Inside the Market’s roundup of some of today’s key analyst actions
Scotia Capital technology equity analyst Kevin Krishnaratne said he is “most cautious on stocks exposed to consumer trends” heading into first-quarter earnings season.
“We would rather own names with more defensive characteristics given the uncertain backdrop,” he said. “We suggest DSGX and KXS (both should also benefit from supply chain uncertainty), and VHI and WELL given their resilient Health Tech exposure.”
In a research report released Monday, he downgraded Lightspeed Commerce Inc. (LSPD-N, LSPD-T) to “sector perform” from a “sector outperform” recommendation, citing reduced subscription revenue estimates due to small and medium business “weakness” as well as risks to gross transaction volume estimates given its “exposure to discretionary spending that could slow on weakening consumer demand” and seeing limited near-term catalysts.
“We expect an in-line Q4 (March) that follows on outlook provided on March 24 that indicated negative SSS [same-store sales] in Feb/March on macro pressures and a decline in SMB optimism impacting subscription revenue,” he said. “Our forecast for FY26 has been further lowered to reflect subscription trends in 1H continuing to be pressured (6.8 per cent growth in Q1, 6.9 per cent in Q2 vs. 7.4 per cent expected in Q4) on SMB weakness, ahead of a rebound in 2H (7.2 per cent in Q3, 11.1 per cent in Q4).
“In our view, uncertainty likely leads to a slower pace of POS upgrades/module attach as merchants more carefully consider new purchases. Furthermore, while we’ve not made any adjustments to our GTV assumptions (we model just flat growth in FY26), LSPD’s exposure to discretionary retail (mainly based in the U.S.) and hospitality (Europe) could lead to downward estimate revisions in the coming quarters on weakened consumer demand.”
Mr. Krishnaratne lowered his target for its shares to US$11 from US$17. The average on the Street is US$15.01, according to LSEG data.
He also made other target price reductions:
* Dye & Durham Ltd. (DND-T, “sector outperform”) to $18 from $20. Average: $19.27.
Analyst: “Although DND’s end customers are small law firms, it is indirectly exposed to the consumer given the company’s large focus on real estate transactions. When DND last reported its Q2 (December) in mid-February, the Canadian Real Estate market had been trending positive with CREA at the time forecasting home sales growth in the country at 8.6 per cent year-over-year vs. its prior estimate of 6.6 per cent. Since that time, CREA has released updated estimates for Canadian housing that now call for zero growth in 2025 and 2.9-per-cent growth in 2026. According to the CREA, its latest forecast represents the largest revision between quarterly forecasts going back to the 2008-2009 financial crisis. CREA’s recent forecast indicates buyers increasingly remaining on the sidelines owing to tariff uncertainty. As it relates to DND’s own business, we see new management’s customer and product innovation focus helping it successfully navigate its big contract renewal opportunity ($20-million out of its $150-million in ARR is up for negotiation by midway CY25 following last big contract signings in Spring 2022), but it remains to be seen what minimums customers may agree too. For now, we’ve left our revenue and Adj. EBITDA estimates unchanged.”
* Open Text Corp. (OTEX-Q/OTEX-T, “sector perform”) to US$30 from US$35. Average: US$34.01.
Analyst: “We remain SP-rated on OTEX given no likely near-term catalysts and our expectations of it being more of a 2H story. Recall that total F25 revenue growth outlook ex-AMC was recently lowered to down 3 per cent to down 1 per cent along with Q2 (Dec) earnings (prior was 0 per cent to 1 per cent), with management anticipating a return to total growth in Q4. Key to the company’s return to growth will be its cloud business, with related trends encouraging in its Q2 (growth accelerated q/q at 2.7 per cent year-over-year vs. 1.3 per cent) with expectations for related growth for FY25 to be 2 per cent to 5 per cent (we are conservative at 3.0 per cent in FY25 only modestly accelerating to 5.0 per cent in FY26 as we await more evidence of cloud bookings translation to revenue). Although top-line trends continue to be muted, we are encouraged by management’s commitment to shareholder returns ($570-million via buybacks and dividends vs. FCF expectations of $600-million to $650-million). ”
* Shopify Inc. (SHOP-N/SHOP-T, “sector perform”) to US$90 from US$120. Average: US$122.03.
Analyst: “While SHOP doesn’t disclose the size of its dropshipping business, we estimate it at 10 per cent of GMV [gross merchandise volume] with China accounting for 30 per cent of the mix or $10-billion. If the U.S. administration goes ahead with plans to eliminate the de minimis exemption for goods imported from China (no taxes on items less than $800), SMB’s who have solely been relying on this model may be at risk. We have adjusted our GTV estimates in FY25 and FY26 by $5-billion (half year impact) and $10-billion, respectively, to reflect the removal of dropshipping activity from China. We note more mature SMBs may be able to source from alternative countries or absorb the COGS increase and continue to operate. Importantly, we have not made any adjustments related to SSS trends across the rest of SHOP’s merchant base, which could lead to further downward revisions to our GMV estimates in the coming quarters given SHOP’s exposure to discretionary retail. We have, however, reduced our non-Plus MRR forecasts to reflect slower business formation, SHOP’s shift to three-month trials (prior one-month), lower levels of apps uptake, and downgrades from higher-ARPU tiers as merchants pay closer attention to spend. We now model subscription revenue growth in FY25 and FY26 at 12.7 per cent and 13.7 per cent, respectively (prior 16.6 per cent and 18.4 per cent). Our GP forecast now calls for 18.6 per cent in FY25 and 17.2 per cent in FY26 (prior 21.1 per cent and 19.4 per cent).”
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Citing the impact of tariffs and “a weakening sales backdrop,“ Citi analyst Paul Lejuez lowered his forecasts for a group of North American athletic brands and retailers on Monday, including Vancouver-based Lululemon Athletica Inc. (LULU-Q).
“Our new estimates use 10-per-cent tariffs for Rest of World (ROW) and 60-per-cent tariffs on China, though we acknowledge the situation remains fluid,” he said. “With limited China sourcing exposure for most athletic brands/retailers, the 10-per-cent tariffs seem largely digestible for this group. However, we prefer brands with strong momentum who can more easily pass through price (AS, DECK, ONON) over those with weaker trends (NKE, UAA, LULU). We are concerned about a global consumer slowdown and a backlash toward American brands (particularly amongst Chinese consumers), which can have a significant impact on this group, particularly those perceived as American brands with higher China sales exposure (NKE, LULU).”
For Lululemon, Mr. Lejuez cut his 2025 and 2026 earnings per share estimates to US$14.34 and US$14.87, respectively, from US$15.59 and US$16.57, pointing to “weaker sales across regions due to a weaker global consumer backdrop and weaker GM reflecting higher tariffs, partially offset by lower SG&A.”
“Our fiscal 2025 estimate of $14.34 assumes total sales up 4 per cent (below guidance of up 5-7 per cent and vs our prior estimate up 7 per cent), including Americas comps of down 3 per cent (vs flat prior) and EBIT margin of 21.8 per cent (vs our prior estimate 23.1 per cent), reflecting weaker GM (down 130 basis points vs down 30 basis points prior),” he explained.
“As a Canadian brand (though some consumers think of it as an American brand), LULU should feel less pain from a consumer backlash to American brands in key regions like China. We estimate F25 China sales up 23 per cent (vs guidance 25-30 per cent and our prior estimate up 28 per cent). However, we believe it will be difficult for LULU to return to growth in the Americas in F25 given potential for a weakening consumer environment, particularly in 2H (we model comps down 4 per cent in 2H vs flat prior). We also note that given management’s previous comments about limiting reliance on price as a tariff mitigation tool, our GM estimate assumes very little pricing mitigation in F25 to offset higher tariffs.”
Reiterating his “neutral” rating for the company’s shares, he cut his target to US$330 from US$375. The average target on the Street is US$337.22, according to LSEG data.
“We rate shares of lululemon as a Neutral,” he said. “After years of benefitting from outsized growth in active apparel, trends in the category have slowed in F24 with data in Yoga & Active apparel pointing to a further deceleration 2Q quarter-to-date vs 1Q (which was a big decel vs F23). This dynamic, coupled with LULU’s execution issues (lackluster product assortment/lack of color/sizing) leave LULU more susceptible to increased competition and promotional pressures in 2H24/F25. We believe category weakness and a tougher macro backdrop makes it unlikely LULU sees a reacceleration in U.S. trends in 2H. Additionally, while LULU has performed extremely well in China over several years, incremental weakening of the China consumer environment is an added risk to the stock (as expectations remain high on China growth). ”
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While RBC Dominion Securities analyst Irene Nattel moderated her forecast for Aritzia Inc. (ATZ-T) through fiscal 2027 in response to “the current state of tariffs/downward revisions to macro forecasts,” she reiterated her “constructive view” on the Vancouver-based retailer, seeing it remaining “a compelling growth story with a strong consumer franchise.”
“ATZ share price has been a roller coaster ride as investors react to tariff news and potential implications on ATZ,” she said. “With the latest news pointing to potentially moderating tariffs that should be more manageable, focus returning to underlying momentum. Channel checks and management commentary point to solid trends. ATZ to release Q4/F25 results on May 1. In our view, investor focus will be on F26 guidance and the underlying assumptions.”
In a note released Monday, Ms. Nattel cut her 2026 and 2027 EBITDA and earnings per share projections by 5 per cent and 8 per cent, respectively, ahead of Thursday’s release of its fourth-quarter 2025 results. She attributed the reductions to “uncertainty around direct and indirect impacts of the tariffs on margins and consumer demand as ATZ adjusts to new market conditions with 50 per cent plus of its revenues from the U.S. operations, and virtually all the purchases from Southeast Asia, notably Vietnam, China (approximately 30-35 per cent), Cambodia and Bangladesh.”
“ATZ has multiple tools to shield margins, including shifting country of origin, re-negotiating with suppliers, and adjusting prices, particularly given ATZ has lagged peers on raising prices,” she noted. “Our analysis indicates high SD price increases should offset a significant proportion of margin hit. Tweaking estimates around SSS [same-store sales], GP margins and SG&A ratios and reflecting latest FX forecasts results in revised F27E revenue at the lower end of the current $3.5-$3.8-billion target range, EBITDA margin 16 per cent, below the target of ‘approximately 19 per cent,’ but unchanged from prior published. F25-27 estimated EPS CAGR [compound annual growth rate] 30 per cent.
“ATZ remains a compelling growth story with a strong consumer franchise and fundamentals, in our view. FCF generation, solid BS, favourable set-up for accelerating NCIB as visibility improves despite no activity in Q4/25. Revising NCIB cadence to reflect near-term uncertainty, assuming no NCIB activity in H1/F26. Our model incorporates 1.5 million shares repurchased in H2/F26 and 3.0 million shares in F27, funded with FCF.”
After trimming her valuation multiples to “reflect market and sector compression, and forecasts to reflect tariff uncertainty,” Ms. Nattel lowered her target for Aritzia shares to $65 from $73, keeping an “outperform” rating. The average target is $68.80.
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ATB Capital Markets analyst Chris Murray reduced his forecast for Boyd Group Services Inc.’s (BYD-T) first half of 2025 ahead of the May 14 release of its first-quarter results in response to U.S. peer LKQ Corp.’s (LKQ-Q) financial results, expecting its recovery to be pushed later into the year than previously anticipated.
“One of the key comps for BYD is LKQ Corp. (LKQ-O, NR), which reported its Q1/25 results on April 24, 2025, missing estimates,” he said. “One of the ongoing negative drivers for LKQ and the broader industry including Boyd Group Services has been the fall in repairable claims. Originally thought to be only a weather-related issue with a highly unusual warm Q1/24 season, there is a broader thought that the fall is more tied to consumer behaviour resulting from significant (approximately 20-per-cent) increases in insurance premiums, which has led consumers to defer or avoid repairs to not further increase insurance costs as well as falling used car pricing, which increases the propensity for total losses. We believe similar trends are impacting Boyd, and we are reducing our expectations for H1/25, while still expecting a return to improved same-store growth and margin performance later this year.”
“LKQ had several relevant comments with its Q1/25 report that indicated that North American organic growth was down 4.1 per cent driven by an almost 10-per-cent reduction in repairable claims and having one less selling day (Q1/24 was a leap year). In their commentary, they indicated that they believed that repairable claims were normalizing, based on insurance data (consumers are switching as some of the highest reported rates and flattening insurance prices) and that a more meaningful improvement should be expected in H2/25.”
While Mr. Murray expects Boyd’s margins to benefit from its recently launched Project 360 transformation initiatives, which is aiming to generate $100-million in recurring annual cost savings and position it to grow adjusted EBITDA by a 15-per-cent annual growth rate, over the next five years by the second quarter of the year, he warned industry dynamics are likely to weigh more in the near term.
“We expect similar trends are likely to apply to Boyd, and we are reducing our expectation for same-store sales growth in Q1/25 and Q2/25,” he said. “When the Company reported Q4/24 results it indicated that it expected to see some improvement from the negative 2.6-per-cent Q4 sale store sales growth (SSSG) print, mainly on the improved year-over-year weather impact, however, we expect industry trends and the one less selling day are likely to keep Q1/25 results similar to the Q4 print, with margins negatively impacted by labour absorption and some early transformation costs. We have shifted our expectation for recovery, partly from normalizing insurance conditions and also from the easier year-over-year comparatives into H2/25.”
With reductions to his 2025 and 2026 earnings and same-store sales growth projections, Mr. Murray cut his target for Boyd shares to $295 from $320, maintaining an “outperform” rating. The average is $265.62.
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TD Cowen analyst Brian Morrison thinks there is “compelling value” in Canada auto parts suppliers, however he cautioned “their near-term direction depends on the visibility/impact of tariffs by the U.S. administration.”
“Our stance on the sector remains cautious, however declining inventory and tariff visibility may provide an H2/25 opportunity,” he said.
“While N.A. SAAR has been strong in Q1/25 as consumers purchase in advance of potential tariff induced price increases, production has been subdued for the same reason/growing fears of an economic slowdown. This is resulting in declining inventory levels that are unlikely to be replenished near-term with the uncertain tariff/ economic outlook.”
For the first quarter of 2025, Mr. Morrison is projecting year-over-year earnings declines for each of the three companies in his coverage universe, falling in line with the consensus forecasts on the Street.
“Regardless of the Q1/25 performance, investor focus will be upon gaining visibility upon tariffs and the ability to mitigate their impact,” he added. “Until the U.S. administration provides greater certainty on their strategy, we are challenged to see the Q1/25 reporting season as a sector/share price catalyst.”
“The N.A. auto supply chain is complex due to its integration across Canada/U.S./Mexico. As a high level summary, since early April, imports to the U.S. of finished vehicles have a 25-per-cent tariff, with a carve-out for U.S content. We anticipate an announcement by May 3 upon the current tariff (also 25 per cent) pause upon auto part imports that are USMCA compliant. Canada has responded with tariffs on non USMCA compliant vehicles from the U.S. As illustrated during the pandemic, prolonged disruptions to the industry can lead to financial duress upon suppliers causing widespread production destruction. This is an impediment to immediate change to redomicile production to the U.S. as are capital/labour requirements. We anticipate/hope for a negotiated solution.”
Mr. Morrison made these target price changes:
- Linamar Corp. (LNR-T, “hold”) to $59 from $60. The average on the Street is $65.57.
- Magna International Inc. (MGA-N/MG-T, “buy”) to US$44 from US$47. Average: US$42.68.
- Martinrea International Inc. (MRE-T, “buy”) to $10 from $12. Average: $11.29.
“We reiterate our BUY rated names, Magna/Martinrea, encompass elevated risk near-term and returns we anticipate to be geared to the second half of our investment horizon,” he said. “We see more compelling opportunity in our Consumer Discretionary sector currently.”
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In a separate report, ahead of the May 8 release of its first-quarter financial results, Mr. Morrison cut his 2025 and 2026 forecast for Canadian Tire Corp. Ltd. (CTC.A-T) to reflect the forthcoming Helly Hansen disposition, the impact of its “True North” strategic initiatives, and “a more prudent approach to consumer demand in light of growing economic uncertainty.”
For the first quarter, the analyst is now projecting earnings per share of 95 cents, down from $1.34 previously and well below the consensus on the Street of $1.33.
“Recall, the company will be reporting HH as a discontinued operation, and we believe the majority of the sell side has not factored this into their estimates,” he said. “We forecast ex-Petroleum Retail revenue growth of 3 per cent year-over-year, aided by soft comps, more seasonal winter weather in Quebec/ Ontario, further penetration of its Triangle loyalty program/data analytics, and perhaps even a small lift from the ‘buy Canadian’ movement. This should be offset by one-time margin benefits unlikely to repeat in Q1/25 and an unfavourable mix shift within Retail, and lastly an increase in the year-over-year write-off rate within CTFS.
“Despite being below consensus, we would consider meeting/exceeding our forecasts as positive and more reflective of historical Q1 seasonal contributions before the pandemic. However, we should stress that we do anticipate earnings revisions to the downside post-quarter for at least 2025, to adjust for the HH transaction.”
Keeping a “buy” rating for Canadian Tire shares, Mr. Morrison lowered his target to $170 from $176. The average is $155.76.
“We believe CTC is receiving a premium valuation for HH that along with its 2024 FCF performance places its Retail operations in a financial position of strength inclusive of net cash,” he said. “This is an envious position during economic uncertainty supportive of it accelerating its NCIB and its attractive dividend yield.”
“We remain positive on CTC. Although not our top pick, we see compelling value at the current level, an improving business model supported by loyalty/ data, a financial position to endure economic headwinds/increase capital returns to shareholders, and notable EPS upside to an economic stabilization/recovery.”
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CIBC World Markets analyst Nik Priebe made a series of target price adjustments to stocks in his diversified financials coverage universe on Monday.
“In every earnings preview, we incorporate a feature piece’ that highlights a name with surprise potential entering the reporting cycle or that merits a thesis refresh,“ he said. ”Recent insider buying at ECN Capital [“outperformer” and unchanged $3.50 target] caught our attention and prompted us to publish a deeper dive, outlining the detailed chronology of events that has resulted in dramatic share price volatility over the past few years. We also present our outlook and how we are framing an investment thesis for the stock. We continue to rate the shares Neutral as we believe the market seems to be pricing in full-year guidance and we would not ascribe a high probability to the prospect of a beat-and-raise scenario. However, gain-on-sale margins at Triad are an important swing factor for profitability and very difficult to predict. We believe it is unlikely that management would be buying shares in the open market if the company were poised to cut guidance or otherwise disappoint investors. We would be more tempted to advocate stepping into the stock if we saw: 1) particularly strong results in the early part of the year, which could help create a set-up for higher earnings guidance in 2026; 2) a favourable trendline in approvals at Triad subsequent to quarter-end (which are a leading indicator for future fundings); and, 3) at the macro level, a continued easing of trade tensions, which have dampened consumer confidence and, by extension, housing market conditions."
His changes include:
- Fiera Capital Corp. (FSZ-T, “neutral”) to $6.50 from $6.75. The average is $6.92.
- Guardian Capital Group Ltd. (GCG-T/GCG.A-T, “neutral”) to $45 from $47. Average: $52.50.
- Onex Corp. (ONEX-T, “outperformer”) to $130 from $150. Average: $139.
- TMX Group Ltd. (X-T, “neutral”) to $57 from $55. Average: $52.88.
Elsewhere, Desjardins Securities’ Gary Ho cut his Fiera Capital target to $6.25 from $7.25 with a “hold” rating.
“FSZ reported preliminary March AUM [assets under management] of $161.6-billion, down 3.3 per cent quarter-over-quarter and below our $164.2-billion estimate,” said Mr. Ho. “We have factored the recent market downdraft into our 2Q AUM, leading to reduced forward forecasts, as well as upward pressure on the payout ratio and funded debt leverage. Despite its compelling 13.8-per-cent yield and better-than-expected private alt AUM growth, its elevated payout ratio and the higher risk on its funded debt leverage keep us on the sidelines.”
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In other analyst actions:
* Barclays’ Paul Kearney initiated coverage of Gildan Activewear Inc. (GIL-N, GIL-T) with an “overweight” rating and US$51 target. The average target on the Street is US$58.39.
* Canaccord Genuity’s Robert Young lowered his Celestica Inc. (CLS-N, CLS-T) target to US$126 from US$138 with a “buy” rating. The average is US$120.44.
* Scotia’s Himanshu Gupta increased his Choice Properties REIT (CHP.UN-T) target to $16 from $15.50 with a “sector outperform” rating. The average is $15.72.
* Ahead of its May 6 earnings release, Stifel’s Daryl Young cut his Colliers International Group Inc. (CIGI-Q, CIGI-T) target to US$160 from US$165 with a “buy” rating. The average is US$164.
“We expect a solid Q1, given clear industry data points showing a healthy recovery in CRE transaction activity to start 2025,” he said. “U.S. capital markets volumes increased 11 per cent year-over-year and office and industrial leasing increased more than 12 per cent and more than 8 per cent year-over-year, respectively. Additionally, there appear to be greenshoots for IM capital raising. CBRE’s Q1/25 outperformance and reaffirmation of its constructive outlook (activity levels/pipelines remain strong) gives us optimism, but the longer the current geopolitical tensions and policy uncertainty remain the greater the likelihood for a slowdown in transactions and IM fundraising, in our view. Colliers did set relatively conservative 2025 guidance, and at this juncture we expect they will maintain it. We think CIGI’s diversified business mix will provide a degree of downside protection in this market. Moreover, the company is well capitalized and has a history of acting opportunistically amid market dislocation.
* Desjardins Securities’ Lorne Kalmar moved his StorageVault Canada Inc. (SVI-T) target to $4.25 from $4.75, which is the current average, with a “hold” rating.
“The quarter-over-quarter deceleration in SP NOI [same-property net operating income] growth was a key focus for us this quarter,” said Mr. Kalmar. “On the positive side, acquisition activity surprised to the upside. While we know this business is capable of generating greater than low-single-digit SP NOI growth, we do not see a near-term catalyst for growth to accelerate absent a rebound in the housing market. Our 2025 AFFOPS growth forecast was revised down slightly to 1 per cent (from 2 per cent) as we take a more cautious stance in the face of broader macro uncertainty.”
* CIBC’s Hamir Patel raised his target for Winpak Ltd. (WPK-T) to $52 from $50 with an “outpeformer” rating. The average is $52.