Inside the Market’s roundup of some of today’s key analyst actions
RBC Dominion Securities analyst Walter Spracklin lowered his first-quarter financial expectations for North American railway companies on Monday, in part, to “reflect increasing risk resulting from tariffs.”
“In terms of key areas of focus into earnings, we highlight: 1) Q1 demand has been solid overall, with one month of extraneous costs associated with severe weather; 2) Q1 exit trends, given inordinate strength in March, appear to be shaping up really well following a tough February ...w ith the big question being how much of this is due to pull forward and how much relates to underlying demand; and 3) despite uncertainty, we do not expect the rails to adjust or suspend guidance,” he said in a report released before the bell.
For Canadian Pacific Kansas City Ltd. (CP-T), which remains atop his pecking order of stocks in the sector, Mr. Spracklin reduced his quarterly earnings per share estimate to $1.05 from $1.11, falling below the consensus on the Street of $1.07 due “entirely due to severe weather in February.”
“Our 2025 EPS growth estimate of up 16 per cent (from up 17 per cent; consensus up 15 per cent) aligns with guidance for EPS up 12-18 per cent, reflecting company-specific growth opportunities, strong pricing, and solid margin improvement,” he said,
Keeping an “outperform” recommendation, Mr. Spracklin’s target for CP shares declined to $122 from $128. The average target on the Street is $127.17, according to LSEG data.
“Our positive view on CP centers on a best-in-class railroad ahead of a transformative acquisition, which we believe will set the stage for significant growth and a material upward valuation re-rate,” he said.
His quarterly EPS projection for Canadian National Railway Co. (CNR-T) slid to $1.80 from $1.91, falling in line with consensus, due to lower volumes and higher expected costs reflecting weather disruptions in February.
“Our 2025 EPS growth estimate of up 14 per cent (from up 15 per cent; cons. up 12 per cent) is at the high end of guidance for EPS up 10-15 per cent,” he added. “We see improving car velocity trends in March as setting the stage for meaningful operating ratio improvement in Q2, which we see as a potential catalyst for the shares to the extent current trends can be sustained.
Mr. Spracklin’s target for CN shares dipped to $165 from $171 with an “outperform” rating. The average is $170.77.
“Our Outperform rating is based on favourable network dynamics as well as GDP plus growth opportunities and potential for margin improvement, in addition to discounted valuation in our view,” he said.
On the broader sector, he said: “CPKC continues to trade at a premium to the group – however, this has come off meaningfully since the U.S. election and we view as a compelling opportunity (see Exhibit 1). CN trades below the group despite historically having traded at a premium, which we believe has created an attractive buying opportunity given the network is running very well exiting a tough February as evidenced by car velocity trends. The U.S. rails are mixed, with UNP’s valuation elevated versus its recent relative range but with still room to increase in our view on the back of the CEO’s operating leadership and the company’s network reach. NSC’s valuation is toward the higher end of its relative range following continued indication the company’s COO is enacting operating change at the company. CSX continues to trade a discount to the group, likely reflecting a lack of company-specific opportunities and indication the first half of 2025 will be challenged from a cost perspective”
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Citi analyst Alexander Hacking thinks Agnico Eagle Mines Ltd. (AEM-N, AEM-T) is “still the best house in the gold neighbourhood.”
In a note released Monday, he raised his forecast for the Toronto-based company as the firm’s global commodity team “remains broadly bullish gold with prices supported by U.S. economic uncertainty and EM central bank buying.”
“The scale and implementation of U.S. ‘reciprocal tariffs’ will be key to commodity price developments over the coming quarter and through 2025,” the firm said. “We believe that the market could be significantly under-pricing the impact of the upcoming April 2 U.S. reciprocal tariffs (due in less than two weeks time) on growth and commodity prices, and strongly recommend clients take insurance against adverse outcomes, or take outright exposure to these risks. Our belief is based on what President Trump and his administration have been saying for months regarding tariffs, alongside recent details given by U.S. Commerce Secretary Lutnick which point to as much as 15-30-per-cent headline tariffs being announced on April 2 and ‘baseline’ reciprocal tariffs in the vicinity of 15-20 per cent (effectively broad tariffs).
“The impact of the upcoming April 2 reciprocal tariffs on global growth, and drive for the U.S. to lower the government budget deficit (bearish U.S. growth) underpin our bullish GOLD view for the next 3 months (we upgrade to $3,200/oz, from $3,000/oz) and bearish OIL view for 2025 (down to $60-63/bbl Brent in 2H’25). Further, we believe that President Trump wants, needs, and will persist in his drive for lower OIL prices (including potential domestic oil subsidies/tax cuts) to mitigate the impact of the tariffs on inflation and help bring down interest rates.”
Mr. Hacking expects Agnico’s first quarter of the current fiscal year to be “generally eventful.” He’s now projecting earnings before interest, taxes, depreciation and amortization (EBITDA) of US$1-billion and earnings per share of 40 US cents, compared to US$934-million and 70 US cents a year ago.
“Gold is up nearly $500/oz year-to-date and most of this should flow into pre-tax income with cost inflation relatively limited outside of royalties (especially given the relatively strong USD),” he said. “This equates to 2 per cent additional FCF yield (3.5moz x $500 x (1-35-per-cent tax)/$54-billion). AEM multiples at $3,000/oz are 8.5 times EV/EBITDA and 3-per-cent FCF. AEM trades at a premium to peers but this is justified by its very long track record of success, in our view.”
After raising his full-year EBITDA by 5 per cent (to US$6.4-billion), Mr. Hacking increased his target for Agnico’s NYSE-listed shares to a Street-high of US$140 from US$100, keeping a “buy” rating. The average is US$110.29.
“Agnico is an excellent company in our view, with high-quality assets and a strong operational track record,” he said. “The company has demonstrated superior execution over the past decade. The acquisition of Kirkland Lake added low-cost ounces in good jurisdictions. We currently see more upside than downside in the stock.”
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In a separate report, Mr. Hacking also updated his forecast for Barrick Gold Corp. (GOLD-N, ABX-T) to reflect the firm’s bullish gold view.
“Gold prices are marching higher, to new all-time highs above $3000/oz as the world frets about the impact of President Trump’s tariff impact on global growth, and we expect ETF and other bar investment will drive it up to $3,200/oz over the next 3 months (based on modelling using our fundamental framework for gold pricing), the firm said. “We forecast that total gold investment will remain well above the critical 70 per cent of mine supply threshold, for the ninth consecutive quarter. Over the past 15 years when investment demand rose above this level, prices have tended to rise in order to switch off jewelry consumption and raise scrap supply.”
On Barrick, Mr. Hacking said: “Q25 EBITDA is set at $1.7-billion (vs consensus $1.7-billion) and EPS of $0.29/sh (vs consensus $0.27/sh). Barrick previously guided to 1Q25 being 2025 trough given planned maintenance at PV (thickener) and NGM (Gold Quarry and Goldstrike mills). PV remains key to unlocking near-term upside if it can exit 2025 at more than 700koz/a rate. Gold is up nearly $500/oz year-to-date and most of this should flow into pre-tax income with cost inflation relatively limited outside of royalties. This equates to 4-per-cent additional FCF yield (4.1moz x $500 x (1-35-per-cent tax) / $34bn). GOLD attributable-multiples at $3,000/oz are 6.0x EV/EBITDA and 6-per-cent FCF -the lowest among the large cap golds.”
While he reduced his 2025 EBITDA forecast by 4 per cent (to US$9.5-billion) to reflect the company’s latest guidance while reflecting Citi’s gold price forecast, his target for Barrick shares rose to US$21 from US$17 with a “neutral” recommendation (unchanged). The average is US$22.11.
“Positive factors include low operating costs, a stable balance sheet, new management with a strong operating track record, and potential upside from synergies at the new Nevada JV. Negative factors include some challenging legacy assets, geopolitical risk, challenges to grow production from such a large base, and limited FCF. On balance, we see equal upside and downside at current levels,” he concluded.
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While Lassonde Industries Inc. (LAS.A-T) reported “strong” fourth-quarter 2024 financial results, Stifel analyst Martin Landry cautions its outlook for the current quarter suggests notable headwinds are emerging.
“Lassonde’s shares performed well recently, up 17 per cent in the last three months, a performance supported by the strong earnings growth recently reported,” he said. “The company is embarking on a large CAPEX cycle, building a new plant in New Jersey and modernizing equipment at various locations. This CAPEX cycle is expected to abate in mid 2026 when the company should reap the benefits, namely increased productivity, increased automation, unlocking of new formats/ products and higher employee retention. We believe these should support mid double-digits organic EPS growth, which could be supplemented further with acquisitions. The juice industry is facing structural volume declines but despite these headwinds, Lassonde continues to win market share and growth rapidly. We believe this is underappreciated by investors, which apply a valuation too punitive in our view. One dynamic to monitor is the rapid decline in the price of orange juice concentrate which could be a double-edged sword.”
Shares of the Rougemont, Que.-based food and beverage maker were narrowly higher on Friday following its quarterly release, which included a year-over-year revenue gain of 22 per cent to $738-million, exceeding both Mr. Landry’s $688-million estimate and the consensus projection of $709-million. With gross margins expanding more than anticipated on the back of higher volumes, pricing and lower conversion costs, adjusted earnings per share jumped 63 per cent to $5.13, also topping expectations ($3.81 and $3.96, respectively).
“Lassonde continues to outperform the juice category with growth in both Canada and the U.S., gaining market share despite an industry decline of 3-5 per cent in Canada and a low single-digit decline in the U.S.,” he saidd “Lassonde appears to benefit from the ‘buy Canadian’ sentiment, achieving high single-digit growth in Canada over the past four weeks. In addition, Lassonde expects potential market share gains in specialty foods with Summer Garden, as the premium sauces category is experiencing double-digit growth compared to the overall category’s low single-digit growth. 2025 outlook points to buckets of margin headwinds.
“Lassonde’s outlook calls for revenue increase of 10 per cent year-over-year in 2025, with half of this increase attributed organic growth, roughly evenly split between pricing and volume. However, Lassonde expects some gross margin headwinds due to volatile commodity prices and a weak Canadian dollar. In Q1/25, gross margin erosion is expected as a result of the lag between high prices of apple concentrate and pricing adjustments. Although orange concentrate prices are down 50 pr cent from recent highs, approximately 70 per cent of Lassonde’s exposure is hedged preventing the company from fully benefiting from the recent decline. Sustained low concentrates prices may have to be passed on to customers. On the SG&A front, tariff uncertainties are increasing transportation and warehousing costs, a situation Lassonde expects to persist at least through 1H25.”
Mr. Landry thinks Lassonde’s place in the tariff turbulence “does not appear at a disadvantage,” noting it sources its ingredients and concentrates in similar regions to its competitors.
“The company sources 40 per cent of its U.S COGS internationally, mainly from Turkey, which is not currently exposed to tariffs,” he said. “Approximately 10 per cent of Lassonde revenue is manufactured in Canada and exported to the U.S. These revenues could be subject to tariffs but the company is working to relocate some production in the U.S.”
Keeping a “buy” rating, Mr. Landry raised his target for Lassonde shares to $243 from $225 after rolling forward his valuation period. The current average is $240.25.
“Lassonde’s shares trade at 10 times forward P/E, a valuation that is difficult to understand given the company’s growth prospect, healthy balance sheet and historical valuation,” he said. “The company’s 10-year P/E average stands at 14 times, hence the current valuation is very depressed vs historical levels. Lassonde’s valuation is also heavily discounted relative to its peers, trading at a discount of almost 60 per cent to peers, despite having similar growth prospects.”
Elsewhere, Desjardins Securities’ Frederic Tremblay upgraded Lassonde to “buy” from “hold” and hiked his target to $255 from $205.
“The company ended a transformative year on a strong note, with solid execution of key initiatives in a dynamic environment. Although Lassonde is not immune to tariff uncertainty, it looks poised to reap benefits from its growth, optimization and pricing actions in 2025 and beyond,” he said.
Analysts making target changes include:
* National Bank’s Vishal Shreedhar to $223 from $213 with a “sector perform” rating.
“We consider Q4/24 results to be slightly constructive. EPS and revenue were ahead vs. NBF and EBITDA dollars were in line with NBF (ahead of cons.), with EBITDA margin below our expectation,” said Mr. Shreedhar. “The EPS beat vs. NBF was largely driven by non-operational factors.”
“We believe that margins in Canada were pressured in 2024, in part due to heightened input costs (orange juice concentrates, among others), which could present opportunity. Similarly, heightened capex and an uncertain macroeconomic backdrop are key considerations.”
* Canaccord Genuity’s Luke Hannan to $240 from $225 with a “buy” rating.
“We believe Lassonde’s leading presence in the North American fruit juice and drink markets, the execution of near-term margin expansion initiatives in its U.S. operations, and a clean balance sheet supportive of large-scale M&A, combined with a compelling valuation, create a favourable risk-reward profile for the shares,” said Mr. Hannan.
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In a research report released Monday titled From Overlooked to On Guard, Ventum Capital Markets analyst Amr Ezzat initiated coverage of Toronto-based Xtract One Technologies (XTRA-T) with a “buy” recommendation and a target price of 80 cents that implies a doubling from current levels.
“While unprofitable today, Xtract One has reached an inflection point – its proven AI-driven security platform is gaining rapid traction, and the Company is on the cusp of positive EBITDA within the next two to three quarters,” he said. “A new management team took the reins in late 2020, refocusing the Company on disciplined execution and long-term commercial viability. While we’ve followed Xtract One from a distance over the years, we were never drawn in due to the Company’s earlier, spending-heavy approach. Today, we see a different story unfolding – this team has built a credible track record of cost control, strategic clarity, and consistent progress. We believe the market is still treating Xtract One as a cash-burning startup, creating a disconnect between the Company’s fundamentals and its valuation. In our view, this presents a compelling opportunity to invest ahead of a rapid swing to profitability.
“Xtract One has roughly 5xed revenue, 10xed bookings, and 8xed backlog since F2022, reflecting the accelerating adoption of its platform. Importantly, gross margins have consistently remained above 60 per cent, and operating expenses have grown modestly – strong unit economics that support a clear path to breakeven EBITDA within the next few quarters. Yet despite this progress, the stock continues to trade as if it were a cash-burning startup, a disconnect we expect to correct as Xtract One turns profitable and demonstrates operating leverage.”
In justifying his bullish view, Mr. Ezzat argue high-profile customers and strategic partners are “validating Xtract One’s technology and amplifying its go-to-market reach.”
“Madison Square Garden Entertainment (MSG-NYSE, NR) – an early customer and 16-per-cent equity owner — has deployed Xtract’s system at iconic venues and lends significant credibility to the product. The Company’s partnership with Oak View Group (a major arena developer/operator) further extends its sales channels, turning marquee venue deployments into reference sites that attract new customers,” he said. “These relationships create a powerful flywheel effect, accelerating commercial traction across sports and entertainment markets.”
He said his 80-cent target “reflects the Company’s strong growth outlook and pending profitability inflection.” It is narrowly under the $1 average on the Street
“In short, we believe Xtract One offers a rare combination of high growth, a near-term path to profitability, and strong competitive positioning – at a valuation that fails to reflect this progress,” he concluded.
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In other analyst actions:
* Pointing to a “sea change” in Bank of Nova Scotia’s (BNS-T) operating outlook given international trade tensions, BofA Securities’ Ebrahim Poonawala downgraded its shares to “neutral” from “buy” previously, seeing a “relatively narrow path” to outperformance given its “idiosyncratic risks,” including Mexican and Latin American exposure, and emphasizing increased vulnerability due to rising trade tensions and difficult macroeconomic conditions. His target slid to $70 from $82, falling below the average on the Street of $78.40.
* Barclays’ Adrienne Yih lowered Canada Goose Holdings Inc. (GOOS-N, GOOS-T) to “underweight” from “equal-weight” with a US$8 target, down from US$10 and below the US$10.13 average on the Street.
* CIBC’s Cosmos Chiu cut his Aya Gold & Silver Inc. (AYA-T) target by $1 to $22 with an “outperformer” rating. The average is $19.47.
“Aya Gold and Silver reported adjusted earnings of -$0.02/sh (GAAP earnings of -$0.23; adjusted for a Tijirit impairment), in line with our estimate of -$0.01/sh and consensus of $0.00/sh,” he said. “With 2024 annual production of 1.646 million ounces of silver pre-released (and in line with revised guidance of 1.6 million-1.8 million ounces), cash costs for the year came in at $19.62/oz (after adjusting for non-recurring expenses), slightly better of our estimate of $20.89/oz. The company also provided 2025 annual production guidance of 5 million-5.3 million ounces of silver, or a tripling of production Y/Y, with cash costs of $15-$17.50/oz. Production guidance for 2025 is in line with our expectation, at better costs. We had been expecting 5.11 million ounces of silver (consensus of 5.23 million ounces) at cash costs of $20.78/oz. At year-end, the company’s cash balance was steady at $49.2 million, compared to $55 million at the end of Q3, which is a solid position for the company and should come as a relief to some investors especially with a much stronger year expected in 2025 from the continued ramp-up at Zgounder.”
* Scotia’s Himanshu Gupta trimmed his Colliers International Group Inc. (CIGI-Q, CIGI-T) target to US$165 from US$166 with a “sector outperform” rating. The average is US$166.29.
* JP Morgan’s Jeremy Tonet raised his target for Pembina Pipeline Corp. (PPL-T) to $62 from $60 with a “neutral” rating. The average is US$62.19.
* While seeing its valuation remaining “compelling,” TD Cowen’s Sam Damiani cut his RioCan REIT (REI.UN-T) target to $22 from $23 with a “buy” rating. The average is $21.63.
“The 10-per-cent drop in RioCan’s unit price since HBC’s CCAA filing exceeds our 4-per-cent estimate reductions and prices-in concerns of further NAV exposure that we do not see as being probable (mainly due to the HBC JV debt being non-recourse),” he said. “With an absolute and relative valuation near historical lows, we see now as a compelling time to add exposure to RioCan.”
* Mr. Damiani also lowered his Primaris REIT (PMZ.UN-T) target to $18 from $19 with a “buy” rating. The average is $18.25.
“Our 2-per-cent/4-per-cent lower FFO/NAV revisions reflect what we believe are all the negative and very little of the potential positive offsets of an assumed wind-up of HBC,” he said. “With the unit price already off nearly 4 per cent since HBC’s CCAA filing, and our post-2025 growth outlook intact, we expect the valuation to respond favourably to further HBC updates from management.”
* Ventum Capital Markets’ Adam Gill initiated coverage of Spartan Delta Corp. (SDE-T) with a “buy” rating an $5.25 target. The average is $6.
“With approximately 600 net potential locations in the Duvernay, we see a value potential of $3.3-billion ($16.45/shr) for the full development of the inventory,” he said. “That said, we do not believe the market will immediately ascribe that value, but expect the Company will gain credit for near-term value creation. Over 2025, we see $101.1-million of PDP additions at strip prices for this year’s drilling, which equates to $0.50/shr (16-per-cent upside), and over 2025 and 2026, we see $282.8-million of value, which is $1.42/shr (44-per-cent upside)
“We see Spartan Delta offering substantially strong CFPS growth as the Duvernay ramps up, forecast at 41 per cent at current strip prices and 48 per cent in a flat US$70/Bbl WTI/US$4.00/MMBtu NYMEX price assumption. This is the value creation from the Duvernay growth, which will increase volumes (expect 18-per-cent production growth on average in 2026 over 2024 levels, with liquids production up 54 per cemt), driving a stronger netback (up 29 per cent in 2026 as the Duvernay makes a sizeable impact on strip, higher at 35 per cent at a flat US$70/Bbl WTI price). In a strip price environment, it would take SDE trading at $4.80 to close that multiple compression gap (49-per-cent upside) and the share price would need to be $5.15 (59-per-cent upside) at flat US$70/Bbl WTI to close the compression gap.”
* National Bank’s Patrick Kenny raised his Tidewater Midstream and Infrastructure Ltd. (TWM-T) target to 15 cents from 10 cents with an “underperform” rating. The average is 33 cents.
* RBC’s Douglas Miehm reduced his Well Health Technologies Corp. (WELL-T) target to $7.50 from $8.50 with an “outperform” rating. The average is $8.68.
“WELL announced a delay in its annual filings due to an ongoing investigation at Circle Medical. We have long believed that the company should streamline its operations to manage the complexity of its business model and its numerous businesses, which it is attempting to do,” said Mr. Miehm. “The current situation suggests management may have overlooked certain aspects of the complexity. Until we receive further clarity, we include a 50-per-cent contribution of Circle Medical in our valuation ($68-million, or $0.27/sh) and have also adjusted our valuation to reflect the current market conditions.”