Inside the Market’s roundup of some of today’s key analyst actions
The Street’s “lofty” expectations for RB Global Inc. (RBA-N, RBA-T) in the second half of its current fiscal year are “at odds” with the difficult macroeconomic environment, according to National Bank Financial analyst Maxim Sytchev.
Accordingly, "being tactical on key drivers lull" and seeing a “construction/salvage lull unlikely to be resolved in the short-term,” he said he’s “moving to the sideline” and lowered his rating for the auction company, formerly known as Ritchie Bros. Auctioneers, to “sector perform” from “outperform” previously.
“For RBA’s legacy Commercial Construction & Transportation (CC&T) business, it can be argued that volume growth tends to be inversely related to pricing growth. Given that pricing is now nearing the end of its normalization following the equipment shortage-driven peak in 2022, should one expect RBA’s CC&T volumes to maintain their trajectory of double-digit year-over-year growth into 2026 and beyond? We believe it would be a relatively tough ask; while it is true that volumes tend to grow if pricing is normalizing after a supply-driven shock, one cannot extrapolate this double-digit growth linearly and indefinitely,” he said.
While Mr. Sytchev thinks RB’s expense control following its US$7-billion acquisition of U.S. auto retailer IAA Inc. has “been very impressive,” he now wonders: “How much more can we squeeze?”
“When the IAA acquisition was originally announced in late 2022, management expected to achieve an annualized US$100-million to US$120-million in cost synergies by the end of 2025E, a target that was reached (and likely exceeded) well ahead of schedule as integration and optimization of IAA operations progressed much faster than expected,” he said. “This was clearly demonstrated in the combined entity’s SG&A intensity, which fell from 18.8 per cent on an LTM [last 12-month] basis in Q1/24 (Q2/23 was the first full quarter of combined operations) to 18.0 per cent in the most recent quarter. That being said, we believe the extraction of further cost synergies will not come easily given the combination of tougher comps, limited near-term revenue growth, and the necessity of further investment to claw back market share from Copart while scaling operations in key geographies.”
“We model the incremental impact of an immediate recovery of prior Geico market share and another large client (recall that in October 2023, IAA lost an automotive client representing a respective 4 per cent/5 per cent/3 per cent of GTV / lots / revenues, which should be completely lapped in Q2/25E). In this scenario, we estimate 2026E pro-forma GTV, revenues, EBITDA, and EPS to rise by a respective 9 per cent, 7 per cent, 6 per cent, and 6 per cent.”
Mr. Sytchev maintained his US$115 target for RB shares. The current average on the Street is US$113.50.
“We continue to be of the opinion that entry points matter, even if tactical in nature,” he concluded. “We had an Underperform on RBA on valuation concerns at the tail end of the pandemic (a positioning that at times felt pretty painful); following the IAA announcement and the stock’s material correction, we went to Sector Perform in late-2022 and once the post-closing washout took place, upgraded to Outperform in May 2023; shares have since returned 107 per cent since vs. 28 per cent for TSX. RBA’s material outperformance is a function of earnings growth and positive revisions, material progress of closing the operational gap vs. Copart (something that we have channel-checked extensively with insurance carriers, prior to IAA deal closing and 2 years post-close), and multiple expansion to pre-IAA highs.
“When looking over the next 6 months, we see TSX re-admission in June as a positive catalyst (that has been already discussed by many; of course, when RBA was added to S&P 400 shares rallied almost 10 per cent on the day); on the more subdued side of the ledger, we are still cycling through tough equipment comps as a Yellow disposition-sized deal has not repeated and both buyers and sellers are still trying to figure out if they actually need the equipment, pushing disposition to the right; parts pricing uncertainty is also introducing a potentially slower scrappage dynamic on the auto side; net net, H2/25E has to be quite a big turnaround vs. Q1/25 actuals and what we are seeing so far in Q2/25E, something that we have difficulty envisioning given all the moving parts. While market share recapture remains a blue-sky scenario dynamic, according to our numbers, getting Geico / USAA back would move the NAV to US$133 (from the current price of US$107, in addition to expanding the target P/E multiple to 32 times from 30 times in that case), a nice improvement but unlikely to take place in the short-term. All-in, we appreciate the massive progress that management has been able to undertake to close the gap vs. Copart; the safe harbor / uncorrelated thesis is also very much aligned with the times, helping the stock to advance 19 per cent year-to-date. We do nevertheless believe the risk/reward dynamic no longer warrants a mis-priced situation, leading us to move to the sidelines in the short-term. We also need to start thinking about how autonomy can (over time) impact the salvage market. It’s always interesting to note a negative correlation for example between Tesla’s pronouncements and Uber’s same-day stock price reactions; somebody out there cares about that transition. As such, we are downgrading RBA shares.”
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While its first-quarter results came in narrowly ahead of expectations, RBC Dominion Securities analyst Pammi Bir said his earnings outlook for Dream Office Real Estate Investment Trust (D.UN-T) “took another step back.”
“In the context of weak office fundamentals and persistently high levels of macro uncertainty, we expect organic growth to remain subdued,” he said. “As well, there’s still some major work ahead in balance sheet repair. While the sale of DIR units marks a step forward in the process, it comes at a dilutive cost. Bottom line, we remain on the sideline.”
On May 8, the Toronto-based REIT reported headline funds from operations per unit of 68 cents, down 7 per cent year-over-year but exceeding Mr. Bir’s forecast by 3 cents as well as the consensus projection on the Street by a penny. Net operating income came in narrowly higher than fiscal 2024 (up 0.2 per cent) with a narrow drop in Toronto offset by growth elsewhere,
While he called the results “neutral,” he emphasized the impact of its sale of $62-million in Dream Industrial units, seeing “balance sheet repair take priority over dilution.”
“With proceeds used to pay down debt (at lower rates relative to the 10-per-cent FFO yield on DIR), the sales put a dent in our earnings outlook,” he said. “From our perspective, selling DIR at a heavily discounted valuation (32 per cent below our NAV) is far from ideal. In our mind, though, the decision speaks to a sense of urgency to reduce leverage from elevated levels (11.5 times D/EBITDA), low macro visibility, a tough environment to sell office assets, and the ability to minimize taxes. As for its remaining 2.6-per-cent DIR stake, we believe the decision to sell will be partly predicated on the future availability of offsetting tax losses. In the meantime, D’s also exploring the sale of its sole U.S. asset in Kansas.”
Beliving its growth is taking “a hit,” Mr. Bir cut his FFOPU estimate for 2025 by 10 cents to $2.52 and 2026 by 27 cents to $2.62, pointing to dilution for the Dream Industrial unit sale along with lower NOI. That led him to reduced his target for the REIT’s units to $16 from $19 with a “sector perform” rating. The average target on the Street is $17.06
“D’s trading at 32 per cent below NAV (12 times 2025 estimated AFFO/7.7-per-cent implied cap), in line with its office peer and below our universe (18-per-cent NAV discount),” he said. “In our view, current levels reasonably capture its growth challenges, weak office fundamentals, and work to do on the balance sheet.”
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National Bank Financial analyst Vishal Shreedhar thinks Empire Co. Ltd. (EMP.A-T) is likely to benefit from “continued momentum” in food same-store sales growth when it reports its fourth-quarter 2025 financial results on June 19.
“We expect FR sssg (excl. fuel) to see continued momentum with year-over-year higher traffic; we expect higher food store inflation (StatsCan data reflects 3.3 per cent in Q4/F25 vs. 1.8 per cent last year),” he said. “Industry food store sales data from StatsCan was 5.3 per cent year-over-year (vs. 2.8 per cent year-over-year in Q3/F25). (2) Our review of peer commentary suggests: (i) Expectations of rising tariff-related inflation, (ii) Higher sales of locally sourced products from the Buy Canadian movement, (iii) Expectations of increasing square footage, and (iv) Ongoing consumer focus on value.”
For the quarter, Mr. Shreedhar is projecting the Nova Scotia-based parent of Sobeys to reported earnings per share of 70 cents, a penny below the consensus estimate on the Street but 7 cents higher than a year ago. He attributes that 10-per-cent growth to “Food Retailing (FR) sssg, new store openings, a higher gross margin rate, lower interest expense, higher aggregate share of earnings from investments & other income (up 24 per cent year-over-year), and share repurchases.”
“We consider FR segment results to be more meaningful than total company results for the purposes of evaluating recurring earnings power (total company results include contribution from the Investments and Other Operations segment),” added Mr. Shreedhar. “For reference, we model FR EPS of $0.65, higher by 6 per cent year-over-year.”
He now sees its fiscal 2026 to “track the financial framework” previously laid out.
“NBF models F2026 EPS growth of 11 per cent year-over-year (vs. consensus at 10 per cent); recall, Empire’s long term EPS growth objective is 8-11-per-cent annualized,” he said. “Our forecast reflects (i) 3-per-cent sales growth: 2-per-cent FR sssg, store network growth, and continued growth in e-commerce, (ii) 10 basis points FR gross margin expansion (excl. fuel and D&A): lower shrink, slightly lower promo penetration, favourable mix from higher sales in fresh, among others, (iii) slight SG&A leverage, (iv) higher interest expense, (v) share repurchases, and (vi) a higher tax rate. (2) We remain on the sidelines as we look for confirmation of sustainable momentum; however, we note that the valuation is at an interesting discount versus peers.”
Reiterating his “sector perform” recommendation, Mr. Shreedhar raised his target to $53 from $49. The average on the Street is $48.88.
“Looking forward, we believe that EMP has opportunity related to ongoing improvement initiatives and inexpensive valuation. That said, it has structural deficiencies versus peers including an elevated mix of lower growth conventional stores, and less pharmacy exposure,” he said.
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Desjardins Securities analyst Gary Ho sees TerraVest Industries Inc. (TVK-T) “financially armed and ready to strike” following the completion of its upsized bought deal equity offering for gross proceeds of $320.8-million.
“The equity raise brings TVK’s leverage to a more comfortable level, enables it to pursue other M&A growth opportunities (we raised the M&A pace to $80-million/year in FY26 and FY27) while reducing financing costs,” he said in a note after resuming coverage of the Toronto-based manufacturer of home heating products and gas transport vehicles.
“(1) Our pro forma leverage drops to 2.2 times (from 3.2 times previously). Given strong FCF generation, we anticipate leverage grinding lower to 1.9 times exiting FY26 and to 1.5 times by 4Q FY27 when the US DoD contract is fully ramped up. (2) Consequently, our FCF estimates increase due to debt repayment on the new credit facility arranged alongside the EnTrans acquisition. (3) With the lower leverage, we increased our assumed acquisition pace (in purchase price dollars) to $80-million/year in both FY26 and FY27 (was C$50/year previously), which raised our revenue, EBITDA and FCF forecasts. TVK has 300–400 candidates of varying sizes in its M&A pipeline. (4) We increased our valuation multiple by 0.5 times to reflect the more comfortable leverage profile (recall that we had lowered our multiple by 0.5 times post EnTrans when leverage nudged above 3 times)."
With increases to his fiscal 2026 and 2027 revenue and earnings projections, Mr. Ho increased his target for TerraVest shares to $185 from $175, reiterating a “buy” recommendation. The current average is $191.
“Our investment thesis is predicated on: (1) TVK’s long runway of M&A growth potential and disciplined approach of acquiring at 4–6 times EBITDA; (2) its history of extracting value from procurement synergies; and (3) a management team keenly focused on FCF," he noted.
Elsewhere, others making target adjustments include:
* National Bank’s Zachary Evershed to a Street high of $205 from $190 with an “outperform” rating.
“Though the 9.9-per-cent increase in shares creates upfront dilution, with clear indications of strength within the company’s M&A pipeline (as evidenced by the flurry of deals post-Entrans) and ability to accretively deploy capital towards doubling the business again within five years’ time, we opt to increase our M&A growth multiple to 2 times (was 1 time), representing the addition of $400 million of acquired sales/year (without baking it into our estimates explicitly), while maintaining pro forma leverage below 3 times, supported by robust FCF generation,” said Mr. Evershed. “Our target rises to $205 (was $190) on 12.5 times (was 11.5 times) 2027 estimated EV/EBITDA, comprising a 10.5 times base multiple and a 2 times M&A premium (was 1 times) as the balance sheet limitation on pace of acquisitions and size of M&A targets is removed. With a long M&A runway, a stellar integration track record, and a knack for extracting organic growth from historically low-growth industries, we reiterate our Outperform rating.”
* Scotia’s Jonathan Goldman to $179 from $176 with a “sector outperform” rating.
“We do not expect the company to continue the current torrid pace of M&A (five deals in the last five months, including EnTrans, which was its largest deal ever by a factor of 7 times) as deal flow can be lumpy depending on when sellers come to market. To us, the raise was by no means necessary as the company can fund more than 10-per-cent EBITDA/share growth with free cash flow alone, but it does provide incremental dry powder to act opportunistically if a larger EnTrans-sized deal does come along,” said Mr. Goldman.
* Canaccord Genuity’s Yuri Lynk to $195 from $200 with a “buy” rating.
“TerraVest’s balance sheet is now better positioned to allow management to continue its highly successful acquisition program. Recall, TerraVest operates in the highly fragmented cylindrical steel, aluminum, and stainless steel manufacturing industries with hundreds of targets across North America. Management’s ability to wring significant revenue and cost synergies from these acquisitions has made TerraVest one of the best compounders in the industrials space over time,” said Mr. Lynk.
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While acknowledging its “frosty” market reception, Desjardins Securities analyst Chris MacCulloch took a positive view of Vermilion Energy Inc.‘s (VET-T) disposition of non-core assets in Saskatchewan and Manitoba for $415-milllion cash, seeing it “executed on an accretive basis in a downward-trending oil price environment while improving asset concentration and materially reducing balance sheet leverage to support future acceleration of capital returns.”
Shares of the Calgary-based company slid 1 per cent on Friday following the premarket announcement of the deal with net proceeds from the sale to be used to repay debt.
“We were disappointed by Friday’s (May 23) negative market reaction to the disposition, which enabled VET to materially reduce net debt on attractive terms, an important step toward rebuilding investor confidence in the story following its debt-financed acquisition of Westbrick Energy in late December,” said Mr. MacCulloch. “That transformative acquisition was carried out on similar transaction metrics ($1.075-billion purchase price, $275-million NOI, 3.9 times multiple) as the disposition of Saskatchewan and Manitoba assets ($415-million purchase price, $110-million NOI, 3.8 times multiple). Granted, there are several qualitative puts and takes to that approach, but we ultimately believe the company will benefit from the increased geographical concentration, growth potential and natural gas weighting provided by the Deep Basin assets.
“While applauding the disposition, we retain our cautious outlook. Ultimately, we need to see the company continue to string together ‘wins’ to support multiple expansion, both from an operational and M&A perspective, including the potential disposition of the Powder River Basin assets on similarly attractive terms. Longer-term, we would also welcome rationalization of the international portfolio, particularly the assets in France and Australia. Meanwhile, we cannot deny that we were impressed by Friday’s transaction and are growing more constructive on VET by extension.”
He maintained his “hold” recommendation for Vermilion shares, which is based on a limited potential return of $10.50, which is up from $10 previously. The average target is $13.68.
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In other analyst actions:
* CIBC’s Mark Petrie hiked his Aritzia Inc. (ATZ-T) target to $79 from $66, keeping an “outperformer” rating. The average on the Street is $66.70.
“We hosted Aritzia management for investor meetings last week. While significant uncertainty remains in macro conditions and tariff policies, we remain highly confident in the brand’s value proposition and momentum with consumers. We increase our estimates, and while these still embed some tariff impacts and constrained demand, they also reflect our view that Aritzia has pricing power and multiple levers to drive growth,” he said.
* “Expecting another transitional quarter,” Canaccord Genuity’s Luke Hannan cut his BRP Inc. (DOO-T) target to $55 from $60, keeping a “hold” rating, ahead of the May 29 release of its earnings report. The average on the Street is $63.76.
“In our view, BRP shares are likely to remain range-bound over the near-term until investors gain more confidence that operating conditions are poised to improve, which we would expect could happen in the latter half of F2026 at the earliest,” he said.
* In response to U.S. President Donald Trump’s executive orders intended to accelerate regulatory approvals for nuclear reactors, Scotia’s Orest Wowkodaw raised his Cameco Corp. (CCO-T) target to $88 from $80 with a “sector outperform” rating. The average is $81.30.
“For investors looking for exposure to nuclear/uranium, we continue to recommend CCO-T, DML-T, and NXE-T,“ he said. ”For the lowest-risk exposure, we recommend CCO-T. We note that Cameco is uniquely positioned in the market to take advantage of the new pro-nuclear policies in the USA given its dominant market share in Western uranium production, its 49-per-cent interest in Westinghouse Electric Co (WEC), a leading global nuclear services provider (including AP1000 reactor technology), and its 49-per-cent interest in Global Laser Enrichment (a US based technology that has yet to achieve commercial scale).We have increased our target multiples for CCO-T given the positive shift in market sentiment, which in our view, effectively reverses the negative impact of the January Deepseek AI development."
* CIBC’s Todd Coupland increased his Celestica Inc. (CLS-N, CLS-T) target to US$150 from US$120 with an “outperformer” recommendation. The average is US$121.86.
“On Thursday, May 22, we hosted Celestica’s CFO, Mandeep Chawla, for a fireside chat at CIBC’s Technology & Innovation Conference 13.0. In our view, Mr. Chawla’s comments confirm that Celestica is well positioned to meet ‘conservative’ expectations for 2025. This is owing to the company’s visibility into the hyperscaler capex build-out as well as bookings momentum, which has not slowed down,” he said.
* Raymond James’ Craig Stanley initiated coverage of Discovery Silver Corp. (DSV-T) with an “outperform” rating and $4 target. The average is $4.14.