Inside the Market’s roundup of some of today’s key analyst actions
Heading into first-quarter earnings season for Canada’s real estate sector, National Bank Financial analysts Matt Kornack and Giuliano Thornhill think “we still have a ways to go before REITs broadly have a cost of capital that justifies growing portfolios, reversing a shrinking relative market cap (vs. the broader TSX), which has reduced the relevance of this subsector from a trading/liquidity perspective.”
In a client report released before the bell, they argue an M&A theme is “playing out” across the sector, which they think is “aiding trading but also raising the spectre of index irrelevance absent growth elsewhere.”
“We ended 2025 and started 2026 with a positive outlook on the prospect for REIT performance with Minto’s privatization providing some immediate gratification,” the analyst said. “Things turned for the worse with the U.S./Israel conflict in Iran as the associated spike in inflation expectations (and rates) took some wind out of the sails of a nascent recovery. That said, we have a bit of a spring back in our step with the announced FCR transaction coinciding with interest rate relief and a pause in hostilities. If the last 20 years have taught us anything, expect the unexpected, but for now the setup for the sector looks to be on better footing.”
The analysts see investors liking “what is working,” but warn “they are cognizant of relative valuations and recent M&A has shifted return profiles.” Overall, Mr. Kornack and Mr. Thornhill think aggregate valuations continue to “look reasonable but somewhat compressed vs. historical levels given elevated bond yields plus M&A-driven price performance.”
“On returns, Storage and U.S. housing names are material outliers (up 28 per cent),” they added. “Here we see disconnected valuations vs. recent trades and FFO growth prospects but a lack of liquidity/ depth of the offering. For the large caps, both Seniors and Industrial are expected to deliver approximately 18-per-cent returns. Seniors are supported by positive fundamental tailwinds despite elevated valuations, while Industrial investors are attracted to cheaper multiples versus global peers, along with emerging signs of inflection in market rents and occupancy. Canadian apartments (up 14 per cent) are aided by relatively attractive valuations with an expected inflection now in sight while Retail (up 11 per cent) has moved down the pecking order, mostly on the back of a pretty significant unit price performance on the back of the FCR deal (PMZ / REI, which lack a controlling shareholder are favoured at up 17 per cent). We still think a high-quality portfolio with a mix of exposure can provide the best total return (25-per-cent total return for our top-sector picks vs. 16-per-cent overall).
“We tend to use the spread between implied cap rates vs. underlying financing costs (10-year CMHC rates for apartments and BBB bond yields for other commercial asset types) as a proxy for relative pricing. On average, this spread today is 180 bps, which is below the pre-pandemic and post-financial crisis average (285 bps) as well as the 2018-2019 period average (217 bps).”
The analysts raised their target prices for equities in their coverage universe by an average of 2 per cent while holding their net asset value projections “stable.” They cited an increase in underlying 10-year government bond yield combined with widening corporate spreads.
For their “focus ideas” across the sector, their changes are:
Self Storage
StorageVault Canada (SVI-T, “outperform”) with a $6.25 target (unchanged). The average target on the Street is $5.81, according to LSEG data.
Analysts: “SVI put up solid Q4 results, with outperformance driven by better-than-expected operating margins. A nascent recovery in Canada’s housing transaction market and weaker prior-year comps are supporting organic performance, while short lease durations make self storage quicker to inflect as fundamentals improve. The sector also benefits from a diverse mix of a-cyclical and counter-cyclical demand, and SVI stands out for its scale, geographic breadth, and attractive valuation relative to recent private-market storage transactions in a highly fragmented industry.”
Industrial
Granite REIT (GRT.UN-T, “outperform”) to $110 from $102.50. Average: $98.20.
Analysts: “Granite delivered results above already high expectations, with occupancy and leasing reflecting the strength of both the portfolio and management team in driving retention and positive leasing spreads, which we expect to continue into H1/26. The U.S. setup remains constructive (improving incrementally with strong demand for larger boxes from the likes of Amazon, etc.) while the REIT’s GTA exposure has provided some rent steps with Europe seeing CPI-related bumps with more material upside in time. Meanwhile, the balance sheet remains best-in-class providing flexibility to acquire in new core markets where valuation gaps have come in relative to the REIT’s existing exposure. A low capex profile and significant earnings growth mean the REIT is in an enviable position vis-à-vis the broader TSX offering with regard to cash flow retention.”
Multi-Family
Boardwalk REIT (BEI.UN-T, “outperform” to $80 from $81. Average: $79.48.
Analysts: “BEI tops our total return for apartments, although the gap to KMP and CAR is fairly negligible - all three offer different geographic, valuation and growth attributes but generally offer solid risk/reward profiles with an improved outlook now on the horizon. That said, BEI’s better-than-expected results to date, largely on cost management, continue to support the story even as the operating backdrop has become more mixed - we are incrementally hopeful on the AB/SK markets given an improved commodity price tone. Leasing trends softened through the winter and 2026 growth is expected to be more muted, but the REIT’s Edmonton-heavy and more affordable offering, together with strong allowable rent increases in its defensive QC market, should continue to support relative outperformance. Valuation remains attractive on a cap rate basis given outsized NOI growth relative to unit price performance, which has also improved leverage metrics.”
GO Residential REIT (GO.U-T, “outperform”) with a target of US$13.50 (unchanged). Average: $13.50.
Analysts: “GO has risen to the top of our pecking order for U.S. names but even our broader coverage - unfortunately through share price underperfomance. That said, we think this is somewhat overblown in light of solid fundamentals in the NYC apartment market and a discounted valuation. As we have noted before, leverage is high, so this name has the potential to provide upside torque but with some asymmetric downside risk.”
Healthcare
Sienna Senior Living Inc. (SIA-T, “outperform”) to $27.50 from $24.50. Average: $25.50.
Analysts: “We maintain a positive view across seniors housing, but have shifted our preferred name to SIA from EXE following another quarter of strong performance. Our research indicates LTC will increasingly be viewed as essential infrastructure within the healthcare system, given its direct role in enabling discharge of high acuity patients. This dynamic tends to be most severe in dense urban markets, particularly the GTA, where SIA has meaningful exposure. As a result, we see continued cap rate compression for LTC assets, supported by both policy and system-level demand. This trend is already being reflected in relative performance, with SIA outperforming CSH over the past six months, during which EXE volumes outperformed related to this capacity issue.”
Diversified
H&R REIT (HR.UN-T, “outperform”) with a target of $12 (unchanged). Average: $12.17.
Analysts: “After a strong Q4 and progress on streamlining the portfolio, we expect a pickup in transaction activity in 2026 and medium-term upside from the progress. We see a sizable return to a still discounted target price and think the name trades at a discount to intrinsic value and the potential exists for a positive outcome (recent externalization of property management at the Lantower platform provides more optionality for that segment). Roll-up strategies require patience, so we will continue to monitor progress and the implications for NAV and prospects for potential upside / downside.
Retail
RioCan REIT (REI.UN-T, “outperform”) to $24 from $22.75. Average: $21.58.
Analysts: “RioCan has been putting up some of the strongest rent growth in our retail coverage universe and seems poised to see continued success in its core retail segment. On the latter, it identified a 25-30-per-cent MTM opportunity in the portfolio today, albeit with a longer weighted average lease term structurally impeding it from accessing this in the near term but nonetheless, providing a long-term trajectory for above-inflationary growth. We remain constructive on the name as it has made real progress on mitigating risks around its HBC exposure, a relatively attractive valuation and leverage improvements through residential sales (condo and apartments). With HBC risk becoming less of an overhang and 2026 expected to be a cleaner year, the story is increasingly centered on embedded growth in the core retail portfolio. After the FCR takeout, we have adjusted our cap rate lower and increased our target premium to reflect that REI is now the sole diversified retail offering without a controlling shareholder.”
Office
Dream Office REIT (D.UN-T, “sector perform”) to $19 from $19.50. Average: $19.76.
Analysts: “Office names have given back a lot of the unit price appreciation from last year’s return-to-office optimism, but the industry’s normalization process is not done. We’re slightly positive on occupancy as it slowly stabilizes with strong absorption but expect it to come at the cost of higher TIs and leasing costs. Dream looks relatively well positioned to where the demand has returned with Toronto seeing the most incremental absorption. While Q1 occupancy will step back on a U.S. tenant departure, H2/26 should benefit from Toronto leasing with longer fixturing periods. The sale of U.S. assets at depressed pricing weighed on the 2026 outlook, but 2027/28 could see stronger growth if targets are met.”
In a separate report, Mr. Kornack argues public markets are “losing a best-in-class pure play” with the sale of First Capital REIT (FCR-UN-T) to Choice Properties REIT (CHP-UN-T) and KingSett Capital, a private real estate firm, for $5.2-billion.
“Are we surprised that FCR is being taken out, the answer here is clearly no - although we have been subject to three years of on and off again speculation with different horses in the proverbial race,” he said. “While we are sad to lose a large, liquid well capitalized pure-play urban grocery-anchored portfolio - the silver lining is that over half of it will remain in public shareholders’ hands through CHP’s $5-billion purchase.
“We do think this transaction should serve as a bit of a wakeup call to public investors in real estate. Private capital (and a public company thinking about generational wealth) are attributing more value to these entities justifying a valuation re-set. Otherwise we stand to lose more high-quality entities that are prohibitively costly, given scarcity and capital constraints, to build in today’s environment.”
In response to the deal, which was announced on Thursday, the analyst moved his rating for Toronto-based First Capital, which possesses a real estate portfolio largely made up of open-air shopping centres in major cities, to “sector perform” from “outperform” and increased his target to $24.40 from $23.50 to reflect the deal. The average target on the Street is $23.47.
“The disclosed IFRS cap rate and premium would imply a sub-5.5-per-cent transaction cap rate,” he said. “On our numbers, it’s more like 5.6 per cent, although we would attribute this to an allocation difference for unproductive or development assets combined with NOI normalization on a higher occupancy assumption. CHP likely paid a lower cap rate for its portion of the portfolio given its composition.”
Mr. Thornhill raised his Choice Properties REIT (CHP-UN-T) to $16.50 from $16 with a “sector perform” rating. The average is $16.78.
“We lowered our 2027 FFO estimate by 5 per cent while increasing our NAV/u to $15.90 to reflect the quality of the assets,” he explained. “While dilutive near term, the overall organic growth rate and risk profile are enhanced. Pro forma leverage increases, but is expected to trend back to 7.5 times from EBITDA growth over time. We expect the key debate going forward to revolve around the assumed multiple for CHP in response to this long-term strategic deal. Inclusive of FCR’s assets, the total portfolio organic growth should step higher, and now not only driven by its industrial exposure. It also diversifies the tenant base away from Loblaw, and provides greater exposure to Toronto (54 per cent of acquisition GLA), such as Liberty Village assets and the Christie Cookie development site, among others.
“Another REIT gone, this time in retail. The transaction represents the third recent instance of private capital stepping into the picture after GIC and CLV Group agreed to acquire IIP.un early last year, and Crestpoint and the Minto Group took MI.UN private at the beginning of this year. This announcement continues to narrow the public/private valuation gap as private institutional investors enter the space despite macro volatility. It should be supportive for sector valuations.”
With BRP Inc. (DOO-T) shares down 27 per cent from the day prior to April 14 update on U.S. Section 232 tariffs on steel and aluminum, RBC Dominion Securities analyst Sabahat Khan now sees the risk/reward proposition as “attractive at current levels.”
On Tuesday, the Valcourt, Que.-based manufacturer suspended its financial forecast for the coming fiscal year, warning it faces an estimated hit worth several hundred million dollars from new changes the United States has made to its tariff policy.
“The amendment results in a 25-per-cent tariff on the total value of snowmobiles and the majority of ORV models imported into the U.S. (vs. prior 50 per cent tariff imposed only on cost of the applicable metal content),” Mr. Khan explained. “BRP estimates the potential incremental tariff cost from this amendment to be more than $500-million for the remainder of F27 prior to any mitigation measures, which is in addition to the $90-million of previously expected tariff costs for F27 (i.e., more than $650-million of annualized tariffs vs. prior F27 Adj. EBITDA guidance range of $1.175-1.275-billion).
“Setting aside the surprise factor of the announcement, the magnitude and immediate impact of the tariffs has led to generally cautious feedback from investors (i.e., hesitancy to step into the name at the moment). Investors are likely to wait at least until Polaris reports Q1/26 results (May 28 BMO) to get more colour/feedback. Notably, PII has outlined that the updated 232 tariffs are not expected to have a material impact on ’26 guidance, and we will be looking to better understand any potential mitigation strategies given the company’s sizable U.S. footprint.”
While acknowledging further tariff-related headwinds may emerge, Mr. Khan thinks the initial share price reaction to the news on April 15 sets the downside floor for BRP shares at the $70 range.
“On the policy front, there are likely to be other industrial firms that are caught up in the amended 232 tariffs, many of which are likely reaching out to policymakers in Washington with the hopes of some adjustments to the Apr. 6 announcement,” he added.
“Beyond this, the next possible off-ramp is the USMCA negotiation process that begins in July. In the meantime, we believe BRP is likely to draw down dealer inventory and/or re-direct its ORV and Snowmobile shipments to other regions to the extent possible. If these tariffs are in place through late-summer/beyond, we believe BRP could then contemplate more material measures.”
After making “modest” revisions to his fiscal 2027 and 2028 estimates to reflect “some initial impact of slower shipments,” Mr. Khan reduced his target for BRP shares to $107 from $124, keeping an “outperform” rating. The average target is $102.99.
“While uncertainty over the ultimate duration/ magnitude of tariffs remains, we believe the majority of the downside risks are priced in at the current share price, with upside potential stemming from positive amendments to the updated 232 tariffs,” he concluded.
Elsewhere, Citi analyst James Hardiman added an “upside 90-day catalyst watch” for BRP, believing “investors will ultimately see the initial estimate is likely a worst-case, with multiple paths to mitigation/elimination going forward.”
He explained: “Just when we thought we had moved past Tariff concerns, BRP shocked the powersports industry by suspending guidance and pointing to a massive $500-million headwind based on the reconfigured Section 232 Tariff policy. We believe that marine, RV, and motorcycle companies are generally safe from the new tariff, with DOO and PII [Polaris Industries Inc.] in focus given their Mexico-heavy import business models. For 2026, we believe that there are differences that dramatically change the exposure, while for 2027 and beyond, the impact is likely to converge somewhat. With this in mind, and following a 25-per-cent sell-off for the week (vs. up 5 per cent for the S&P), we are putting a positive catalyst watch on DOO, believing investors will ultimately see the initial estimate is likely a worst-case, with multiple paths to mitigation/elimination going forward.”
With his 2026 estimates falling “drastically,” Mr. Hardiman moved his target for BRP shares to $102 from $119 with a “buy” rating.
“The biggest question coming out of the back-to-back announcements from PII and DOO was how the respective 232 exposures could be so different for the significant portion of the businesses coming from Mexico,” he said. “We bridge the gap by assuming (1) that PII could see a 10-per-cent 232 tariff (rather than DOO’s 25 per cent) by sourcing the bulk of its metals from the U.S., (2) that PII’s ‘all-clear’ includes just a half a year of exposure given an April start and significant inventory in the channel, (3) PII has some exempt (1000+cc) units, and (4) a meaningful offset from the IEEPA roll-off.
“If our assumptions prove correct, it would logically follow that (1) there is an opportunity for DOO to meaningfully mitigate its 232 exposure into 2027 and beyond, and (2) PII is likely to see material exposure for 2027 if the current tariff sticks. Longer term, we think the new 232 tariff is unlikely to persist, although it may require a broader renegotiation of the USMCA, given the affected companies may not carry the political leverage to affect change in the near term.”
In a client report released before the bell titled Putting our Rally Caps, RBC Dominion Securities analyst Bart Dziarski made a series of target price adjustments to stocks in his Diversified Financials coverage universe.
“Our view for Q1/26 earnings: i) U.S. Alts - we have done a deeper dive into Private Credit and don’t believe it’s a systemic risk with DE impacts of stressing larger retail Private Credit vehicles managed by U.S. Alts being manageable. We have reduced estimates on lower carried interest and FRPR expectations. With the sector recently re-rating despite an almost two-month barrage of negative headlines regarding Private Credit, we believe we are past the bottom and are in the early days of a re-rating to the upside. Tactically, we like BN and TPG into the quarter. ii) P&C insurance - we expect resilient results from the group though we don’t believe Q1/26 results will be enough to change currently subdued investor sentiment on the sector and iii) GSY - we remain cautious and will look for updates regarding remediation of the LendCare portfolio.
“Our top ideas include BN, ARES and BX within U.S. Alts, EFN as our top growth pick and FFH as our top value pick.”
Mr. Dziarski’s target adjustments include:
* Brookfield Corp. (BN-N/BN-T, “outperform”) to US$63 from US$60. The average is US$56.88.
Analyst: “We have taken a deeper look into Private Credit given the recent barrage of headlines and conclude fears are overblown and Private Credit does not represent a systemic risk. We have provided differentiated analysis sensitizing DE impacts of assuming lower returns and lower NAV for Private Credit vehicles for BX, ARES, KKR and APO and in all cases earnings headwinds are manageable in a stressed scenario. We view recent price acceleration as the beginning of a positive re-rating in the sector, supportive of our longer-term constructive view on the sector. We have reduced our estimates primarily reflecting lower realized carried interest expectations and lower FRPR in Private Credit following elevated redemptions in non-traded BDCs. We have reduced price targets by 4 per cent on average though note TPG & BAM price targets were maintained and we increased BN’s price target on a true-up of our model following Just Group acquisition closing. Tactically, we like BN and TPG into the quarter.”
* Fairfax Financial Holdings Ltd. (FFH-T, “outperform”) to US$2,261 from US$2,234. Average: US$2,827.70.
Analyst: “Investor sentiment on P&C stocks remains subdued given elevated competition in commercial and, from a positioning perspective, investor preference for banks. We don’t believe Q1/26 results will mark a turning point to reverse these dynamics. We have made minor modeling adjustments to reflect Q1/26 weather events in Canada (winter ice storms in January and March). We increased our FFH target primarily reflecting the Poseidon transaction (higher realized investment gains partially offset by lost profit from associates).”
* Onex Corp. (ONEX-T, “sector perform”) to $136 from $133. Average: $133.
Analyst: “We rate Onex Sector Perform given limited visibility on upside catalysts in the near term. Onex trades at 32-per-cent discount to NAV and we apply a 25-per-cent discount, reflecting the removal of voting control and ability to elect 60 per cent the board following Gerry Schwartz’s shares sunsetting in May 2026. Overall, we believe our 25-per-cent discount appropriately reflects the company’s investment performance, fundraising challenges and NAV growth outlook.”
In other analyst actions:
* Touting the success of its transition into a pure-play natural gas and power infrastructure company following the South Bow liquids spin-off and seeing it offering an attractive “utility-like risk profile” in a volatile macro environment, Goldman Sachs’ John Mackay upgraded TC Energy Corp. (TRP-N, TRP-T) to “neutral” from “sell” with a US$62 target, jumping from US$53 but remaining below the US$68.48 average.
* Citing valuation concerns, Mr. Mackay initiated coverage of South Bow Corp. (SOBO-N, SOBO-T) with a “sell” rating and US$29 target. The average is US$32.49.
* ATB Cormark’s Chris Murray hiked his Bird Construction Inc. (BDT-T) target to $48, exceeding the $46.71 average, from $38 with an “outperform” rating.
“We recently hosted Management from Bird Construction for a corporate update. Management was increasingly bullish on its project pipeline, which continues to benefit from strong, balanced demand across primary end markets. Despite a slower 2025, Bird sees a path to reaching its 2027 revenue target, implying meaningful growth over the next 18 months, with expanding self-perform capabilities providing a line of sight to its 8.0-per-cent margin target. While construction names have re-rated in H1/26, a strengthening opportunity set and margin outlook keep us positive on BDT,” said Mr. Murray.
* In response to an updated feasibility study (FS) for the company’s flagship 99.5-per-cent-owned Nussir copper project in Norway, ATB Cormark’s Stefan Iannou increased his Blue Moon Metals Inc. (MOON-X) target to $13.50 from $10 with a “speculative buy” rating. The average is $13.17.
* Ahead of the release of its first-quarter results on April 27, TD Cowen’s John Shao raised his Celestica Inc. (CLS-N, CLS-T) target to US$350 from US$330 with a “hold” rating. The average is US$385.40.
“We see a low performance shortfall risk and expect the typical ‘beat and raise’ pattern to continue. The stock’s recent rally nonetheless sets the bar higher and prices in perfect execution. Following improved visibility into 2027, we are adjusting our estimates and increasing CCS growth rates to 44 per cent year-over-year,” he said.
* ATB Cormark’s Zach Matheson became the first analyst to initiate coverage of K2 Gold Corp. (KTO-X), giving it a “speculative buy” rating and $2.25 target.
“Following nearly five years of dedicated permitting initiatives, K2 Gold has reached a strategic turning point in the company’s history, with a recently cashed-up balance sheet now primed for an aggressive exploration campaign at its Mojave Project in California,” he said. “Backed by one of the industry’s leading resource development groups, the Discovery Group, K2 is set to continue doing what it knows, exploration and resource discovery. We believe Mojave offers a clear path to significant discovery and the capability for K2 Gold to once again deliver industry-leading drill results to the market.”