Inside the Market’s roundup of some of today’s key analyst actions
While acknowledging the market for oilfield services “lacks visibility” with rig counts continuing to trough with little confidence in the cadence of upstream spending, National Bank Financial’s Dan Payne thinks “in general the resilience (and lack of volatility) of earnings within the group should continue to prove long-term value.”
In a research report released Thursday previewing second-quarter earnings season titled “Wall Street is In Charge”, the equity analyst said he believes “tactical opportunity remains through unique market exposures.”
“Undoubtedly, the upstream activity backdrop has not been inspiring for investors, with rig counts down 5-10 per cent year-to-date in the Lower 48, and tangibility of the outlook in flux given risks to the macro (operators requiring mid-$60’s with stability to provide any increment),” he said. “As that reality has sunk-in, drag has increasingly translated through OFS earnings estimates, and the equities have generally underperformed the E&P’s (down 15-20 per cent year-to-date vs. FLAT). This is all evidence of the fact that ‘Wall Street is in charge’, for both activity and outcome of equities (not the U.S. Admin.).
“While there is little visibility to that changing (OFS Major’s hold mixed outlook for Q2/25 & H2/25; flat to down top line with margins diverging), there are unique segments of the market that continue to provide tactical opportunity, and ultimately, offer relative stability to earnings & value off a low base of expectations. Notably, Canada remains differentiated to the U.S. market, with rig counts benefiting from structural support domestically, from such trends as LNG (gas basins activity buoyed by LNG, with resonance thereafter) and multi-laterals (heavy oil the benefactor of prior TMX expansion, with resonance thereafter). Moreover, the ‘intensity thematic’ continues to be entrenched throughout the space, as operators leverage applications to high-grade returns in support of sustainability. Each of these trends lends themselves well to the resilience of returns of our domestic coverage, which should be benefactors throughout, but whose valuations (trading at a 30-per-cent discount to historical) is not pricing-in that opportunistic positioning.”
While Mr. Payne reduced his activity forecast to largely fall in line with five-year average as well as “modestly” lowering his sector estimates, he kept his target prices for stocks in the sector largely intact to “reflect that relative resilience.”
He also emphasized he’s “edging back in to the space” with his first OFS upgrade and “outperform” rating “in over a year (buy the dip)!” by raising his recommendation for CES Energy Solutions Corp. (CEU-T) from his “sector perform” previously.
“Overall, we are highlighting the tactical opportunities offered through the unique market exposures of our domestic coverage, which is not fairly appreciated by the street,” he explained. “That differentiated positioning should be increasingly observed through the balance of the year, and if not, then we wonder if an M&A cycle doesn’t emerge (backfilling lagging earnings in ROW with higher-quality CDN earnings; U.S. comps offered within). Recall, in most scenarios, stability of returns, and outcome to free cash flow remains strong, with little inherent risk as balance sheets remain strong.
“As a reflection of that, and based on a ranking of YTD equity & valuation performance and relative earnings & FCF momentum, we have amended our pecking-order for the group as CEU (upgraded to Outperform), TCW, PD, PSI & EFX (from prior CEU, PD, PSI, TCW & EFX), while believe that the dispersion within this group remains very low (dealers choice, remains).”
For Calgary-based CES, Mr. Payne kept a target price of $14.50 per share. The current average target on the Street is $9.56, according to LSEG data.
“Wild to say, given it being the darling of the group, but CEU has shown the greatest underperformance off recent highs of any of the names in our coverage (down 35 per cent vs. peers down 15-20 per cent),” he said. “To be fair, that was off very solid performance, each (up & down) being the product of a confluence of exogenous factors (not of its own control), but the opportunity for the name has meaningfully changed as a result. Hard to say that it’s a good thing when a stock goes down, but suffice it to say, we welcome the underperformance, as that, in association with the fundamental outlook, has us increasing our confidence in the opportunity for the stock; as a result we are UPGRADING CEU to Outperform (from Sector Perform) as our first positive OFS rated stock in well over a year!!! Simply put, while the macro backdrop remains muted, we continue to see better relative opportunity in the fluids space, as its earnings are insulated through the high-entrenchment & exposure (i.e. market share) to the “intensity thematic” (increasing demand for consumable fluids), and diversified business lines (i.e. production chemicals 50-60 per cent of revenue)."
Mr. Payne’s lone target adjustment was moving Precision Drilling Corp. (PD-T) to $100 from $110 with a “sector perform” rating. The average is $101.81.
“The driller continues to best exemplify this market, where although Lower 48 activity is languishing, its strength of operations in Canada and overall diversity (C&P & International) continue to prove insulation,” he said. “To that end, its operations north of the border remain stout, with its high-spec (super single & triples) proving strong utilization (albeit through break-up in the period) with decent visibility through the back-half (a more level-loaded activity slate to the prior year), and which should continue to be seen through margins within the guided range for the period (approximately $14,000/day, down 5 per cent quarter-over-quarter with seasonality). That is in almost total opposition to the Lower 48 market, which continues to experience drag (possible that customer funded rig moves north could occur), where oil activity has stabilized in the trough (not declining, but no visibility to inclining until commodity prices materially inflect on a sustained basis), and gas activity (a core competency) is providing a silver lining with strong market share being realized for increased utilization in the Marcellus & Haynesville.”
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Ahead of second-quarter earnings season for Canada’s energy sector, Raymond James analyst Michael Barth and Luke Davis updated their commodity price deck forecast and made adjustments for company-specific estimates, leading to four rating changes for stocks in their coverage universe.
They upgraded these companies:
* Whitecap Resources Inc. (WCP-T) to “strong buy” from “outperform” with a $13 target, up from $12. The average is $12.91.
Mr. Davis: “We are upgrading Whitecap to Strong Buy from Outperform given we believe the magnitude of the valuation discount to larger-cap peers is unwarranted and see several potential upcoming catalysts over the next couple of quarters that could drive a reversal. The stock is down 10 per cent year-to-date, materially underperforming the S&P/TSX capped energy index (up 1 per cent year-to-date) despite above average sustainability metrics, top-decile breakevens, and strong balance sheet, though post-deal leverage screens above peers. In our view, relative underperformance has largely been driven by capitulation associated with the company’s acquisition of Veren, see our note, though we expect integration to be fairly seamless with current guidance including plenty of room to offset potential operational noise.”
* Surge Energy Inc. (SGY-T) to “outperform” from “market perform” with an $8 target, up from $6. Average: $8.81.
Mr. Davis: “We have upgraded Surge to Outperform from Market Perform and increased our target price to $8.00/share from $6.00/share, previously. We highlight continued operational momentum at Hope Valley and in SE SK, which likely presents some upside to our current estimates as capital efficiency improvements work through the business. In the context of the current oil pricing environment, we believe management may look to optimize capital spending and believe there is room to trim without materially impacting guidance figures. While leverage is above peers in out years, we think leverage is manageable and a strong hedge profile through 2025 provides a meaningful buffer.”
They downgraded these companies:
* Imperial Oil Ltd. (IMO-T) to “market perform” from “outperform” with a $107 target, up from $105. Average: $99.21.
Mr. Barth: “IMO is up 29 per cent (outperforming XEG, which is up 23 per cent) since we upgraded to Outperform in mid-April, and is now trading through our target. In our view, that’s a big move for the business least sensitive to commodity prices in the Canadian E&P universe (lowest breakevens). With the Investor Day in the rearview mirror and any SIB potential at least a couple quarters out, it’s also challenging for us to see any near-term catalysts to drive continued outperformance. Despite what we view as one of the highest quality businesses in the Canadian energy space, we’re downgrading IMO to Market Perform, and now see better risk-adjusted returns elsewhere in our coverage universe.”
* NuVista Energy Ltd. (NVA-T) to “market perform” from “outperform” with a $17 target (unchanged). Average: $17.33.
Mr. Davis: “We have downgraded NuVista shares to Market Perform from Outperform previously with our target price unchanged - while our commodity deck improved, this was offset by a tempered outlook for the year on third party facility delays. We continue to like the business and believe the stock is relatively inexpensive but given a 29-per-cent run since our initiation in early April, we are taking a breather given we see better opportunities among peers near-term. With quite a lot of optimism built into gas-equities, we would not be surprised to see the group retrace somewhat, particularly through the balance of summer alongside weak pricing.”
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Citi analyst Spiro Dounis sees “a larger, more connected” Keyera Corp. (KEY-T) with its $5.15-billion purchase of a Canadian natural gas distribution network from Plains All American Pipeline LP.
“The acquisition materially increases KEY’s scale, brings in new customers, enhances the C3 offering, and adds market access to the east,” he said in a research note. “We estimate roughly 16-per-cent DCF/unit accretion in the first year – congruent with management guidance. The initial $100-million synergies appears conservative. The enhanced cash flow and partial equity funded deal also makes deleveraging to 2.5 times by year-end ’28 a light lift, in our view. That said, management could opt to use balance sheet capacity to support opportunistic bolt-on M&A – something for which we believe the company still has a strong appetite. KEY’s current trading level implies 8.0 times ’28 estimated EBITDA when projects enter service and more commercial synergies are likely realized – compelling, in our view."
Mr. Dounis is now projecting second-quarter EBITDA from the Calgary-based company of $253-million, below the average on the Street of $280-million, pointing to the impact of the planned outage at Alberta EnviroFuels as well as maintenance, and seasonally lower frac utilization.
“We expect a $37-million headwind from the AEF outage; that said, we still expect KEY is tracking inline with the $310-350-million,” he said. ”Marketing margin guidance – lower feedstock prices should be a minor tailwind. Octane premiums are strengthening into driving season, which should benefit 3Q. Within G&P, Wapiti volumes fell 15 per cent month-over-month in April – presumably on maintenance. The downtime likely enabled capacity testing, which could result in increased plant capacity from here. Outside of earnings, we suspect the 7-8-per-cent fee-based growth guidance for standalone KEY is intact; it’s likely too early for a pro-forma KEY/PAA NGL assets guidance update, which could be a ’26 event. We expect a light commercial earnings with KAPS Zone 4 sanctioned."
Reiterating his “buy” rating for Keyera shares, he raised his target by $1 to $51 to “reflect the accretive cash flow benefits from the Plains Canadian NGL acquisition.” The average on the Street is $50.38.
“We expect impending capital efficient EBITDA growth. Importantly, capital deployed over the last several years underwrites this organic growth with limited spending from here to achieve growth targets,” he concluded. “Accordingly, we expect KEY to generate excess FCF that can be used to repurchase shares, increase its dividend at an accelerated rate, or reinvest in growth – a stark contrast from several years of a cash flow deficit. The Canadian NGL asset acquisition materially increases KEY’s scale, brings in new customers, enhances the C3 offering, and adds market access to the east. KEY’s tighter valuation spread and capital efficient growth outlook create a compelling valuation offering, in our view.”
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Ahead of the July 31 release of Bombardier Inc.’s (BBD.B-T) second-quarter results, National Bank Financial analyst Cameron Doerksen sees “positive momentum in the company’s business and increased visibility on the sustainability of new jet deliveries beyond 2026.”
Shares of the Montreal-based plane manufacturer soared 21.4 per cent to a seven-year high on Wednesday in response to a late Monday announcement it had signed a deal for 50 Challenger and Global jets, alongside a services agreement, for US$1.7-billion.
“Bombardier shares have been exceptionally strong of late, now up 47 per cent year-to-date (versus TSX up 8.7 per cent) after the significant share price move on Wednesday,” he said. “However, while some risks around tariffs and the macro-economic picture remain, we believe there is still upside for the stock based on the following: * End market conditions for new business jet orders are positive and the large 50-unit firm order announced earlier this week gives us greater confidence that Bombardier can sustain aircraft deliveries at 150+ through 2027; * Bombardier is already enjoying strong momentum in its Defense segment and as we will highlight in an upcoming report, the company should see some further benefits from Canada’s large increase in defence spending * With leverage continuing to come down (we forecast 2.2 times at the end of 2025 and 1.5 times at the end of 2026) and the company refinancing at lower interest rates, the balance sheet is progressively moving towards investment grade. In mid-June, S&P upgraded Bombardier’s credit to BB- from B+.”
Even with the Wednesday’s substantial gain, Mr. Doerksen thinks the relative valuation for Bombardier shares remains “attractive” with it trading at 9.3 times enterprise value to EBITDA base don his 2026 forecast, which he called “a meaningful discount to the aerospace OEM peer group that trades at 11.5 times 2026 on average.”
Keeping his “outperform” rating, he hiked his target to a Street high of $171 from $115 after updating his previously “conservative” valuation multiple. The average is $129.57.
“Tariff risk has been an overhang for aerospace stocks so far in 2025 and even though Bombardier aircraft are currently exempt from U.S. import tariffs (due to USMCA compliance), we still see potential changes to trade policy as a risk that is likely pressuring valuation, at least to some degree,” he added. “However, we believe that it is increasingly likely that aerospace products globally will ultimately be tariff-free, consistent with a 1979 agreement that kept aircraft and related parts tariff-free among most Western economies. Our confidence stems from the recently agreed U.S.-U.K. tariff deal that will see imports of U.K. aerospace products exempt from tariffs. Furthermore, the U.S. Secretary of Transportation recently publicly stated that he would like to see the aviation industry a zero tariff industry as per the 1979 agreement. The key argument in favor of zero tariffs from the U.S. perspective is that the country is a net exporter of aerospace products ($75 billion annually) so it would be in the best interests of U.S. industry to remain tariff-free. U.S. industry trade groups and companies have also vocally supported a zero-tariff policy on aerospace product.”
Elsewhere, others making target adjustments include:
* TD Cowen’s Tim James to $151 from $128 with a “buy” rating.
“Bombardier is overdue for a re-rating in our view, and recent developments have kickstarted this process. BBD fwd EV/EBITDA discount vs A&D comps remains significantly more than historical average. Although recent strength could lead to short-term profit taking, we don’t view size of discount vs comps as appropriate, and view growth and deleveraging as likely to move stock higher,” said Mr. James.
* Desjardins Securities’ Benoit Poirier to $175 from $140 with a “buy” rating.
“Given it already holds a 18–24-month backlog (plus >200 options), the new order/options further boost visibility,” he said. “The Challenger’s success despite its age supports our view that BBD does not need a clean-sheet aircraft in the medium term. We have raised our valuation multiple and lowered our risk rating, reflecting stronger confidence in BBD’s FCF profile through decade-end, ideally positioning the company to begin returning capital next year.”
* CIBC’s Kevin Chiang to $140 from $115 with an “outperformer” rating.
“Despite the tariff noise, demand remains healthy,” said Mr. Chiang. “BBD noted on its Q1/25 earnings call that its order pipeline and customer engagement was strong throughout the quarter, but some deals did shift to the right amidst the economic uncertainty of the first quarter. This significant order supports BBD’s comments.
“This orders adds to Bombardier’s revenue visibility and backlog. BBD had noted its backlog extended out two years and this recent order pushes this out further. In addition, this contract supports BBD’s service revenue target of $2.8-$3.9-billion by 2030. At the end of Q1/25, BBD’s TTM [trailing 12-month] service revenue was just over $2-billion.”
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Desjardins Securities analyst Gary Ho thinks Exchange Income Corp. (EIF-T) has “established itself as a consistent quality compounder with a solid track record of successful M&A, often in niche markets, with a focus on the aerospace & aviation and manufacturing sectors across North America.”
“EIC has ample runway for organic and inorganic growth, especially in relation to the ‘silver tsunami’ tailwind,” he added. “Meanwhile, investors should be rewarded with steady dividend increases.”
In a research report released before the bell, he initiated coverage with a “buy” rating.
“We are positive on EIC for several reasons: (1) A proven M&A recipe — since 2004, EIC has executed on 30+ acquisitions, putting $3.5-billion of capital to work in businesses with market-leading positions, strong leadership, attractive FCF and a history of delivering solid returns over varying cycles. (2) Multitude of growth avenues in aerospace & aviation, including increased traffic in northern Canada, the Atlantic provinces and remote communities, the Canadian North acquisition, increased focus on Arctic security and a growing ISR presence opening the door to a prospective Australian ISR contract win. (3) Utility spending in the US and Canada providing tailwinds for its matting business. We believe its composite mat rental buildout could generate favourable returns,“ he explained.
“Catalyst-rich story: (1) The acquisition of Canadian North (closed on July 2, 2025) offers both offensive and defensive benefits; (2) multiple promising RFPs in the pipeline, including the ongoing lucrative Australian ISR bid; and (3) multi-year utility infrastructure investment cycle should benefit EIC’s matting business, where it is a top 3 player in the growing composite market.”
Mr. Ho set a target of $73 per share, pointing to a potential retirm 20.6 per cent. The average target on the Street is $71.42.
Elsewhere, with the close of its $205-million acquisition of Canadian North, National Bank’s Cameron Doerksen raised his target to $81 from $73, keeping an “outperform” rating.
“The closing comes earlier than expected, indicating that there were no major competition considerations from regulators,” Mr. Doerksen said. “Although revenue and profitability of Canadian North have not been disclosed, EIC essentially paid asset value for a profitable business that comes with solid revenue and cost synergy potential. We see the acquisition as highly strategic for the company.”
“Beyond the Canadian North acquisition, we continue to see solid growth ahead for EIC in 2025 and 2026 driven by contract wins including (1) ongoing ramp and year-over-year growth from medevac contracts in B.C., Manitoba, and starting in 2025, Newfoundland; (2) contract expansion on the U.K. aerial surveillance contract; (3) leasing growth at Regional One, and (4) growth in the Windows segment (skewed to 2026 and beyond). We also expect to hear on whether EIC is the successful bidder for the large Australian aerial surveillance contract in the coming months.”
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RBC Capital Markets analyst Ken Herbert continues to think North American’s small-cap defence technology sector is poised for continued outperformance," citing “the growth in fiscal 2026 defence spending, idiosyncratic positioning in growth markets (space, missiles, missile defense, hypersonics, unmanned, AI), as well as some company specific valuation mismatches (DCO).”
“While investor concerns about FY27 defence growth are legitimate, we believe the 12-per-cent growth in the FY26 total Department of Defense (DoD) spending (22-per-cent growth in investment spending), coupled with a greater focus on low-cost, disruptive technologies and evolving purchasing requirements, will continue to favor small cap defence stocks over the defence primes,” he said in a report released Thursday.
“For the small cap growth stocks, we remain Outperform on AVAV, KRMN and KTOS, with a preference for AVAV due to its valuation discount relative to peers, and its enhanced competitive position post the Blue Halo acquisition. For small cap value, we remain Outperform on DCO and MDA, with a preference for DCO due to its engineered products portfolio.”
Mr. Herbert thinks the positive re-rating occurring across the industry is “sustainable and can support continued outperformance.”
“We believe these companies’ exposure across high-growth priorities within the DoD supports this narrative (missile and missile defence, space, autonomous systems, hypersonics, AI), as well as the current Administration’s focus on fostering greater competition and opportunities for smaller defence players,” he sai.
For Brampton, Ont.-based MDA Ltd. (MDA-T), he raised his target to $42 from $35 and reaffirmed an “outperform” rating. The average is currently
“We believe the company will continue to benefit from the positive re-rating across small-cap defence and space companies,” he said. “The company remains on track to increase its production capacity on satellites to 2/day with the expansion of its Montreal facility. Company management remains hopeful that they will receive 1-2 large constellation orders by the end of the year, which we would view as a large, positive catalyst for the stock. We continue to view incremental order activity as the most critical factor for sentiment on the stock. We also believe MDA will continue to benefit from a scarcity of pure-play, publicly traded space stocks.
“Earlier this week, the company announced that the Government of Canada is extending their MDA Space contract for continuous maritime awareness and security via Radarsat2. Although not too incremental to Geointelligence revenues for FY25 or FY26, we view it as a positive commitment to additional Earth observation. MDA continues to expect its CHORUS constellation to launch by mid-2026 with a commissioning period to take place during 2H26. We then expect CHORUS and Radarsat2 to contribute to revenue generation in 2027 as most customers adopt use of CHORUS over the aging Radarsat2.”
Elsewhere, Scotia Capital’s Maher Yaghi downgraded MDA to “sector perform” from “sector perform” previously, saying he’s “taking some profits on valuation” while noting its “growth story continues.” His target rose to $39 from $33.
“Although we have been nothing but impressed by solid execution since assuming coverage, we are taking our foot off the gas for now as the stock has more than quadrupled over the past two years (year-to-date up 22.7 per cent vs. TSX up 8.7 per cent) and forward multiples are looking more or less in line with closest comps,” said Mr. Yaghi. “To be clear, we are not worried about long-term growth prospects, which we view as strong all across, particularly for the satellite business as MDA is launching significant satellite making capacity in Quebec. However, we see the risk/reward as relatively balanced at current levels with the key risks (high customer concentration, potential competition, working capital volatility, and potential lumpiness in growth) being balanced by potential revenue and cash flow catalysts (more major contract wins and/or positive FCF surprises). We continue to like the fundamental story but would prefer a better entry point, considering space investors are bulled up on the sector likely following recent IPOs.”
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In other analyst actions:
* Coming off research restriction following the close of its acquisition of Strathcona’s Kakwa assets, BMO’s Randy Ollenberger raised his Arc Resources Ltd. (ARX-T) target by $1 to $33 with an “outperform” rating. The average is $34.07.
“ARC remains one of our top picks as its higher condensate exposure materially enhances its free cash flow potential and assists in navigating weakness in gas prices. We believe the addition of SCR’s (Restricted) Kakwa asset further improves these desirable attributes and will allow it to accelerate shareholder returns,” he said.
* In response to the release of its initial Mineral Resource Estimate (MRE) for its 100-per-cent owned Kay Mine Project, Stifel’s Cole MacGill cut his Arizona Metals Corp. (AMC-T) target to $2.50 from $6 with a “buy” rating. The average is $2.31.
“Headline maiden MRE for Kay has come in at a skinny 10.1MMt [million tons] at 3.1-per-cent CuEq for just shy of 700MMlbs CuEq [copper equivalent]; 93 per cent of tonnage is in the indicated category,” he said. “This number is well shy of street estimates (15-20MMt) and will come likely as a disappointment to investors given the +4 years & 133km drilled on the project post the historic, non NI 43-101 6MMt @ 5-6-per-cent CuEq Exxon resource. That said, post reset, we think stock is approaching the ‘too cheap to ignore territory’ ($0.12/lb CuEq, ie comps VMS asset in situ + no value for Sugarloaf); and would intimate post reset, we see a dual track derisk (PEA + further met work by year end) + drill (with only 7-per-cent inferred, much of the forward drill budget can go towards exploration) thesis, while firmly in the ‘show me camp’.”
* CIBC’s Stephanie Price resumed coverage of BCE Inc. (BCE-T) with a “neutral” rating and $33 target, down from $52, and Rogers Communications Inc. (RCI.B-T) with an “outperformer” rating and $55 target, down from $76. The averages are $33.17 and $51.25, respectively.
“The Canadian telecom sector is trading below U.S. peers, near trough levels. ... We conclude that while the traditional premium to U.S. peers is not warranted in the current environment, we believe that Canadian telecoms should be trading roughly in line with U.S. peers. With the pricing environment stabilizing, we see valuation upside at current levels, although we expect it will take several years for the Canadian telecom customer base to completely reprice. Our top picks include Rogers, Quebecor and TELUS,” she said.
* Haywood Securities’ Gianluca Tucci increased his target for Kits Eyecare Ltd. (KITS-T) to a Street-high of $21 from $18 with a “buy” rating. The average is $17.93.
“KITS is well-positioned to continue delivering outsized growth and leading the industry’s charge from bricks-to-clicks,” he said. “Our DCF-based TP moves higher on refreshed forward estimates and a lowered discount rate to 14 per cent from 15 per cent, reflecting the Company’s robust financial standing.”
* Berenberg’s Richard Hatch raised his Wheaton Precious Metals Corp. (WPM-N, WPM-T) target to US$95 from US$87 with a “buy” rating. The average is US$96.97.