Inside the Market’s roundup of some of today’s key analyst actions
RBC Dominion Securities analyst Irene Nattel remains “extremely cautious” on the consumer spending backdrop in Canada with the firm’s Economics team expecting it to “remain under pressure through mid-2025 with total household consumption forecasted to decelerate to 1.0 per cent in 2025 from already tepid 1.9 per cent in 2024.”
“Our positioning for 2025 is broadly consistent with last year: against the backdrop of muted and value-oriented consumer spending augmented by uncertainty around the effects of rising unemployment and mortgage renewals on purchasing power, our primary focus remains on the less cyclical elements of retail,” she said. “But there is a compelling valuation opportunity in select small-cap discretionary names, and we remain mindful of anticipated flow of funds toward more cyclical stories at some point in 2025 as visibility on the macro situation improves.
“Against this backdrop, we narrow our best ideas for 2025 to: i) L as our overall best idea, ii) DOL as best positioned to cater to a value-oriented consumer, iii) ATD as our best large cap laggard with valuation re-rating potential as KPI’s improve, iv) ATZ as our best small-cap/discretionary idea with the caveat that headlines around tariffs may cause some share price bumpiness, and v) PET as our best self-help idea as the company harvests the benefits of 2023-2025 supply chain investments.”
In a report released Monday titled Strong ships in choppy waters, Ms. Nattel predicted consumers are likey to focus on “essentials over discretionary purchases and visiting value channels and banners” in the year ahead, pointing to “the combined impacts of (modestly) higher unemployment, higher absolute pricing for core consumer goods and services, and the negative impact of higher interest rates on debt service and shelter costs.”
“Biggest surprise in 2024 turned out to be duration of the consumer spending downturn, and we expect like-for-like sales of discretionary retailers to remain under pressure through mid-2025,” she added.
“Key themes: Our key themes for 2025 are formulated within the context of our consumer spending outlook, with substantial consideration for valuations. Key themes for 2025 include: 1) Stronger for longer trends in food and drug retail, as cost-conscious consumers favour meals at home over meals away, with the tailwind of population growth and aging population further supporting food retailer tonnage and drug retailer Rx count, and for c-stores, a perennial destination for time-strapped consumers; 2) Valuation re-rating opportunities in selected quality growth names as well as the laggards in our coverage universe; 3) Self-help names where investors are waiting for companies that are in the midst/toward the end of major capital investment cycles to surface the financial benefits of P&E investments; and 4) Names potentially impacted by policy changes, notably around tariffs.”
With that view, Ms. Nattel recommends investors seek out “quality defensive growth” in 2025.
“Valuations in our sector remain bifurcated with proven quality, defensive staples/staple-like growth leaders trading at or above long-term averages, whereas within the discretionary space, weaker financial performance and flow of funds out of the sector are driving share prices/valuations below historical averages,” she said. “We believe select large cap names in our coverage universe, notably top pick Loblaw (TSX: L), still have room for upward valuation re-rating based on fundamental performance.”
For Loblaw Companies Ltd. (L-T), the analyst raised her target for its shares to $217 from $205, reiterating an “outperform” recommendation. The average target on the Street is $198.33, according to LSEG data.
“Consistent with our long-held thesis, the valuation gap between Loblaw and Metro is gradually narrowing from a peak of 4 times NTM [next 12-month] EBITDA in mid-2020 to close to 1.5 times currently,” said Ms. Nattel. “We reiterate our view that the underling relative performance does not justify the gap, which therefore should continue to narrow over time. Our analysis indicates Loblaw’s financial performance holds greater torque, underpinned by a store base that skews to discount, industry-leading PL penetration and loyalty program, national scale in food and pharmacy, rising pharmacy contribution, and relative optionality around various vectors of growth and initiatives that don’t get as much air time but set the company up for sustainable long-term growth and leadership in Canadian food retail and pharmacare.”
“Loblaw is assembling a unique ecosystem of virtually irreplaceable assets in core consumer demand areas that bridge physical and digital capabilities, augmented by consumer insight data from PC Bank, including PC Mastercard and PC Money Account, and PC Optimum with seamless crossover of channels and banners. In our view, this is a key underappreciated and perhaps misunderstood element of Loblaw’s long- term strategy that should sustain and differentiate growth, and support valuation re-rating.”
The analyst also raised her target for George Weston Ltd. (WN-T) to $266 from $253 with an “outperform” rating to reflect the Loblaw change. The average is $243.07.
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Desjardins Securities analyst Jerome Dubreuil is “dialling back growth expectations” for Canadian telecommunications and media companies in 2025.
“Coming out of a relatively reasonable Black Friday gives us hope that competitive intensity in Canadian telecoms may have reached equilibrium,” he said. “However, we still would not overweight the sector ahead of 2025 since (1) the deceleration in population growth is not fully reflected in consensus; (2) the market is still in the midst of repricing the subscriber base to the new competitive environment; (3) regulatory pressure persists; and (4) recent capital allocation decisions by RCI and BCE have not convinced investors yet.
“Our top pick in Canadian telecoms is T. In Canadian IT services, we anticipate that the acceleration in demand will start materializing only in 2H25—our top pick in the sector is therefore CGI, as we favour stability.”
In his annual sector outlook released Monday, Mr. Dubreuil said investors currently “want blocking and tackling.”
“The Canadian telecommunication index has underperformed the S&P/TSX by 35 per cent year-to-date,” he said. “Given foreign telecom valuations are lower vs Canadian telecoms in some instances, we cannot definitively say we have hit the absolute bottom in terms of valuations. We believe execution and deleveraging are what many investors seek in the ‘defensive’ telecom sector, which contrasts with management teams’ recent efforts to position their businesses for long-term growth as services such as wireless and Internet mature. However, portfolio managers could be looking for underowned and cheaper sectors such as telecoms going into 2025. The solid FCF that telecoms generate and the increased pricing stability we expect in 2025 could help attract investor attention.”
For Telus Corp. (T-T), his telecommunications pick, he has a “buy” recommendation and $26.50 target for its shares. The current average on the Street is $24.32.
“T is our top pick among Canadian telecoms as we like its cleaner story (no risky U.S. expansion and no investments in sports with expensive financing),” he said. “Moreover, we believe T has a decent organic growth runway and is ahead of peers in terms of digitization and declining cost to serve. Moreover, we see T’s valuation premium to peers as being too small considering its capex advantage. We also forecast that T will generate the fastest FCF growth among the Big 3 over the next five years, even excluding FCF growth stemming from capex reductions. Of course, risks exist, such as having the highest valuation in an industry with significant challenges. We also highlight recent management comments referring to some expenses being transferred from capex to opex, meaning that all expected capex savings may not translate into FCF. Moreover, many investors view potential TIXT privatization as a risk for T shareholders given the negative impact it could have on Health privatization prospects and the perception of capital allocation. However, TIXT is much smaller now and it would cost T roughly $800-million (only 1.3 per cent of T’s EV) to take TIXT private (assuming a 25-per-cent premium).”
Mr. Dubreuil has a “buy” recommendation and $178 target for shares of CGI Inc. (GIB.A-T), his top IT services idea for 2025.
“With discretionary spending still under pressure and customer delays still present, we prefer lower-beta stories,” he said. “We believe CGI’s high-single-digit EPS growth and its significant amount of dry powder for M&A are attractive, even if prospects for the U.S. government vertical are foggier than usual.”
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After a “mixed” 2024, increased volatility is likely in engineering and construction, aerospace and defence, and transportation sectors in the year ahead, according to Desjardins Securities analyst Frederic Tremblay, seeing “investors navigate the contortions of a geopolitical twister (new leadership in the U.S. and Mexico, plus a Canadian election set for 2025), and position themselves ahead of potential changes in policy and sector sentiment.”
“Ultimately, in this uncertain environment, we favour companies that are catalyst-rich and where investor expectations are moderate,” he added.
“For 2025, our top picks are ATRL, BBD and TFII.”
In Transportation, he upgraded TFI International Inc. (TFII-T) to “buy” from a “hold” recommendation, seeing a “resilient call option with macro-independent catalysts.” He increased his target to a Street high of $236 from $204. The average is $199.95.
“We now consider this our top pick in the sector for the following key reasons: (1) lowered and more realistic expectations for 2025 and beyond; (2) improving cycle fundamentals (tender rejection and spot rates rising), with early signs that the freight recession may be coming to an end; (3) attractive valuation vs peers; and (4) decreased leverage (1.1 times in 2025) enabling the return of capital deployment toward buybacks and M&A,” said Mr. Tremblay.
He added: “Given we are less than one month away from the new year, and for better comparison with CN and CP, we have rolled our valuation forward to our 2026 numbers (which we have not changed). We have also adjusted our exchange rate to C$1.40/US$1 (from C$1.38/US$1) to reflect current market rates. For the reasons cited above, we currently see significantly improved risk/reward dynamics for TFII investors, with an attractive M&A catalyst that could be less than a year away. TFII is our top transportation pick heading into 2025.”
In Engineering & Construction, AtkinsRéalis Group Inc. (ATRL-T) remains his top pick with a $91 target, up from $87, and a “buy” rating. The average is $82.50.
“We see greater potential in this turnaround story despite the share price increase due to: (1) re-rating opportunities; (2) completion of LSTK work; (3) monetization of non-core assets; (4) a high-growth nuclear business; (5) lower relative US exposure; and (6) the most attractive potential return in our E&C universe,” he said. “For those who are more skeptical of the nuclear trend, WSP remains a solid alternative and is #2 in our pecking order.
“Moreover, we view E&C as the best positioned sector in our coverage universe entering 2025. We like the setup for several reasons—clean balance sheets (all four companies at leverage of 1.5 times or below), expected interest rate cuts boosting construction activity, margin upside from high-value/lowcost centres, low material risk of US infrastructure spending cuts and the sector’s safety net against tariff risk.”
For the Aerospace & Defence space, Mr. Tremblay reiterated Bombardier Inc. (BBD.B-T) as his top pick “due to the resetting of FCF expectations and an anticipated demand increase for bizjets post the Trump win.” He has a “buy” rating and a Street-high $145 target, which exceeds the $119.47 average.
“The undersupplied market should continue to drive pricing and aftermarket growth,” he said. “We see the recent share price drop as an overreaction and expect tariff exemptions for the A&D industry. With leverage expected to fall below 2.0 times by the end of 2025, BBD is poised for re-rating and increased institutional interest. We also expect BBD to be a significant beneficiary in a declining interest rate environment (being a higher-beta name and still being perceived by investors as highly levered).”
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Two more companies were added to TD Cowen’s “Best Ideas 2025″ list on Monday.
Seeing it “poised for earnings growth,” analyst Graham Ryding highlighted Element Fleet Management Corp. (EFN-T). He has a “buy” rating and $33 target for its shares, exceeding the $32.44 average on the Street
“We believe Element is well-positioned for earnings growth to persist, driven by continued self-managed fleet wins, growth with existing customers, servicing revenue momentum, and a focus on delivering operating leverage,” he said. “2025 guidance is constructive, and we are at the high-end. Element Fleet has a strong track record of raising, and beating, guidance, which we believe supports its valuation expansion trajectory.
“We see upside potential to our 7-per-cent revenue growth forecast for 2025 and 2026. While management’s medium-term revenue growth target is 6-8 per cent, we see potential for the company to continue to beat this measure (including 2024 they will have delivered 3 successive years of double-digit top-line and bottom-line growth). We believe this can be driven from several areas, including further conversion of self-managed fleets (Element is on pace to add 75 previously self-managed fleet clients in 2024, on par with 2022 and 2023); expansion with existing clients; and increasing share of wallet (increasing services per vehicle under management, and higher services utilization). Areas of incremental growth could come from Autofleet related synergies, successfully growing insurance as a service, pricing optimization, and penetrating the small to medium enterprise market. Strong top line growth, combined with management’s focus on operating leverage, and returning capital to shareholders (dividend growth and buybacks), should support multiple years of high single-digit / low double-digit EPS and FCF per share growth.”
Analyst David Kwan said Well Health Technologies Corp. (WELL-T) remains his top pick, expecting “strong” momentum to continue and seeing key near-term catalysts ahead. He has a “buy” rating and $8 target. The average is $7.68.
“Despite its almost 70-per-cent return year-to-date (up 60 per cent in the last 3 months alone), we think there is still solid upside to the stock, aided by several key near-term catalysts with the potential sale of Wisp and/or Circle and the WPS spin-out,” said Mr. Kwan. “We expect total/organic growth to remain strong with improving margins/FCF in 2025, which should help drive a continued positive re-rating.”
“We expect WELL to continue its highly accretive and capital efficient clinic roll-up strategy in Canada. The potential sale of Wisp and/or Circle should help simplify the story, reduce its modest leverage, and refocus investors on the very attractive growth opportunity in Canada, given favourable reimbursement trends and supply/demand dynamics. At 13.3 times EV/EBITDA (C2025E), a more than 25-per-cent discount to the peer group average, we do not believe its valuation properly reflects its superior execution and competitive position, expected further margin/FCF improvements, the potential value creation from the sale of Wisp and/or Circle and WPS spin-out, and the hidden value from its HEALWELL investment.”
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While BRP Inc.’s (DOO-T) third-quarter fiscal exceeded his expectations on stronger revenues, Stifel analyst Martin Landry warned investor attention “turned rapidly on the company’s outlook” which remain a concern.
“Management expects the powersports industry to be flattish next year, however it seems premature to opine on next year’s industry expectations given the limited visibility,” he said. “Non-current models from other OEMs are expected to continue to be a headwind for BRP in the near-term until they are mostly cleared next spring.
“Tariffs could cloud the outlook for BRP given nearly all the company’s production is in Canada and Mexico. Most OEMs could face similar challenges, which is expected to reduce affordability and weigh on volumes. In addition, comments on limited replenishment of dealer inventory in FY26 is disappointing as this was previously thought to be a revenue growth driver. Hence, we have reduced our FY26E forecasts slightly to reflect these uncertainties.”
Shares of the Valcourt, Que.-based recreational vehicle manufacturer jumped 6.9 per cent on Friday after it reported earnings per share, adjusting for a $20.5-million loss from its discontinued Marine business operations, of 91 cents, exceeding the 67-cent projection from both Mr. Landry and the Street. Revenue of $2.202-billion was a drop of 18 per cent year-over-year, but it topped the analyst’s $1.867-billion forecast.
“Non-current inventory is pressuring BRP’s market share,” the analyst warned. “BRP was one of the first OEM to reduce its inventory level at dealerships a year ago in reaction to the slowing consumer demand. However, non-current inventory remains elevated at other OEMs, and these units are competing against BRP’s higher-priced current model year units. This resulted in BRP losing market share during the quarter, particularly in the SSVs and ATVs categories. This dynamic is expected to continue into 1HFY26.
“Snowmobile season will be closely watched. Given last year’s weak snowfall, dealers have started the season with a high level of snowmobile inventory. This makes the performance of the snowmobile category this season particularly important for future earnings growth, as a poor season would exacerbate the inventory situation and increase discounts next year to clear unsold units. Also, the snowmobile season will be crucial for BRP to reach its goal of reducing overall inventory by 15-20 per cent in FY2025.”
Looking ahead, Mr. Landry pointed to several earnings headwinds facing BRP in the next fiscal year: “(1) non-current inventory from other OEMs may not be cleared until the end of 1HFY26, (2) PWC inventory remains elevated, which could lead to lower shipments next season, (3) The launch of electric motorcycles is expected to be a $20-30 million headwind and (4) The Marine business should continue to be a drag on cash flows until sold, and we believe it could be difficult to sell the Marine business given the macroeconomic context and important operational losses.”
After revising his estimates to reflect the removal of Marine business from continuing operation, Mr. Landry’s fiscal 2026 and 2027 EPS estimates are now $4.90 and $7.24, respectively, representing year-over-year increase of 9 per cent and 48 per cent.
Keeping a “hold” rating for BRP shares, he cut his target by $4 to $78. The average target on the Street is $89.61, according to LSEG data.
Other analysts making target adjustments include:
* Citi’s James Hardiman to $90 from $101 with a “buy” rating.
“While facing near-term share losses in the face of heavy discounts from competitors on non-current units, DOO has done a commendable job in its inventory management, which we believe puts the company in a position of relative strength once retail demand improves,” said Mr. Hardiman. “However, DOO’s Mexico-heavy supply chain is a new and significant risk as we wait to see how punitive the new administration’s tariff policy proves to be, prompting margin conservatism in our model and a price target cut.”
* TD Cowen’s Brian Morrison to $83 from $81 with a “hold” rating.
“BRP Q3/F25 results beat consensus, but essentially maintained F2025 guidance upon accounting for Marine as a discontinued operation. Many headwinds to near-term earnings remain, however we are increasingly comfortable we are nearing an earnings inflection point. Seasonal inventory headwinds and the exposure to Trump tariff rhetoric keep our recommendation at neutral at this time,” said Mr. Morrison.
* Scotia’s Jonathan Goldman to $86 from $91 with a “sector perform” rating.
“DOO shares were down 24 per cent since September 5 heading into 3Q reporting as the prospects of a protracted powersports recovery became more apparent, which underscored our prior downgrade,” he said. “On the earnings call, management noted that the working assumption for F2026 is no change in the current interest rate environment and that it would take “several cuts” to start seeing an impact on consumer demand. While earnings may have finally found solid ground, elevated industry inventories (industry ORV more than 2/3 non-current), particularly from competitors who were slower to react, could continue to pressure ASPs or share through 1HF26. Marine sale proceeds and lower cash taxes could provide added flexibility for buybacks, but we have already reflected that possibility in our valuation multiple. Overall, the risk/reward seems balanced given industry dynamics and current stage of the cycle.”
* CIBC’s Mark Petrie to $82 from $92 with a “neutral” rating.
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Desjardins Securities analyst Chris Li expects to see “gradual sequential improvement” in food same-store sales growth when Empire Co. Ltd. (EMP.A-T) reveals its second-quarter 2025 financial results on Thursday before the bell.
“Consistent with 1Q, we expect 2Q to reflect early signs of improvement in consumer behaviour, aided by normalized inflation and lower rates,” he said. “While the recovery will be gradual and non-linear, we will look for confirmation that EMP is on track to achieve its 8–11-per-cent EPS growth target this year. This is a key catalyst for further valuation improvement given EMP’s steep discount to peers (14 times NTM P/E vs 20 times for L and MRU). Near-term volatility is likely as macros remain uncertain. Patience is required.”
Mr. Li is now projecting earnings per share for the quarter of 65 cents, falling in line with the consensus expectation on the Street. Excluding “a sizeable” real estate gain in the second quarter of its last fiscal year. he estimates underlying EPS growth of 7 per cent, up from 5 per cent in the first quarter of 2025.
“[We expect] food SSSG (excluding fuel) of 1.3 per cent (in line with consensus),” he said.” We expect gradual sequential improvement from 1.0 per cent in 1Q FY25, supported by low food inflation, declining interest rates and stable promotion penetration. But it still trails L (1.8 per cent ex Thanksgiving timing and non-food) and MRU (2.2 per cent) as discount continues to outgrow full-service (although the gap is narrowing).”
While he made modest reductions to his 2025 and 2026 earnings expectations, Mr. Li raised his target for shares of the Sobeys parent to $47 from $44, reiterating a “buy” rating. The average target is $44.50.
“EMP continues to trade at a steep discount to peers at approximately 14 times NTM EPS vs 20 times for L and MRU,” he said. “As we expect annual EPS growth of 8–10 per cent over the next few years, we have raised our target to $47 from $44 based on a blended P/E (FY26/27) of 14 times.”
“We maintain our positive long-term view.”
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U.S. cannabis multi-state operators are “in need of regulatory catalysts” heading into 2025 or they risk remaining in a “sideways market”, according to ATB Capital Markets analyst Frederico Gomes.
“The year was not gentle to U.S. cannabis investors,” he said. “Rescheduling and Florida legalization did not happen, fundamentals were mostly uninspiring, and valuations reached all-time lows. We expect 2025 to repeat the theme of slow growth due to a continuation of price compression offsetting higher volumes, tough retail dynamics, competition from hemp-derived THC, and a dearth of new states legalizing. While companies have become more efficient, most have already cut significant costs, which means margin expansion is becoming harder to achieve.
“On the backdrop of challenging fundamentals, a valuation rerating relies on regulatory catalysts such as rescheduling or Pennsylvania legalization (both with reasonable chances of happening in 2025). The new administration could bring uncertainties with other changes happening at a rapid pace (SAFE Banking?), such that sentiment could swing drastically following a ‘gradually, then suddenly’ wave of reform. In this case, many MSOs may look to raise capital, especially Tier 2s; however, if regulations (and valuations) remain stale in 2025, leveraged companies may face difficulties refinancing maturities, with asset sales as an alternative in H2/25 and 2026. Investors should focus on names with no near-term maturities, ability to generate significant cash flow, scale, and diversification. The Tier 1 pond is where investors should fish, and Green Thumb is the best fish to catch, in our view.”
In a research report released Monday, Mr. Gomes downgraded his recommendations for three companies:
* Cresco Labs Inc. (CL-CN) to “sector perform” from “outperform” with a $3.50 target, down from $4.25. The average is $3.60.
Mr. Gomes: “Cresco remains a leading wholesaler of branded products in Illinois, Pennsylvania, and Massachusetts, and achieved a #3 position in Ohio. However, due to market headwinds on wholesale in key states and limited opportunities for retail growth within the current state footprint, we believe future growth could be limited, which in turn might lead to lower adj. EBITDA margins due to expense de-leveraging on lower sales. While the valuation remains somewhat attractive, the unexciting base-case 2025 outlook with potential lower sales and margins drives our Sector Perform (from Outperform) rating.”
* Jushi Holdings Inc. (JUSH-CN) to “underperform” from “sector perform” with a 70-cent target, down from 85 cents. The average is $1.34.
Mr. Gomes: “We think that Jushi could be one of the few growth stories over the next couple of years (we have sales increasing 10.9 per cent year-over-year in 2025), with an ambitious expansion plan in Ohio and certain other states. The Company needs to grow into its balance sheet, as it is one of the most leveraged companies in the sector (LTM cash interest paid represents 11.6 per cent of revenue). However, due to our conservative approach of not factoring Jushi’s second phase of expansion plans into our forecast, layered with the balance sheet, which we believe will remain a key theme for investors and a potential overhang until the sector re-rates, we have lowered our rating to Underperform (from Sector Perform).”
* TerrAscend Corp. (TSND-CN) to “sector perform” from “outperform” with a $1.75 target, down from $2.75. The average is $3.11.
Mr. Gomes: “We think TerrAscend is an M&A story. The Company still has a relatively low revenue base, and scale needs to be achieved to drive operating leverage and expand adj. EBITDA margins to the mid-20s. Near-term organic growth opportunities are currently scarce in the industry. We like TerrAscend’s track record of acquisitions (Maryland has surpassed expectations), but it is hard to model out and bake M&A-driven growth into our base-case estimates. As a result, we have lowered our rating to Sector Perform, keeping in mind that retail expansion in New Jersey and Michigan, as well as entrance into new states (potentially through a transformational acquisition), could be upside to our estimates.”
Conversely, he upgraded Trulieve Cannabis Corp. (TRUL-CN) to “outperform” from “sector perform” with a $17 target, down from $20. The average is $23.93.
“We view Trulieve as one of the best operators in the space, with top-tier margins and robust cash flow generation,” he said. “The stock took a heavy hit with the failed Florida vote, but we believe too much negativity has now been priced in. As a result, we are raising our rating back to Outperform. While the Florida market could become more competitive, Trulieve’s production and retail scale are clear differentiators. We believe the Company will maintain top-tier margins and continue generating FCF, which could be allocated towards debt repayment or entrance into new markets to diversify the footprint (valuations are now looking attractive).”
For his top pick, Green Thumb Industries Inc. (GTII-CN), he cut his target to $19 from $20.50, keeping an “outperform” rating. The average is $22.42.
“Green Thumb is a consensus long and one of the preferred targets of new capital entering the space as regulations change,” said Mr. Gomes. “We like the Company’s geographical diversification and cash flow profile, which is the best in the industry. The industry is struggling with low valuations and price compression, which positions Green Thumb to maintain and potentially extend its leadership position. Given its enviable liquidity position, Green Thumb has plenty of flexibility to allocate capital towards growth investments, buybacks, and debt repayments. Green Thumb is our top pick among MSOs.”
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In other analyst actions:
* CIBC’s Stephanie Price raised her Constellation Software Inc. (CSU-T) target to $5,300 from $4,850 with an “outperformer” rating. The average is $4,950.
* Jefferies’ Joe Ng bumped his Laurentian Bank of Canada (LB-T) target to $30 from $29 with a “hold” rating. Other changes include: Raymond James’ Stephen Boland to $29 from $27 with a “market perform” rating, National Bank’s Gabriel Dechaine to $27 from $25 with an “underperform” rating and Scotia’s Meny Grauman to $33 from $30 with a “sector perform” rating. The average is $28.36.
“LB’s Q4 beat was driven by better-than-expected loan loss provisions, but in an operating environment where commercial credit is clearly getting worse, the ability of this bank to deliver an upside surprise on commercial credit is notable,” said Mr. Grauman. “That said, despite delivering a 12 bps PCL ratio to close out the year, Management is still targeting the mid-teens for next year which suggest that this latest result is not quite sustainable. Looking beyond credit, the bank is guiding to a year of elevated operating costs in F2025 as LB invests in cloud computing capabilities. Loan growth is still expected to be flat next year, but management did sound optimistic that commercial loan growth will begin to improve later in the year, and with that also bring some multiple expansion. The outlook for F2026 looks even more constructive, even though it will depend on both a combination of strong execution and an improving macro environment as a well as a potential funding deal with private credit funds. We remain on the sidelines on this name for now, but we like what we are hearing as the bank invests for the long term and focuses on its core strength in commercial lending.”
* Canaccord Genuity’s Yewon Kang cut her Organigram Holdings Inc. (OGI-T) target to $3.15 from $3.60 with a “speculative buy” rating. The average is $3.63.
* Barclays’ Benjamin Budish raised his TMX Group Ltd. (X-T) target to $47 from $45 with an “equal-weight” rating. The average is $49.73.