positively again, demonstrating traction with sales to higher net worth households, and mortgage/insurance sales. While Mackenzie retail flows remain negative, they are making progress with retail wealth partners, and notably won $4 billion of institutional mandates that are expected to fund in Q1/25,” the TD analyst said in a note to clients.
IGM Financial reported adjusted EPS of $1.05, in line with consensus estimates.
The average analyst price target is C$51.83.
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In other analysts actions:
Alimentation Couche-Tard Inc (ATD-T): BMO cuts target price to C$85 from C$87
Autocanada Inc (ACQ-T): CIBC raises target price to C$17 from C$16
Boyd Group Services Inc (BYD-T): CIBC raises target price to C$276 from C$272
Converge Technology Solutions Corp (CTS-T): CIBC raises target price to C$5.5 from C$4; TD Cowen cuts to “sell” from “buy” and raises price target to C$5.50 from C$4.50; Ventum Financial cuts price target to C$5.5 from C$6 and changes rating to “tender” from “buy”
Eldorado Gold Corp (ELD-T): Cormark Securities cuts target price to C$30 from C$33.5
Kraft Heinz (KHC-Q): Mizuho downgrades rating to “neutral” from “outperform” and cuts price target US$31 from US$38
Linamar Corp (LNR-T): CIBC cuts target price to C$82 from C$85
Martinrea International Inc (MRE-T): CIBC cuts target price to C$14 from C$14.75
Quebecor Inc (QBR-B-T): CIBC cuts target price to C$39 from C$40
Trisura Group Ltd (TSU-T): Cormark Securities cuts target price to C$47 from C$54
Vecima Networks Inc (VCM-T): Cormark Securities cuts to “market perform” from “buy” and cuts target price to C$14 from C$23
WSP Global Inc (WSP-T): Scotiabank raises target price to C$281 from C$279
Amazon (AMZN-Q): Raymond James raises target price to US$275 from US$260
Merck & Co Inc (MRK-N): TD Cowen cuts target price to US$100 from US$121 and upgrades rating to “hold” from “buy”
Walmart (WMT-N): JP Morgan raises target price to US$112 from US$97