Inside the Market’s roundup of some of today’s key analyst actions
TD Cowen analyst Michael Van Aelst thinks Canada Packers Inc. (CPKR-T) "offers modest long-term revenue growth, solid FCF in normal markets (positive throughout a normal cycle) and an attractive dividend yield."
"As part of MFI, pork business was labeled as volatile and scorned. But past extreme margin moves are explained by highly unusual events and behind it, and fundamentals are now healthy," he added.
In a research report released before the bell, Mr. Van Aelst initiated coverage of the spin-off of Maple Leaf Foods Inc.’s (MFI-T) legacy pork business ahead of its commencement of trading on the Toronto Stock Exchange on Thursday.
Maple Leaf Foods will keep a 16-per-cent stake in the new pork company – a name that dates back to 1927, when three of Canada’s largest meatpackers amalgamated into Canada Packers. The remaining shares will be distributed on a pro-rata basis to existing shareholders, with the executive chair at Maple Leaf Foods and Canada Packers Michael McCain keeping a 33-per-cent stake in the business.
"The spinoff of Canada Packers creates what we view as one of North America’s premier pureplay pork processing companies, with untapped growth potential (albeit modest annually), premium mix, and strong FCF generation,“ said Mr. Van Aelst. ”It frees CPKR to chart its own strategic course, with the main pillar being the optimization of plant utilization though a gradual increase in the number of hogs processed annually to reach capacity over the next 6-9 years. Many Maple Leaf investors appear fixated on the challenged profitability of CPKR’s business in recent years, but we argue that this was the result of three once-in-a-century events that had the company operating in an environment that was far from normal. With those events behind it, and a healthy outlook for pork markets for the next few years, if value investors step in, valuation could settle closer to its peer group average."
While Mr. Van Aelst did not specify a rating for Canadian Packers shares, he was the first equity analyst on the Street to set a target for the newly minted company, settling at $20.
“Early trading is expected to be volatile, though once the initial selling is over, we think CPKR should trade at 5.0-5.5 times EV/EBITDA (at least until it has a longer track record) as this would place it slightly below its peer group average,” he explained. “We use the bottom of this range to start, getting us to our $20 PT 12 months out. It would also imply a current value of $16.40, supported by a FCF (before WC) yield of 17 per cent and dividend yield of 5.1 per cent. We would view the value as attractive below $18 and less attractive above that level.”
Meanwhile, Mr. Van Aelst cut his target for Maple Leaf Foods shares to $43 from $47 with a “buy” rating. The average is $40.07.
“With the spin-off of CPKR, investors searching for a pure play CPG company now have another option,” he said. “With 3 strong quarters under its belt, MFI’s true earnings power and consistency is shining through following years of large investments. It has leading brands, solid innovation, highly automated facilities and cost savings initiatives that we see driving 23-per-cent/11-per-cent EBITDA growth in 2025/2026.”
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RBC Dominion Securities analyst Matthew McKellar thinks Interfor Corp.’s (IFP-T) recently completed bought deal offering of $144-million has put it "on more solid footing to navigate challenging near-term conditions in the lumber market."
“While issuing shares at the recent lows is somewhat painful, we also view the move as improving Interfor’s balance sheet and flexibility amid difficult market conditions, with the company noting weakened lumber markets and an expected non-cash duty expense of US$125-million with Q3 (which will reduce the company’s invested capital) as reasons for raising equity,” he said in a note titled Sowing seeds for what tomorrow may bring.
“With the actions taken on July 28 , Interfor still has a maximum ratio of net debt to invested capital of 50 per cent; however, over the next two years, it is able to increase its leverage level to ‘much closer to the 50-per-cent maximum’ before the EBITDA interest coverage ratio test (more than 2 times) is applied (previously applied at 42.5 per cent). With the equity offering, the company expects its pro forma net debt to capital ratio to be 35-36 per cent, which in our view provides headroom should poor conditions persist or impairments be necessary.”
While he adjusted his forecast to account for the equity issuance, Mr. McKellar also thinks lumber prices “could push higher from here.”
“After rising for 13 consecutive weeks, prices for W. SPF [Western spruce-pine-fir] 2x4s declined $124 per thousand board feet from early August to mid-September, which we think in part reflects a pull-forward of U.S. demand ahead of higher Canadian lumber duties, followed by a de-stocking of inventories,” he said. “Prices stabilized over the past two weeks, leading us to believe that de-stocking likely has concluded, and with the U.S. set to apply 10-per-cent Section 232 tariffs on all imports of softwood lumber from October 14 , we wonder if buyers will view this as the bottom and potentially push prices higher, particularly over the near term before tariffs take effect. While there is little indication of a meaningful demand-side inflection, we think the additional tariff pressure on Canadian lumber producers (who would largely be operating deeply below EBITDA breakeven today) along with an added degree of clarity from the announcement could potentially accelerate Canadian supply curtailments, supporting improved market tension and pricing into 2026.”
Maintaining his “outperform” rating for Interfor shares, Mr. McKellar lowered his target to $17 from $19. The average target is $16.33.
Elsewhere, TD Cowen’s Sean Steuart cut his target to $12 from $15 with a “hold” rating.
“We did not expect that IFP would require an equity raise to provide balance sheet security, but the $143.8 million offering, while dilutive to existing shareholders, addresses questions around covenants and liquidity. Our lower target price reflects dilution tied to the equity offering, lower volume estimates (H2/25 downtime guidance), and more conservative price realization spread forecasts,” he said.
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Scotia Capital analyst Phil Hardie expects the landscape for private equity firms to “experience a gradual but uneven recovery over the next 12 to 18 months, emerging from a period of constrained liquidity.”
“The market is currently defined by a record backlog of unsold assets and elongated holding periods, which has shifted the monetization focus toward sponsor-to-sponsor transactions and a burgeoning secondary market,” he said. “Fundraising is expected to remain highly selective, with private equity investors prioritizing managers who can demonstrate a clear path to returning capital. We believe the primary catalysts for a broader recovery will be a series of anticipated central bank rate cuts, which are expected to narrow valuation gaps and stabilize credit markets, thereby unlocking more traditional exit channels like strategic M&A and IPOs. While a full normalization to pre-2022 levels is unlikely within the next year, the current environment is creating distinct opportunities, particularly within the secondary space, and for managers focused on resilient sectors such as healthcare, services, and digital infrastructure.
“We believe the evolution of ‘secondaries market’ is an important but largely overlooked theme. Private equity secondaries involve the sale of existing private equity fund interests or assets. We think the secondary market is quickly transforming from a niche solution to an important liquidity engine with applications across the private equity ecosystems. Further, we think secondary transaction multiples can provide public equity investors with a benchmark to help gauge P/NAV discounts for stocks such as BBU and Onex.”
In a client report released Thursday, Mr. Hardie argued the “difficult conditions” across the private equity landscape over the past three to four years have weighed on valuations of Onex Corp. (ONEX-T) and Brookfield Business Partners L.P. (BBU-N, BBU.UN-T).
“We estimate NAV discounts have narrowed significantly from recent peaks, but expect further compression as the private equity operating environment continues to improve,” he said. “Industry-wide private equity exits and fundraising have been challenging, but the combination of rate cuts, credit stability and tariff policy clarity are expected to serve as catalysts to drive a gradual, albeit uneven recovery over the next 12 to 18 months. The world is changing, but we think many investors have mistakenly characterized wider NAV discounts at BBU and Onex over the past two to three years as a structural de-rate and are underestimating the influence of several unique factors that we believe are set to unwind.”
The analyst thinks both companies now sit “well aligned with a market rotation toward cyclical and well positioned for a value ‘catch up’ trade given wide market valuation disparities”
“We expect upside to be driven by a combination of NAV growth and a narrowing discount. Despite BBU’s solid rally, we see strong upside potential, with a relatively young investment portfolio, and several levers to draw upon in order to surface further value for shareholders. We believe Onex shares trade well below the value of its invested capital, and offer a free option on its asset management business. We estimate the value of the credit platform at between $16.50 to $21.50 per share assuming a relatively conservative 15 times to 20 times FRE multiple based on its targeted-year end run-rate of FRE of US$55-million.”
Mr. Hardie raised his target for Onex shares to $150 from $140 with a “sector outperform” rating. The average is $146.33.
“Onex remains one of our top value ideas, and we are maintaining our Sector Outperform rating,” he explained. “The stock trades below the estimated current value of its invested capital, with no value being attributed to the asset management platforms or carried interest potential. Onex’s stock currently trades at $121 despite the company’s $166 per share of invested capital, which includes $40/sh in cash and public securities. We estimate stock trades at 27-per-cent discount to its current level of invested capital and almost 36 per cent to our forward NAV estimate with a free option on the asset management platform and carried interest potential. Assuming cash and public stub trade at par, we estimate the current stock price implies the price holdings are trading at 36-per-cent discount.”
He maintained a US$39 target and “sector outperform” rating for Brookfield Business’ NYSE-listed shares. The average is US$36.
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While the third-quarter guidance update from Algoma Steel Group Inc. (ASTL-T) fell short of the Street’s expectations, RBC Dominion Securities analyst James McGarragle sees it “as neutral to sentiment given the recent weakness in the shares.”
“We lower our Q3 estimates to the mid-point of the guide and reduce 2026 estimates on the assumption that extended tariffs will pressure steel volumes through mid-2026,” he added. “That said, we expect the company’s accelerated transition to EAF [electric arc furnace] to enhance cost efficiency and flexibility in a challenging demand environment. Importantly, we believe the company has sufficient liquidity, supported by new loans, to navigate near-term headwinds until conditions improve.”
Algoma Steel pivots early to electric future after securing $500-million in government loans
Shares of the Sault Ste. Marie, Ont.-based company, which is now Canada’s last independent steelmaker, fell 4.3 per cent on Wednesday after it projected total steel shipments to be between 415K and 420K net tons and adjusted EBITDA in the range of a loss of $80-million to $90-million, below the consensus projection of a loss of $76-million, due to the ongoing tariff environment and an over supply of sheet in Canada.
“We extend our assumption of 50-per-cent tariffs into the first half of 2026, which we expect to pressure margins and sheet production, resulting in 2026 estimated EBITDA of $26-million (from $305-million),” said Mr. McGarragle. “Our 2027E remains largely unchanged and reflects a return to a more normalized trade relationship between Canada and the U.S.; although we reflect heightened risk surrounding this in our target multiple.”
He did emphasize government loans and an increase to its asset-based revolving credit facility have ease liquidity concerns in the medium term.
“Algoma recently announced $500-million in low interest government loans and an ABL upsize of $100-milion which we see significantly bolstering its liquidity position, allowing the company to address tariff- related challenges,” he said. “These actions enhance financial flexibility, and we now estimate Algoma’s liquidity to be $800-million. With an anticipated cash burn of $275-million for the remainder of the year, we see the backstop providing liquidity well into 2027.
“EAF acceleration a positive to switch to lower cost, flexible production . We view the decision to fast-track the EAF transition as a strategic move to control costs, despite an incremental $70-million increase in project costs, and flag production will likely decrease due to the lower shipments to the US. Collectively, these recent measures should position Algoma for improved financial resilience and long-term operational stability.”
Maintaining his “sector perform” rating for Algoma shares, Mr. McGarragle cut his target to $6 from $8 following the reductions to his 2026 and 2027 forecasts. The average is $8.25.
“Our price target moves to $6 (from $8), as we roll our valuation year to 2027, and lower our target multiple to 5 times (from 6.5 times) to account for the weaker macro environment and continued tariff uncertainty, which continues to pressure steel pricing and broader industrial demand. Additionally, we assign a Speculative Risk rating to account for the heightened uncertainty associated with a prolonged tariff scenario,” he explained.
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National Bank Financial analyst Mohamed Sidibé thinks Lithium Americas Corp.’s (LAC-N, LAC-T) agreement with the U.S. government for a 5-per-cent equity stake as well as a separate 5-per-cent stake in the company’s Thacker Pass joint venture with General Motors “reinforces the strategic nature of the project” and increases its “overall financial and offtake flexibility.”
“We anticipated a direct government equity layer at the parent level with better repayment structure and the project level,” he said. “The agreement also provides for more flexibility around the GM offtakes, allowing LAC to enter into third-party offtakes on any volumes not purchased by GM. However, the agreement also does require LAC to fund the reserve account with an additional $120-million, which we expect to be raised in equity, specifically following the meaningful share price increase over the past week.
“As a result of this agreement, we reduced LAC’s ownership in Thacker Pass to 59 per cent from 62 per cent, assumed the U.S. DOE’s execution of the warrants, fine-tuned our DOE loan amortization and lowered our project discount rate to 8 per cent from 10 per cent to reflect reduced construction period risk from the Government backing.”
Mr. Sidibé did emphasize the deal, which sent the Vancouver-based company’s already soaring shares higher by 23.4 per cent, did fall “short” of the deal between the Trump Administration and rare earths producer MP Materials Corp. (MP-N) in which the government invested $400-million in equity through the purchase of preferred shares and signed an offtake with a price floor for important magnetic materials over 10 years.
“Our NAV increases 108 per cent to $8.96 per share from $4.95 with the lower project discount rate offset by equity dilution and lower ownership interest in the project,” he added. “We additionally raised our multiple to 1.1 times from 1.0 times to reflect the U.S. critical minerals premium now ascribed to LAC.”
Keeping his “sector perform” rating for Lithium America’s TSX-listed shares, the analyst doubled his target to a Street-high of $10 (from $5). The average is $8.25.
Elsewhere, Canaccord Genuity’s Katie Lachapelle downgraded Lithium Americas to “sell” from “speculative buy” with a $6.25 target.
“We have updated our estimates for the revised debt terms and DOE ownership stakes,” she explained. “While, on the surface, the U.S. government taking a greater financial interest in a domestic critical minerals project may be perceived as a positive, we believe that the recent run-up in the stock price is overdone and does not accurately reflect the valuation implications of the revised deal with the DOE.
“In our view, only minor modifications have been made to the loan. And while these provide increased near-term financial flexibility, we believe that the potential equity dilution of the $0.01 warrants and the requirement for LAC to provide an additional US$120 million to a DOE reserve account in the next 12 months, outweighs the benefit. We also note that, unlike the MP Materials deal, this deal does not include any major additional benefits, like an above-market floor price. As a result, our C$6.50 target is unchanged. Based on our now negative return to target (as a result of the significant run-up in LAC shares over last week), we are downgrading LAC to SELL from SPEC BUY.”
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In a research report released Thursday titled Record gold highs drive turbocharged margins, precious metals analysts at Canaccord Genuity raised target prices for stocks in their coverage universe on Thursday following positive revisions to their commodity price forecasts.
"We have increased our 2025 gold price to $3,320/oz, up from $3,216/oz previously (up 3.2 per cent),“ they said. ”As a result, we now estimate a record AISC [all-in sustaining costs] margin of $1,650/oz, up 88 per cent vs. last year’s record of $880/oz. We now forecast average AISC of $1,670/oz, up 11 per cent vs. 2024. Despite record margins, the sector remains largely disciplined in our view with a focus on executing current organic growth plans, sustaining production levels, reducing debt where possible, modest dividend increases and increasing share buybacks. We also expect to see record share buybacks this year for the senior producers with $1.6-billion bought back to date through Q2 reporting vs. $2.0-billion over 2024."
However, citing valuation concerns, Carey MacRury downgraded a trio of companies:
* Franco-Nevada Corp. (FNV-T) to “hold” from “buy” with a $322 target, up from $270. The average is $258.26.
Analyst: "We are updating our rating for Franco to a HOLD from a BUY and increasing our target price to $322.00 from $270.00 following the strong share performance year-to-date (up 85 per cent), where we now see it fairly valued. Franco is trading at a premium versus its senior royalty peers at 2.32 times NAV versus Royal Gold at 1.40 times and Wheaton at 1.85 times, and is just over its long-term average of 2.21 times. Franco has been active so far this year, announcing a $300-million acquisition for a 4.25-per-cent NSR [net smelter royalty] on Porcupine in January, $1-per-cent acquisition of a 7.5-per-cent gross margin royalty on Côté in May, and $250 million for a 1.0-per-cent NSR on the Arthur Gold project in July. Franco reiterated its 2025 guidance with Q2 results, looking for 465-525koz GEOs, excluding any Cobre Panama restart but including about 10,000 GEOs from on-site concentrate sales expected in Q3/25. We expect growth in H2/25 coming from a full quarter of Côté and Porcupine contributions and higher anticipated deliveries from Antapaccay. The guidance midpoint of 495koz is in-line with our 498koz forecast."
* OR Royalties Inc. (OR-T) to “hold” from “buy” with a $56 target, up from $44. Average: $43.72.
Analyst: "OR is up 112 per cent year-to-date and up 49 per cent in the last three months, outperforming intermediate peers Sandstorm (up 32 per cent) and Triple Flag (up 20 per cent), as well as Franco Nevada (up 32 per cent) and Wheaton (up 21 per cent). The company announced a net cash position with its Q2/25 results, as well as a new upsized and extended $650 million credit facility, supporting additional growth opportunities in the future. 2025 guidance of 80-88 kGEOs (CGe 82.3koz) was reaffirmed with its Q2/25 results, and with H1/25 deliveries at 38.714 GEOs (about 46 per cent of the midpoint), we see OR as on track to achieve its targets. Looking ahead, the 5-year outlook calls for 110-125 kGEOs by 2029 - a rise of more than 40% from 2024 - driven by new contributions from Windfall, Hermosa, and the Island Gold expansion. We are largely in-line with this outlook, estimating 110koz by 2029."
* Triple Flag Precious Metals Corp. (TFPM-T) to “hold” from “buy” with a $42 target, up from $37.50. Average: $39.85.
Analyst: "Triple Flag is up 90 per cent year-to-date, below its intermediate peers Sandstorm (up 119 per cent), and OR Royalties (up 112 per cent), but ahead of seniors Franco (up 85 per cent), and Royal Gold (up 49 per cent). Triple Flag reaffirmed its 2025 sales guidance of 105-115 koz GEO (CGe 108koz), with first-half GEOs reaching 57.4koz. The year so far has been marked by the acquisition of Orogen Royalties in July. Recall the transaction secured a core 1.0-per-cent NSR on AngloGold Ashanti’s large-scale (16Moz resource), long-life, Arthur Gold project (previously the Expanded Silicon project) in Nevada. Total consideration paid for Orogen was approximately $421-million, comprising a mix of cash, Triple Flag shares, and shares in a newly formed Orogen Spinco, representing $2.00 per Orogen share on a fully diluted basis."
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In other analyst actions:
* Barclays’ Brandon Oglenski cut his targets for Canadian National Railway Co. (CNI-N, CNR-T) to US$97 from US$99 with an “equal-weight” rating and Canadian Pacific Kansas City Ltd. (CP-N, CP-T) to US$90 from US$91 with an “overweight” rating. The averages are US$113.47 and US$88.29, respectively.
"Transport estimates again trimmed into 3Q results as weak industrial growth and continued oversupply temper sector yield and margins; M&A a relevant topic for rail investors and we upgrade C.H. Robinson shares to Equal Weight as the company delivers AI-enabled efficiency gains in a soft market," he said.
* In a report titled Solid Waste: Is The Market Taking Too Punitive A View On H2/25 And 2026?, CIBC’s Kevin Chiang cut his GFL Environmental Inc. (GFL-T) target to $79 from $81, keeping an “outperformer” rating. The average is $74.29.
"Since April 30, the waste names have underperformed the broader market by an average of 27 per cent. We attribute the bulk of the underperformance to a rotation away from defensive sectors such as waste. The other concern we often hear from investors is the risk of negative earnings for the waste sector given the downward move in commodity prices. In this report, we make the case that we are at the extremes in terms of the rotation trade while we estimate that the downside risk to H2/25 and 2026 revenue and EBITDA is more modest than feared. We have tweaked our estimates, with our 2026E EBITDA declining by an average 1.9 per cent. We also adjust our price target multiples to reflect the rotation away from defensive equities," said Mr. Chiang
* Stifel’s Ian Gillies hiked his Secure Waste Infrastructure Corp. (SES-T) target to $23.50 from $17.50 with a “buy” rating. The average is $18.56.
“SECURE’s share price has had a Herculean move over the prior 3-months (up 28 per cent) compared to the S&P 500 (up 8 per cent),” said Mr. Gillies. “The improvement in the stability of the earnings profile of the business is being rewarded by investors, and we believe this is warranted because 2025E EBITDA is likely to finish the year at or about the low end of EBITDA guidance in what can best be described as a choppy year in the energy markets. We are rolling out 2027 estimates which depict a 25-27E EPS CAGR [earnings per share compound annual growth rate] of 18 per cent, and that is prior to any additional share buybacks.”