Inside the Market’s roundup of some of today’s key analyst actions
Heading into third-quarter earnings season, RBC Dominion Securities analyst Andrew Wong sees rising crop prices being “supportive” for North American fertilizer companies.
“Fertilizer prices were stronger through Q3 despite soft seasonality, with nitrogen bouncing quickly off mid-year lows, phosphate staying tight, and potash steady,” he explained. “Nitrogen supply continues to be disrupted by the U.S./Iran war, with prices rising through Q3 - prices remain below elevated marginal cost for now, but with potential upside if U.S./Iran war persists. Phosphate supply remains restricted by lack of sulphur availability, but demand is limited by weak affordability. Potash markets were steady, with strength in North America and Southeast Asia offsetting weakness in Brazil/China, with favourable affordability supportive for demand.
“Overall, stronger crop prices have been supportive for fertilizers, and we see continued tight ag conditions into early-2027 given yield risks (lower phos applications, weather), offset by U.S./Iran war headline risk and volatility.”
In a client report released before the bell, Mr. Wong said he “likes” Saskatoon-based Nutrien Ltd. (NTR-N, NTR-T, citing “continued strong execution and supportive ag/ferts environment.”
“We are in-line with consensus on Q3, but slightly higher on 2026 overall and see upside into 2027, given a supportive backdrop across ag, nitrogen and potash,” he said. We also expect continued strong execution and see potential for updated operational improvement targets in the upcoming investor day at the end of November. We forecast strong cash generation (8-per-cent FCF yield in 2026/2027), with limited downside, and see potential near-term decisions on non-core asset sales before end-2026.
“Focus items: U.S. farm activity, impact from stronger crop prices. Farmer sentiment into 2027 preparations and Fall season activity. Update on non-core assets sales process and timing. Potash outlook, potential impact from higher Chinese port inventories.”
Mr. Wong has an “outperform” rating and US$85 target for Nutrien shares. The average target on the Street is US$81.15.
Seeing Mosaic Co. (MOS-N) “most impacted by phosphate market challenges and see re-start risks along with challenged near-term cash generation,” the analyst downgraded its shares to “sector perform” from “outperform” with a US$25 target, down from US$27 and below the US$27.10 average.
“We are below consensus on Q3, mainly due to higher cost expectations given ongoing phosphate curtailments and potentially lower potash production as the Esterhazy hydrofloat project continues to ramp. We forecast minimal FCF in 2026/2027 (2-per-cent yield) due to phosphate challenges and delayed capex spend.
“Focus items: FCF expectations through 2026/2027 and capex spending plans. Phosphate curtailment plans as sulphur market challenges persist. Phosphate margin outlook. Dividend policy.”
His other stocks in the industry are:
- CF Industries Holdings Inc. (CF-N, “sector perform”) with a US$115 target. Average: US$125.25.
- LSB Industries Inc. (LXU-N, “outperform”) with a US$13 target. Average: US$14.67.
Scotia Capital analyst Jonathan Goldman thinks the “business transformation” of Russel Metals Inc. (RUS-T) supports a re-rating of its shares.
“Simply asking “What steel price are RUS shares baking-in?” is missing the point: RUS is a much higher quality business today than it was five or six years ago,“ he said. ”Actions taken over the past several years have resulted in higher earnings power and lower volatility through the cycle, including: (i) the divestiture of its OCTG/line pipe business removing its lowest margin/ROIC, most cyclical vertical; (ii) five highly accretive acquisitions, which increased exposure to U.S., value-add, and non-ferrous; (iii) organic investments in value-add, which structurally raised MSC margins; (iv) delevering the B/S to 0.8 times from 2.5 times enabling the company to ‘play offence’; (v) lowering its cost of debt by achieving investment grade credit rating; and (vi) reducing share count by 12 per cent."
In a client report titled What Goes Up, Sometimes Goes More Up, Mr. Goldman said he’s see upside to the Mississauga-based metal distribution company’s third-quarter results and argued its valuation does not yet properly reflect its potential.
“RUS shares are up approximately 35 per cent since 2Q,” he said “We estimate shares are pricing-in HRC [hot-rolled coil] of US$1,085/tonne, a 15-per-cent discount to spot of US$1,300, assuming a midcycle valuation of 9.5 times EV/EBITDA, and no M&A optionality,” he said. “That’s bang-on our estimate derived by taking prior midcycle of $675/tonne adjusted for inflation with steelmaking costs up 60 per cent since 2019.
“What that overlooks is the strong demand environment and positive tariff impact. Channel inventory remains low and mill lead times are drawn out with some service centres even being put on allocation. Demand is broad-based on both sides of the border with Canada recently playing catchup (e.g., LNG2). While not the main driver of stronger prices, tariffs have also raised the floor price of NA steel. We note that original S232 tariffs implemented in 2018 never went away – not even under the Biden administration. The futures curve is up 10 per cent on average since July.”
Mr. Goldman emphasized the Street is now projecting third-quarter earnings before interest, taxes, depreciation and amortization of $136-million, which is a decline from $154-million in the previous quarter despite steel HRC and plate prices rising 8 per cent and 11 per cent quarter-over-quarter and guidance pointing to flat volumes for its Metals Service Centers segment compared to the first half of the year.
“As a pass-through business with stable margins, higher pricing supports higher gross profit dollars,” he noted. “But the company buys steel three months in advance and sells at spot, meaning in a rising price environment, it also benefits from margin expansion due to inventory holding gains. We also see upside from ongoing integration of Kloeckner.”
“We raised our valuation multiple to 13.5 times EV/EBITDA on our equal-weighted 2026/2027 estimates to account for upside to steel pricing/earnings. For context, we estimate consensus is forecasting steel prices flat from 2Q despite them rising throughout 3Q. Moreover, If we straight-line spot through our model, we get EBITDA of $550 million in 2026 and $600 million in 2027, 10 per cent and 20 per cent above consensus, respectively.”
Maintaining his “sector outperform” recommendation for Russel shares, Mr. Goldman increased his target to $113 from $89. The average target on the Street is $82.43.
Following last week’s release of weaker-than-anticipated fourth-quarter production and financial results, National Bank Financial analyst Mohamed Sidibé is now taking a more cautious view on the production growth for Uranium Energy Corp. (UEC-A).
“While no FY27 outlook was provided, we have taken a more conservative view on the production ramp at the various hubs to reflect the pace of ramp-up to date, the timing of header-house start-ups at Christensen Ranch, and the time required to advance Burke Hollow beyond its initial production area,” he explained. “Four Christensen Ranch header houses received final approval on September 28, while all Hobson processing stages have now been commissioned. Our FY27 production estimate decreases to 0.49 million pounds from 0.80 million pounds at cash costs of $39.94/lb versus $33.25/lb. We have also reduced our estimated value for UR&C to reflect a longer-dated timeline to a potential start vs. our prior assumptions and also pushed out by a year our estimated construction start at Roughrider.”
Mr. Sidibé’s net asset value assumption for the Texas-based company, which holds a large portfolio of high-grade conventional uranium exploration and development projects in Canada, including its flagship Roughrider Project in Saskatchewan’s Athabasca Basin, fell by 7 per cent to $9.22 per share from $9.95 previously.
“Near-term operating focus remains on starting four approved Christensen Ranch header houses [in Wyoming], advancing three header houses under construction, and continuing the Burke Hollow ramp [in south Texas] while PAA-2 permitting progresses,” he said. “UEC plans to add staff and expand extraction at both sites in FY27. At Ludeman, construction and testing continue on the initial wellfield, and development of the satellite ion-exchange plant is progressing, though we continue to model no FY27 production.
“UR&C completed its core execution plans, assembled a 63-member team, began preparing its NRC licence application, and progressed site selection, with a Class IV cost estimate targeted for mid-2027. The NNSA inquiry identified annual requirements equivalent to 4 mln lbs of unobligated U.S.-origin uranium, with deliveries potentially beginning in 2030. The U.S. Army also anticipates more than 20 Janus Program microreactors, all requiring domestically produced unobligated uranium. We view these as longer-term opportunities; UEC had no uranium purchase or sale agreements at year-end.”
With a reduction to his 2027 production estimates, the analyst lowered his target for Uranium Energy shares to US$15 from US$16, keeping an “outperform” rating. The average is US$17.65.
“The thesis for UEC is contingent on delivery on the ability to become vertically integrated in the United States and take advantage of the emerging U.S. Government demand opportunities,” he said.
In a separate report, Mr. Sidibé and colleague Baltej Sidhu said a potential U.S. initial public offering of Westinghouse Electric Co. could be a “visible value discovery catalyst” for both Cameco Corp. (CCO-T) and Brookfield Renewable Partners LP (BEP-N, BEP.UN-T).
According to reports, the Pennsylvania-based nuclear services giant, which is jointly owned by Cameco and Brookfield Renewable, is seeking a valuation of more than US$50-billion and is targeting a public filing as soon as later this month.
“The prospect of a Westinghouse IPO and both CCO’s and BEP’s recent pullback have prompted three investor questions: how much of Westinghouse the stocks already reflect and what an IPO could daylight, whether Cameco and BEP will keep their 49-per-cent and 10.8-per-cent interest, respectively, and what is driving the broader weakness in uranium and renewable equities,” the analyst said.
“Neither stock is paying for Westinghouse. For CCO, at our 30-times EV/EBITDA multiple on CCO’s legacy business, CCO’s current share price leaves C$11/sh, or US$7-billion for 100 per cent of Westinghouse. Even at CCO’s 14 times pre-Westinghouse floor, the stock implies only 87 per cent of the reported US$50bln. BEP trades only US$1.85/unit above our US$26.50/unit operating asset DCF, reflecting neither the larger growth opportunity inherent in the platform nor the strategic and financial value of Westinghouse.”
At the reported US$50-billion IPO valuation, the analysts said Cameco’s 49-per-cent stake would lift their net asset value per share assumption by 33 per cent and our target by 18 per cent if it keeps the full stake, while BEP’s 10.8-per-cent stake would be worth US$8-9/unit at approximately 12 times multiple on invested capital.
“The post IPO ownership views fit together,” they said. “We expect Cameco to keep its 49 per cent, with the float coming from the Brookfield side. For BEP, monetization is the funding model, recycling proceeds into underwriting development at 12-15-per-cent returns, which are then monetized at 8-10 per cent (more than 20 per cent all-in). A 30–50-per-cent sale of BEP’s interest could raise US$1.0–$3.0-billion, or roughly half to more than one year of BEP’s annualized deployment, while retaining 5-8-per-cent look-through ownership.
“Both stocks sold off on rates, not fundamentals. Long-duration nuclear and renewable cash flows de-rated as the 10-year yield rose above 5 per cent, while uranium prices and BEP’s contracted cash flows held up.”
Mr. Sidibé has an “outperform” rating and $185 target for Cameco shares. The average is $177.95.
“We view Westinghouse as differentiated nuclear exposure and believe both Westinghouse and its development pipeline (growth) are not simultaneously reflected,” he concluded. “A public listing would combine value discovery with a credible monetization path. CleanMax offers a direct precedent as BEP reduced half of its interest realizing US$185-million of proceeds, including US$40-million net to BEP. The sale of approximately half the interest recovered all initial invested capital while retaining 20 per cent of the platform (4 per cent net to BEP) and generating an 25-per-cent IRR. Luminace provides a control-level precedent, with Brookfield selling 50 per cent to Temasek and retaining joint control. Elsewhere, BIP’s Csquare IPO saw a monetization of 10 percentage points (29 per cent to 19 per cent).”
Mr. Sidhu has an “outperform” rating and US$38 target for Brookfield Renewable units, which exceeds the average by 21 US cents.
“The key takeaway is not that the market assigns zero value to Westinghouse, but that it does not appear to recognize Westinghouse and BEP’s growth platform at the same time,” he said. “We view a public market valuation for Westinghouse as the clearest near-term catalyst for discovering this embedded value and recycling capital into BEP’s 12–15-per-cent return growth opportunities.”
RBC Dominion Securities analyst Paul Treiber sees Wellstar Technologies Corp. (WSTR-X) “well positioned to benefit from the ongoing digitization of Canadian healthcare.”
He initiated coverage of the Vancouver-based software-as-a-service company, which commenced trading on the TSX Venture Exchange on Oct. 1 after going public through parent Well Health Technologies Corp. (WELL-T), with an “outperform” rating, believing “the Canadian digital health transformation underpins 20-per-cent-plus organic growth.”
“Wellstar provides digital health solutions to outpatient healthcare providers across Canada,” he said. “Policy mandates are accelerating digital transformation, and clinics are adopting solutions to improve productivity. We forecast 25-per-cent average organic revenue growth from FY26e to FY28e through cross-selling additional modules and AI into its EMR installed base, rising eReferral volumes through OceanMD, and increased outsourcing.
“AI to fuel a large upsell opportunity. Adoption of AI tools, eReferrals, and outsourcing remains low across Canadian outpatient clinics. We estimate Wellstar can increase revenue per clinic by up to 7x through upselling all of the company’s modules and services. Many solutions are EMRagnostic, enabling market share capture beyond its EMR install base.”
In justifying his bullish view, Mr. Treiber emphasized he sees Canada’s “fragmented” Canadian healthcare IT market providing “a long-term consolidation opportunity.”
“Wellstar has deployed $167-million across 24 acquisitions since 2019,” he said. “The Canadian healthcare IT market remains fragmented. We believe the company is likely to continue to deploy capital on acquisitions in line with historical hurdle rates (i.e., takeouts avg. 2.7 times EV/S and 14.6 times EV/EBITDA). Acquisitions represent potential upside to our estimates. We estimate every $50-million capital deployed on acquisitions would be 12.5-per-cent accretive to annual adj. EPS.
“Well Health relationship brings alignment and stewardship. Wellstar is well capitalized, with $102-million pro forma net cash. WELLSTAR has been conservatively managed, averaging 21-per-cent organic growth and 23-per-cent adj. EBITDA margins over the last 3 years. WELL Health (holds 54.7 per cent of economic interest, 82.4 per cent of voting rights) brings strategic alignment and stewardship.
“Given Well Health’s likely increasing share of the outpatient client market in Canada and focus on maximizing clinic productivity and profitability, we believe Well Health is likely to help accelerate Wellstar’s growth.”
Mr. Treiber set a target of $10 per share. The current average target is $7.20.
Elsewhere, TD Cowen’s David Kwan initiated coverage with a “buy” rating and $8.50 target.
“We think WSTR is well-positioned to continue its strong operational and financial (Rule of 40) execution, as it capitalizes on the ongoing digital transformation in the Canadian healthcare market, including increasing AI workflow adoption. On a fundamental basis, we see upside to its valuation, given its superior (organic) growth/margin profile, with further upside to our forecasts/valuation from M&A,” said Mr. Kwan.
In other analyst actions:
* ATB Cormark’s Ryan Bannerman initiated coverage of Maxim Power Corp. (MXG-T) with an “outperform” rating and $5.50 target, matching the average.
“MXG is a Calgary-based independent power producer whose flagship asset is the 300MW CCGT M2 plant, operating entirely on a merchant basis in Alberta. The company is well situated to benefit from a tightening power market driven by expanding load demand with a high sensitivity to power prices. Our base estimate models 2028 Adjusted EBITDA of $35-million at a $66/MWh realized price, while our model implies a sensitivity where every $1/MWh change in realized price impacts 2028 Adjusted EBITDA by $2-million. Our $5.50 price target is derived entirely from operating M2 cash flows, establishing a fundamental floor, while further upside rests in the 600MW development pipeline. The project pipeline is led by the permitted 400MW Prairie Lights project and a signed gas turbine and generator reservation agreement (target delivery by 2030). With zero debt, we view MXG as an attractive vehicle to play Alberta grid tightening with a meaningful potential cash flow inflection,” said Mr. Bannerman.
* Ahead of earnings season for North American asset managers, BofA Securities’ Craig Siegenthaler trimmed his price target on Brookfield Asset Management Ltd. (BAM-N, BAM-T) to US$60 from US$61, keeping a “neutral: rating on the shares. The average is US$57.39.
* In response to a site visit to its Snow Lake operations in Manitoba and updated reserve-based mine plan, National Bank’s Shane Nagle raised his target for Hudbay Minerals Inc. (HBM-T) to $42.50 from $41, maintaining a “sector perform” rating. The average is $44.90.
“We remain somewhat cautious in our outlook for Copper Mountain ramp-up through H2 and Copper World capex update in Q3,” said Mr. Nagle.
* TD Cowen’s Derek Lessard cut his Tilray Brands Inc. (TLRY-Q, TLRY-T) to US$4.50, falling below the US$4.70 average, from US$5 with a “buy” rating
“TLRY reports pre-market on October 8. We expect double-digit revenue growth, led by the BrewDog acquisition and continued strength in recreational and international cannabis. Softer beer depletions and higher promotional and marketing spend push more of the expected EBITDA growth into 2H. Even so, we still forecast 11-per-cent EBITDA growth in 2027E, consistent with the low end of guidance,” he said.