Inside the Market’s roundup of some of today’s key analyst actions
Following first-quarter earnings season for Canadian pipeline, utility and energy infrastructure companies, National Bank Financial analyst Patrick Kenny continues to see “strengthening” macroeconomic tailwinds, “namely the intensified spotlight on North American energy security/reliability.”
“Over and above heightened WTI price volatility during the U.S./Iran war, the three-month (and counting?) disruption of the Strait of Hormuz is having a structural impact on trade flows and investor sentiment surrounding North America’s role in delivering global energy security and reliability,” he said.
“This comes at a time when domestic support for pipeline egress is picking up steam, bringing 1.0 mmbpd [million barrels per day] of medium-term expansions into focus (ENB up 250 mbpd [thousand barrels per day] MLO2; TMX up 300 mbpd; SOBO up 450 mbpd Prairie Connector), while the longer-term over 1.0 mmbpd West Coast pipeline is to be submitted to the Major Projects Office by July 1, 2026, following the Government of Canada’s recent implementation agreement. On the natural gas front, heightened global security of supply concerns also amplify market demand for Canada’s over 6.0 bcf/d of potential LNG projects off the West Coast.”
Mr. Kenny also emphasized the impact of the surge in power demand related to data centre construction.
“We continue to expect the sanctioning of 1.2 GW of Phase I Alberta data centre capacity (Greenlight, Keephills) over the near term, as well as implementation of the AESO’s Phase 2 large load allocation process (’bring your own generation’) on the back of the Government of Canada and Alberta providing clarity on Alberta’s long-term carbon pricing under TIER, maintaining the Clean Electricity Regulations (CER) in abeyance while the constitutional reference and any appeals proceed (i.e., Alberta gas-fired plants will not be forced to achieve net-zero by 2035),” he said. “More broadly, we continue to observe hyperscalers prioritizing speed-to-power, positioning natural gas and behind-the-fence generation solutions as supporting North America’s ability to compete for global AI-related infrastructure projects.”
In a client report released before the bell, Mr. Kenny adjusted his valuations for companies in his coverage universe to reflect this bullish view, while touting a “Strait up premium for energy security.”
“Even if and when blockages on the Strait of Hormuz are lifted, we believe the global trade diversification train has left the station, with North America’s energy infrastructure companies benefitting from rising international demand for reliable and affordable energy exports, while presenting a generational opportunity for Canada to reach its potential as an energy superpower,” he said. “As such, on the heels of ourAnnual Canadian Energy Infrastructure Conference, we are reducing our equity risk premiums embedded in our cost of equity assumptions by 100 bps on average across our coverage list (i.e., increasing our EV/Free-EBITDA valuation multiples by 1.0 per cent), with our target prices moving up approximately 11 per cent.”
Mr. Kenny continues to see “attractive” entry points for his unchanged top picks for the year ahead, which are:
* AltaGas Ltd. (ALA-T, “outperform”) with a $60 target, up from $52. The average target on the Street is $55.62, according to LSEG data.
* Capital Power Corp. (CPX-T, “outperform”) with an $82 target, up from $75. Average: $84.07.
* Gibson Energy Inc. (GEI-T, “outperform”) with a $33 target, up from $30. Average: $30.50.
* Rockpoint Gas Storage Inc. (RGSI-T, “outperform”) with a $35 target, up from $32. Average: $32.
* TC Energy Corp. (TRP-T) with a $102 target, up from $92. Average: $96.24.
His other target revisions are:
- Atco. Ltd. (ACO.X-T, “sector perform”) to $69 from $62. Average: $72.80.
- Brookfield Infrastructure Partners LP (BIP-N/BIP.UN-T, “outperform”) to US$43 from US$38. Average: US$43.73.
- Canadian Utilities Ltd. (CU-T, “sector perform”) to $51 from $46. Average: $49.17.
- Emera Inc. (EMA-T, “sector perform”) to $75 from $69. Average: $78.81,
- Enbridge Inc. (ENB-T, “sector perform”) to $81 from $73. Average: $79.62.
- Fortis Inc. (FTS-T, “sector perform”) to $82 from $75. Average: $79.72.
- Hydro One Ltd. (H-T, “sector perform”) to $61 from $56. Average: $58.83.
- Keyera Corp. (KEY-T, “sector perform”) to $56 from $50. Average: $59.64.
- Pembina Pipeline Corp. (PPL-T, “outperform”) to $71 from $63. Average: $67.
- South Bow Corp. (SOBO-N/SOBO-T, “sector perform”) To US$35 from US$31. Average: US$33.31.
- Superior Plus Corp. (SPB-T, “sector perform”) to $8.50 from $7.50. Average: $8.93.
- TransAlta Corp. (TA-T, “outperform”) to $24 from $22. Average: $24
- Tidewater Midstream and Infrastructure Ltd. (TWM-T, “sector perform”) to $17 from $15. Average: $14.83.
When Dollarama Inc. (DOL-T) reports its first-quarter fiscal 2027 results on June 11, National Bank Financial analyst Vishal Shreedhar expects the discount retailer to see the benefits of improving same-store sales growth while near-term investments, particularly in Australia, may limit earnings expansion.
“Our forecast of sequentially higher sssg (Q4/F26 was 1.5 per cent; 3.5-per-cent adjusted for the calendar shift) largely reflects positive article price inflation and a recovery from unfavourable weather last quarter, among other factors,” he said. “Our price checks of items suggest like-for-like article price inflation of 1.6 per cent year-over-year. Further, our analysis suggests a higher mix of $4-$5 articles (4 per cent year-over-year, largely within consumables), which may contribute to higher aggregate article inflation.
“Our data suggests that sssg accelerated quarter-over-quarter. Recall, DOL noted:“...Towards the end of fiscal 2026, we started seeing some price increases from the domestic side, which will trickle into fiscal 2027.”(3) Our review of peer commentary suggests: (i) consumer spending remains focused on value, (ii) competitive environment is intense, yet rational, and (iii) higher growth in younger and more affluent consumer cohorts within discount retailing."
Mr. Shreedhar is now projecting earnings per share of 99 cents, which is a penny less than the consensus on the Street but 4 cents higher than the same period a year ago. He attributes that 4-per-cent year-over-year gain to “(i) 4.0-per-cent sssg, (ii) net new store openings (73 year-over-year), (iii) share buybacks, and (iv) 24-per-cent year-over-year higher Dollarcity contribution.”
“These factors are expected to be partly offset by: (i) 230 basis points lower EBITDA margin at 29.6 per cent, largely reflecting a lower margin contribution in Australia, (ii) higher D&A, (iii) higher interest expense, and (iv) a higher tax rate,” he added.
Reaffirming his “outperform” rating for Dollarama shares, Mr. Shreedhar raised his target to $203 from $198. The average is $205.41.
“We hold a positive view on DOL reflecting a stable, high return on capital international growth story supported by strong cash flows, a solid balance sheet and resilient sales performance,” he said. “While near-term investments are elevated, we expect DOL to execute effectively on improvement initiatives over time, consistent with its track record of disciplined conservatism and success in international markets.”
Following better-than-expected first-quarter results and a “positive” update to its guidance, Desjardins Securities analyst Benoit Poirier is “encouraged” by BRP Inc.’s (DOO-T) “balance sheet, premium positioning and supportive trends.”
The Valcourt, Que.-based recreational vehicle manufacturer reported quarterly revenue of $747-million, exceeding the Street’s expectation of $736-million and at the top of its guidance range of $710-million to $750-million. Adjusted basic earnings per share of 36 cents fell under the consensus of 44 cents despite a 30-per-cent year-over-year jump in sales.
Seeing “modest growth” in fiscal 2027, BRP now expects the company to generate normalized earnings before interest, taxes, depreciation and amortization of $925-million to $975-million this fiscal year, compared to a previous forecast at the end of March of between $1.18-billion to $1.28-billion.
“We are not concerned about the softer-than-expected 2Q FY27 guided EPS, as it is primarily driven by timing factors rather than underlying demand weakness,” he said. “Specifically, the outlook reflects lower PWC shipments delivered earlier in 1Q, combined with the full tariff impact as mitigation factors are going to have a positive impact only in 2H. We therefore model margins of 4.3 per cent for 2Q and 10.3 per cent for the full year.
“Underlying trends remain strong. BRP’s premium mix continues to be supported by an affluent customer base more insulated from inflation and fuel price volatility. Management highlighted continued retail momentum, especially in ORV, and strong snowmobile pre-orders, and stated that May retail was positive on a consolidated basis, with both ORV and personal watercraft up. It emphasized that pricing is a minimal component of the mitigation strategy and does not expect any significant pricing actions. We model revenue growth of 6.6 per cent for 2Q and 9.1 per cent for the full year.”
Also emphasizing share buybacks are “back on track,” Mr. Poirier raised his target for BRP shares to $103 from $97, keeping a “buy” rating, after increased his revenue and earnings expectations through fiscal 2029. The average on the Street is $95.11.
Toronto-based Minera Alamos Inc. (MAI-X) “has emerged from a significant organizational and financial restructuring with a clean capital structure and clear multi-year growth roadmap,” according to National Bank Financial analyst Rabi Nizami.
“The start of construction at Copperstone marks an important milestone which puts the company back in position to execute and demonstrate its mine-building capabilities,” he added. “We model consolidated production scaling quickly from 35 koz in 2026 to more than 150koz/yr through a series of low-cost mine builds, starting with Copperstone (46 koz/yr; mid-2027 ramp up), Goldrock (40 koz; 028), followed by Cerro de Oro (55-60koz).”
In a note released before the bell, Mr. Nizami updated to his model for the Toronto-based junior miner to reflect several developments over the past week, including the close of a US$75-million credit facility and a US$45-million initial drawdown, elimination of gold prepays and call options, adoption of U.S. dollar reporting, and a pre-feasibility study and fully-funded construction go-forward decision at its Copperstone project in La Paz County, Arizona.
“We have adopted the Copperstone PFS mine plan, with first production now in Q3/27 (was Q1/27), adding 42 koz/yr at US$1,430/oz LOM AISC [life-of-mine all-in sustaining cost] (was 38koz/yr at US$1,546), opex conservatively 15 per cent higher and initial capex in line with the study,” he said. “In addition, we have incorporated a US$80-million NAV credit for300 koz of M&I resources that were not captured in PFS reserves, reflecting optionality for potential open pit mining. We model a restructured balance sheet with initial capex for Copperstone fully funded, supported by the credit facility plus cash flows from the operating Pan mine which is now fully exposed to gold prices going forward.”
Maintaining his “outperform” rating for Minera Alamos shares, Mr. Nizami raised his target by $1 to $9.50, matching the average, “in recognition of the company entering an execution and de-risking phase with the construction of Copperstone now underway.”
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