Inside the Market’s roundup of some of today’s key analyst actions
RBC Dominion Securities analyst Darko Mihelic thinks Canadian bank investors “may be indifferent to shorter term uncertainty.”
“Shorter term we share a sense of unease regarding significant macro-economic uncertainty but we refrain from making large estimate changes in the absence of significant evidence that provisions for credit losses (PCLs) must spike materially higher,” he said. “Modelling under the assumption that the North American economy can rebound by 2027 we see significant EPS/ROE upside in 2027 under more ‘normalized’ PCLs. This is not an attempt to justify current valuations, just a reflection of a typical PCL cycle for banks.”
In a research report release Monday, Mr. Mihelic made “modest” reductions to his forecasts for large Canadian banks in his coverage universe after a review of net interest income, PCLs, and capital. His 2025 core earnings per share estimates slid by 0.3 per cent on average, while his 2027 core EPS projections increased by 5 per cent.
“In Q2/25, we note that strong year-over-year NII growth across the large Canadian banks in our coverage were mainly driven by NIMs (tractors, lower funding costs) as opposed to loan growth,” he explained. “On credit quality, we model 2026 as a transition year with elevated impaired PCLs which improve and decline to historical normalized levels in 2027, although the uncertainty remains with regard to trade policy, and we see the possibility of higher PCLs should trade wars escalate and/or a recession ensue. Risk premiums of the large Canadian banks remain below historical averages suggesting that the market is looking through the current weakness, possibly as far out as 2027 where notably we see stronger ROE on close to what we believe would be normalized PCLs. We also see earnings and valuation upside from the possibility of additional NCIBs when the currently active issuer bids are complete as the group’s capital levels remain solid.”
With updates to his forecast, Mr. Mihelic made these target adjustments:
- Bank of Montreal (BMO-T, “outperform”) to $161 from $163. The average on the Street is $154.50, according to LSEG data.
- Bank of Nova Scotia (BNS-T, “sector perform”) to $80 from $81. Average: $77.29.
- Canadian Imperial Bank of Commerce (CM-T, “outperform”) to $112 from $116. Average: $100.75.
- National Bank of Canada (NA-T, “sector perform”) to $152 from $148. Average: $139.23.
His target for Toronto-Dominion Bank (TD-T, “sector perform”) remains $93, which is under the average of$96.06.
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Citing valuation concerns, Barclays analyst Brian Morton downgraded Bank of Montreal (BMO-T) to “equal-weight” from “overweight” on Monday with a $144 target, which sits below the average on the Street of $154.50.
He also made these target price adjustments:
- Bank of Nova Scotia (BNS-T, “equal-weight”) to $78 from $81. Average: $77.29.
- Canadian Imperial Bank of Commerce (CM-T, “underweight”) to $94 from $90. Average: $100.75.
- Royal Bank of Canada (RY-T, “overweight”) to $182 from $180. Average: $182.48.
- Toronto-Dominion Bank (TD-T) to $91 from $83. Average: $96.06.
"Canadian banks wrapped up 2Q25 earnings with four exceeding consensus and two trailing aided by better than expected NII. Still, headwinds remain with the impact of tariffs yet to be realized amid a weaker economic picture," said Mr. Morton.
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Canaccord Genuity analyst Matthew Lee also updated his forecast for Canadian banks in a report released Monday titled Prepared for the worst, but still hoping for the best.
“The banks reinforce their hulls as they head into opaque waters,” he said. “The biggest story of Q2 was the uniform decision by management teams to take large performing provisions to account for the current state of geopolitical opacity. On average, the Big 6 put through 17bps of performing PCLs, more than the prior three quarters combined. In our view, this should help soften the earnings impact of unforeseen economic adversity and is easily digestible given the group’s capital position. Post-quarter, we have raised our total PCL expectations but view credit as relatively benign and unlikely to impede the banks’ path to high single-digit EPS growth for F25E. As operational visibility improves, we note that each of the banks can release allowances, which could be a source of earnings growth in F26 but is not yet built into our forecast.
“We expect commercial lending to outpace personal, with U.S. recovering ahead of Canada. Loan growth across the group was muted in the quarter as both consumers and businesses were hesitant to deploy capital in an uncertain geopolitical environment. While much still depends on global trade decisions, we expect commercial lending will likely be the first point of acceleration with companies eager to make investments if tariffs stabilize. This is particularly true in the U.S. given the country’s stronger GDP growth and the potential for policy-driven capital expenditures. On the other hand, we would expect personal lending to remain muted (particularly in mortgages) as consumers remain wary of rising unemployment rates and cost inflation puts pressure on household budgets. Overall, we expect loan growth to begin showing early positive signs in H2 (1.6 per cent from 1.4 per cent in H1), with a more sizeable improvement coming in F26.”
Mr. Lee said he remains “positive on the sector overall, even with valuations at a modest premium.”
“Our medium-term thesis on the banks’ earnings growth remains largely intact and, in our view, Q2 supports our expectation for improving earnings growth as credit remains manageable and loan growth reaccelerates,” he concluded.
The analyst made these target changes:
- Bank of Nova Scotia (BNS-T, “buy”) to $81 from $80. The average is $77.29.
- National Bank of Canada (NA-T, “hold”) to $138 from $136. Average: $139.23.
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RBC Dominion Securities analyst Jimmy Shan lowered his recommendation for InterRent Real Estate Investment Trust (IIP-UN-T) to “sector perform” from “outperform” in response to its deal to be acquired by Carriage Hill Properties, believing “investors are likely viewing this situation as one where there is a low likelihood of another materially superior offer, but that there is a reasonable probability of a modestly sweetened offer.”
“Any upside left in the stock? We believe that the answer comes down to a matter of who has the better leverage, as with any negotiated transaction,” he explained. “On the one hand, a deal structure characterized by a relatively short 40-day (ending July 6) go-shop window, a right to match by CLV/GIC combined with a break fee that shaves 10 basis points of cap rate could deter other bidders. This is in the context of a private market generally lacking depth in institutional bids. This suggests a diminished likelihood of a materially superior offer.
“On the other hand, investors (including any activist) would point to an initial low offer price that is at a discount to consensus NAV (down 4 per cent to $14.13) and to reported book value (down 17 per cent to $16.40) when CDN REIT M&A history suggests discounts to NAV for non-distressed, high-quality REITs are an exception. Moreover, investors could point to the lack of a ‘platform’ premium, which the market was willing to, and did, pay for.”
Mr. Shan thinks the InterRent news “may have set a floor” for other Canadian-focused apartment equities, noting “while they have all re-rated, they are still trading at an average 19-per-cent discount to NAV.”
“Naturally, speculation abounds on whom the next target could be,” he said. Price action suggests that some investors are focusing on some of the deeper value names, even outside of the apartment sector. M&A is hard to handicap but we agree that if M&A activity steps up, one is more likely to generate alpha in deeper value names.
“A temporary jolt or a floor on apartment valuation? We fear the former, but we expect the latter. While the IIP news has re-rated the apartment sector to a certain degree, the 4 CDN-focused apartment REITs are still trading at a material discount to NAV, averaging 19 per cent. As with prior M&As, the market typically gives some consideration to M&A but ultimately, operating fundamentals and rates drive LT performance.”
He lowered his target for InterRent units to $13.55 from $14.50 to reflect the offer. The average is $13.42.
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While he sees a “constructive” outlook for its current fiscal year after in-line fourth-quarter fiscal 2025 results, National Bank Financial analyst Vishal Shreedhar acknowledges Saputo Inc. (SAP-T) continues to be “a show-me story which will take several quarters of solid execution before gaining meaningful traction.”
“We expect investor focus to be on steady execution amid a volatile commodity and macro backdrop,” he added.
After the bell on Thursday, the Montreal-based dairy company reported quarterly revenue of $4.753-billion, up from $4.545-billion a year ago but falling short of Mr. Shreedhar’s $5.045-billion estimate as well as the consensus projection of $4.730-billion. Earnings per share fell 7 cents year-over-year to 30 cents, also missing expectations (32 cents and 35 cents, respectively).
“SAP expects growth in all sectors and operating margin expansion (optimization/capacity expansion),” said the analyst. “Longer term, SAP is accelerating efforts to expand sales into new markets (Southeast Asia, Japan and the Middle East) via its existing operation.
“USA results to benefit from the new USDA milk pricing formula (US$60-$70-million annualized; to manifest in early Q2 as SAP cycles older inventory). We expect further USA benefits from site consolidation (Green Bay closure at end of Q3/F26) and reduction of duplicate costs (fade off by F2027; $42-million in F2025). ... SAP expects continued strong Canada performance.”
With that optimistic view, Mr. Shreedhar increased his EPS projections for 2026 by 2 cents to $1.85 and 2027 by 3 cents to $2.06.
That led him to raise his target for Saputo shares to $29 from $28, keeping an “outperform” recommendation. The average on the Street is $30.33.
Elsewhere, Scotia Capital’s John Zamparo lowered his target by $1 to $29 with a “sector outperform” rating.
“We maintain our Outperform rating on the view that dairy conditions appear to have bottomed, U.S. volumes are improving, various P&L drivers should contribute meaningfully in F26 and a robust buyback should continue,” said Mr. Zamparo. “Purely from three sources — efficiency gains (approximately $40-million), the new USDA formula ($50-million) and reduced duplicate costs ($20-million) — we project SAP can to grow EBITDA by 7 per cent. Risks are present on the macro picture/trade-down, and from higher spending (wages, marketing/promo, IT implementation, tariff-related costs). That said, we see minimal downside in the stock and could see strong 2H/F26 performance.”
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Citi analyst Alexander Hacking thinks the progress of the Quebrada Blanca Phase 2 project in northern Chile remains “key” to the share performance of Teck Resources Ltd. (TECK.B-T).
“QB2 ramp has been notably slower than greenfield peers,” he said. “Quellaveco hit 300ktpa rates in its first year. Cobre Panama hit 300ktpa rates in its second year – and would have been 6 months quicker without the major COVID disruptions of 2020.
“That said, the QB2 issues do still appear temporary – e.g. seismic activity around an access road, slow drainage for the TMF materials causing delays on lifts, and port problems recently disclosed. The mine got within 10 per cent of design throughput in 4Q25 (131ktpd vs 143ktpd) and into the range of design recoveries in 1Q25 (87 per cent vs 86-92 per cent) — now its just a matter of consistency. Production is expected to steadily improve in 2Q and 3Q before hitting full stride in 4Q."
In a note released Monday, Mr. Hacking made modest reductions to his forecast for Teck to fall in line with Citi’s “cautious” outlook on copper heading into the second half of 2025. The firm’s target is now less than US$9,000 ton “given macro headwind.”
With his changes, he dropped his target for Teck shares to $55 from $68, reiterating a “neutral” rating. The average is $65.29.
“Teck has underperformed peers year-to-date (down 5 per cent in USD vs group 5-30 per cent) due to new issues at QB2 (TMF lifts delayed by slow sand drainage),” he said. “Relative performance from here will likely be driven by 2026 expectations, i.e. can the mine hit full stride in 4Q at 70kt+ setting up 300kt for 2026.”
“We rate Teck at Neutral. Positive factors include exposure to copper, several interesting growth options, and a strong balance sheet. Negative factors include historical challenges on execution and a dual-class share structure. On balance, we see equal upside and downside at current levels.”
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Citi’s Ariel Rosa said last week’s analyst tour of Canadian National Railway Co.’s (CNI-N, CNR-T) Port of Prince Rupert Facility showed “levers to achieve long-term double-digit EPS growth.”
“We have long maintained that CN has certain network benefits, including long-haul lengths and its EJ&E [Elgin, Joliet and Eastern Railway] loop which allows it to bypass congestion in Chicago, providing it with structural advantages versus other railroads,” he said. “Similarly, we view its Prince Rupert access as a competitive advantage given the low population density around the port, which is also the fastest ocean-route to North America from Asia.
“In our meetings, CN management said it expects to grow volume at Prince Rupert at a 10-per-cent annualized rate through 2027. With Prince Rupert representing approximately 10 per cent of CN revenue, this is likely to be a key driver towards reaching its target for low-to-mid single digit overall vol. CAGR [compound annual growth rate]. CN sees further opportunity to balance inbound intermodal volume with Coal, Grain, and PetroChem exports from the port.”
In a client note released Monday, Mr. Rosa emphasized Port Rupert is “now viewed as a key platform for East-West trade growth given limitations at more-established West Coast ports” as its investment in the facility has ramped up over the last 20 years.
“Rupert provides the fastest lane from Asia to Chicago, with major steamship lines calling on Rupert,” he said. “The Gemini Cooperation (operational partnership between Maersk and Hapag-Lloyd) and potential ramp in MSC/COSCO shipments could be growth drivers for CN. Prince Rupert has been held back by recent labor, weather (wildfires in western CA), and trade disruptions, but CN views these as temporary and noted ample opportunity for ‘shovel ready’ projects through 2028.”
“Growth at Rupert is expected to be driven by a diverse set of commodities, and within each commodity is a diverse set of growth drivers in the form of different projects/sources. Intermodal growth at Rupert can benefit from a diversified set of drivers, including the Gemini Cooperative of Maersk with Hapag-Lloyd on East-West routes, ramp from other steamship lines such as MSC and COSCO, and supply chain partner investments from CANXPORT and IntermodeX to incentivize steamships to bring more loaded imports by facilitating the transloading of export goods. Rupert is seeing continued strong demand for Canadian Natural Gas Liquids (NGLs) from Japan and Korea given their closer proximity to Canada and longer distance from the Middle East. Japan’s and Korea’s ramp in Canadian NGL demand is dependent on their own lower usage of nuclear and renewable power. Canadian NGL exports into both these countries are driven by the longer-term secular trend of energy transition towards more usage of lower-emission natural gas over other fossil fuel alternatives, as both countries aim to diversify energy sources for national security purposes. Rupert’s REEF project is expected to expand NGL throughput in a major way. Coal depends on the ramp of the new Quintette mine that is one of several coal sources for Rupert.”
Maintaining his “buy” rating, Mr. Rosa raised his target for its U.S.-listed shares to US$124 from US$117. The current average is US$116.24.
“CN’s stock performance has undoubtedly been frustrating for many investors, with shares down 21per cent since their peak last year, and down 9 per cent over the past 3 years (trailing peer CP which is up 10 per cent),” he explained. “With the reset in CN’s multiple, currently at 16.6 times consensus 2026 EPS (vs. long-term avg. fwd. PE of 19.4 times), and an expectation to grow EPS at a double-digit rate, we view shares as attractive and reiterate our Buy, which is supported by the long-term network strengths discussed above. We raise our target price to $124 (from $117) lifting our target PE to 22 times our US$ 2025 EPS (from 21 times). We also raise our ‘25/26 EPS target to C$7.85/C$8.75 (up C$0.10 each), as better-than-expected 2Q volumes, easy 2H25 comps given various 2H24 challenges, and improving network fluidity should support solid 2025 results.”
“Muted investor expectations have created a favorable backdrop for CNI to outperform, especially given its high-quality network and outlook for 10-15-per-cent EPS CAGR for 2025 and high-single digit EPS CAGR for 2026 and 2027. CNI benefits from structural network advantages (long-haul lengths and tri-coastal access) which should enable higher incremental margins as the volume environment improves.”
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In response to its “significant” debt restructuring, TD Cowen analyst Tim James upgraded Transat AT Inc. (TRZ-T) to “buy” from “hold” ahead of the release of its second-quarter results on Thursday.
“In our view, the lower risk of a creditor protected restructuring, $377-million reduction in net debt ($9.53/basic share), strong franchise, and opportunities to spur earnings expansion through its partnership with Porter Airlines support a higher target and share price,” he said.
“We believe the risk of broader restructuring that eliminates equity value has been significantly reduced given maturity extensions (to 2035 from 2026-2028), lower forecast debt, and more lenient credit terms. This should provide additional time for realizing the benefits of its Elevation program, A321XLR fleet upgrade, and clearing current (trade/ economic driven) air travel uncertainty, all of which should improve profitability to where leverage is appropriate and equity risk acceptable to a broader range of investors. We believe the restructuring could make TRZ a more attractive acquisition candidate. The restructuring terms provide validation for our view that the government is supportive of TRZ and is highly motivated to ensure it avoids a creditor protected restructuring in order to prevent the negative implications it could have for Canadian competition and employment.”
Mr. James’s target for Transat shares rose to $4.75 from $1.75. The average is $2.35.
“Increase to target reflects reduced valuation-period net debt due to debt restructuring partially offset by a downward bias to our target multiple to 4.0 times from 4.25 times. Lower target multiple reflects changes in comp multiples and a move to a multiple that we believe reflects historical and comparable market valuation trends away from one which reflects a government supported equity value based on depressed earnings,” he explained.
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In other analyst actions:
* In response to Simpson Oil Ltd.’s announcement late Friday that it will endorse Sunoco’s bid for Parkland Corp. (PKI-T), CIBC’s Kevin Chiang moved his rating for the Calgary-based company to “tender” from “outperformer” with a $44 target to reflect the offer. The average on the Street is $44.45.
“This removes the potential upside optionality as we believed there was a possibility Sunoco would need to raise its bid,” he said.
* TD Cowen’s Brian Morrison hiked his Aritzia Inc. (ATZ-T) target to $81 from $70 with a “buy” rating. The average is $70.90.
“We believe Aritzia continues to outperform peers to commence F2026, and is positioned to capitalize on its material growth opportunities including U.S. store expansion that remains ‘early days’ and heightened eCommerce penetration,” he said. “We see strong Q1/F26 results, attractive Q2/F26 guidance/growth, upward consensus revisions, and reduced tariff risk looking at F2027, as forthcoming catalysts.”
* TD Cowen’s Craig Hutchison increased his Cameco Corp. (CCO-T) target to $100 from $77 with a “buy” rating. Other changes include: Canaccord Genuity’s Katie Lachapelle to $92 from $83.50 with a “buy” rating, BMO’s Alexander Pearce to $95 from $85 with an “outperform” rating, Scotia’s Orest Wowkodaw to $93 from $88 with a “sector outperform” rating and Raymond James’ Brian MacArthur to $88 from $83 with an “outperform” rating. The average is $85.63.
“Cameco announced a US$170-million increase to its Q2/25 and 2025 Westinghouse EBITDA guidance tied to two new nuclear reactor wins in Czechia,” Mr. Hutchison said. “In addition, CCO expects significant financial benefits for Westinghouse as a subcontractor over the duration of the project construction and future fuel fabrication. We have increased our TP to $100 on higher multiples given positive momentum in nuclear.”
* RBC’s Paul Treiber cut his Enghouse Systems Ltd. (ENGH-T) target to $26 from $30 with a “sector perform” rating, while CIBC’s Stephanie Price reduced her target to $25.50 from $30 with a “neutral” rating. The average is $25.50.
“Enghouse’s Q2 missed RBC/consensus estimates, as macro uncertainty led to delayed new customer deployments, while profitability was lighter than expected, as integration of recent acquisitions is taking longer than typical. Enghouse has ample cash on hand; management continues to see an attractive M&A environment and also intends to ramp up share buybacks,” Mr. Treiber said.
* Seeing it “firing on all cylinders” and “well positioned to leverage key tailwinds,” Raymond James’ Steve Hansen increased his Firan Technology Corp. (FTG-T) to $14 from $11 with an “outperform” rating. The average is $12.67.
“We are increasing our target price on Firan Technology Group ... based upon our increased conviction in the company’s ability to leverage broad-based tailwinds benefitting the global Aerospace & Defense industry,“ he said. ”While the stock has already enjoyed a robust move year-to-date (up 53 per cent), we note that: 1) it continues to trade at a healthy discount to its closest peers; and 2) we believe the company’s earnings power remains broadly underappreciated by the Street.”
* RBC’s Ryland Conrad bumped his High Liner Foods Inc. (HLF-T) target by $1 to $21 with a “sector perform” rating. The average is $20.94.
“We view the acquisition of U.S. seafood brands Mrs. Paul’s and Van de Kamp’s as a logical fit for High Liner’s U.S. retail business and consistent with management’s M&A playbook focused on the North American frozen seafood market,” he said.
* Canaccord Genuity’s Aravinda Galappatthige increased his Rogers Communications Inc. (RCI.B-T) target to $47 from $44 with a “buy” rating. The average is $51.32.
“We are of the view that Rogers’ share price has reflected little to no recognition for its recent efforts to crystallize value for its sports assets, and consequently is positioned for material upside as the process rolls along,” he said. “We believe there is a high likelihood of a transaction involving the sale of a minority interest in Rogers’ SportsCo within 6 to 12 months. We conservatively estimate that the asset base can be valued at nearly $13-billion (management notes $15-billion), and we have illustrated ... that the current attribution for these assets in the stock price is zero, or negligible. We calculate that a 50-per-cent recognition of this value by the market could translate to a 33-per-cent uptick to Rogers’ market valuation.”