Inside the Market’s roundup of some of today’s key analyst actions
Heading into first-quarter earnings season for North American paper and forest products companies, RBC Dominion Securities analyst Matthew McKellar is maintaining his preference for containerboard names, believing they “look attractive from current levels.”
“A significant more than 8 per cent of North American containerboard capacity was rationalized in 2025 (the bulk in H2/25), and we continue to project North American operating rates in the mid-90s per cent,” he said. “We expect significantly healthier conditions in North America but see an attractive setup across the coverage group with valuations looking reasonable and meaningful self-help opportunities in flight (our pecking order: CAS, IP, SW).
“[Southern Yellow Pine] prices are having a healthy run - but can it continue? SYP prices (2x4s, westside) averaged $433/mfbm [thousand board feet] in Q126, which was up 13 per cent year-over-year and significantly ahead of our $350/mfbm estimate going into the quarter, and currently sit at $515/mfbm (the highest level since April 2023 and likely more than $150/mfbm above industry breakeven). We view the run as mostly supply-driven (a function of curtailments, closures, and tight trucking conditions to some degree) and think producers will be somewhat cautious about adding shifts/incremental production after several tough years for the industry, but nonetheless expect prices to ease somewhat from current levels.”
In a research report released before the bell titled See into the trees, Mr. McKellar said recent share price softness in Cascades Inc. (CAS-T) and International Paper Co. (IP-N) have “created attractive setups from current levels (and CAS’s packaging business featuring relatively clean exposure to the more attractive North American market).”
“Lumber price momentum off the lows of late last year is encouraging, although our top ideas in the space remain large and liquid North American-focused names (WFG, WY) with undemanding valuations, reflecting demand uncertainty,” he added.
Mr. McKellar made one rating revision, downgrading Canfor Corp. (CFP-T) to “sector perform” from “outperform” previously, noting its shares are nearing his unchanged $15 target and “in recognition of more compelling opportunities” elsewhere in his coverage universe. The average target on the Street is $15.66, according to LSEG data.
“The company’s geographic diversification into the U.S. South and Europe should benefit its lumber segment, as B.C. faces a supply and demand imbalance; we anticipate B.C. to remain a very difficult operating area for the foreseeable future, although the company has rationalized its less-competitive facilities in the province,” he said. “We think housing fundamentals over the long term remain favourable, which should be beneficial for Canfor.
“We think the pulp business is well positioned to supply Chinese demand for softwood pulp given its mills in Western Canada, although we expect BC to be a tricky operating environment for some time. We think there could be a relative scarcity of softwood pulp compared to hardwood pulp, although some ability to substitute between the two products will likely limit the spread in pricing to some degree.”
Mr. McKellar also made these target revisions to TSX-listed stocks:
- Acadian Timber Corp. (ADN-T, “sector perform”) to $18 from $17. The average is $17.
- Cascades Inc. (CAS-T, “outperform”) to $15 from $16. Average: $14.41.
- Doman Building Materials Group Ltd. (DBM-T, “outperform”) to $12 from $11. Average: $11.50.
- Interfor Corp. (IFP-T, “outperform”) to $13 from $14. Average: $13.
- Western Forest Products Inc. (WEF-T, “sector perform”) to $14 from $13. Average: $15.13.
- West Fraser Timber Co Ltd. (WFG-N/WFG-T, “outperform”) to US$81 from US$87. Average: US$81.59.
“Favourite names: In Canada, we like CAS (which reset expectations for Q1 ), DBM and WFG; in the U.S., we like IP, WY and SW,” said Mr. McKellar.
“RBC estimates vs. consensus for Q126: We are ahead of consensus EBITDA on CFP, IFP, WFG, WY and below consensus EBITDA on CAS, JHX, LPX, MERC, SLVM and WEF, although we think consensus could evolve in many instances as analysts update for trends through the quarter.”
Similarly, TD Cowen analyst Sean Steuart expects a “mixed” earnings season for forest products companies, but he predicts investors will be “more focused on directional commentary around cost inflation through the remainder of the year and associated knock-on effects for demand.”
“We are lowering 2026 and 2027 earnings estimates for most names to reflect higher cost assumptions - especially freight and chemical inputs,” he said
“Key Q1/26 themes: 1) Positive quarter-over-quarter earnings momentum for wood-weighted equities, particularly those exposed to the U.S. South, where regional composite lumber and OSB prices improved 23 per cent and 38 per cent quarter-over-quarter, respectively. Positive outliers versus consensus are led by IFP and CFP. Negative outliers are led by MERC. 2) Guidance that cost inflation will begin to weigh on Q2/26 results. CLW and LPX appear most exposed to higher energy costs within our coverage. 3) Continued focus on balance-sheet preservation (measured capex and disciplined returns of capital to shareholders).”
Mr. Steuart made a number of adjustments to his forecast for 2026 and 2027, including: “1) Higher lumber prices, with average annual increases of 9 per cent in 2026 and 3 per cent in 2027, reflecting supply-driven gains that have exceeded expectations early in 2026. 2) Higher assumed costs for energy and energy-derivative inputs, particularly freight and chemicals. 3) Lower shipment forecasts for several commodities, driven by a weakening mid-term demand outlook. Cumulative expected year-over-year EBITDA growth for our coverage set is negative 32 per cent in 2026 and negative 28 per cent in 2027.”
With his revised forecast, the analyst made these target changes:
- Cascades Inc. (CAS-T, “buy”) to $14 from $15. Average: $14.41.
- Interfor Corp. (IFP-T, “hold”) to $12 from $13. Average: $13.
- Western Forest Products Inc. (WEF-T, “hold”) to $17 from $16. Average: $15.13.
- West Fraser Timber Co Ltd. (WFG-N/WFG-T, “buy”) to US$88 from US$93. Average: US$81.59.
“Revisions reflect more conservative target multiples (average adjusted trend EV/EBITDA of 5.6 times, down from 5.8 times) and updated mid-term FCF estimates. WFG and CCL.B remain top picks. TCL.A moves up to #3 from #5, while CAS moves down to #6 from #3, based on revised scorecard rankings weighted by valuation discounts to historical averages," he said.
After energy equity analysts at TD Cowen made their normal commodity price assumption updates to mark the end of the quarter, Menno Hulshof raised his rating for Strathcona Resources Ltd. (SCR-T) to “buy” from “hold” in a report titled Rising Relevance Meets Visible Growth.
“Upgrade on updated price deck reflects clear path to durable volumes growth through 2031 (and pot. 2035), accelerated balance sheet deleveraging following $10/sh Special Distribution and steady lift in institutional relevance as float expands,” he explained. “Biz model works very well atmore than US$70/bbl WTI, heavy diff contingencies in place (CBR), and should benefit from scarcity value (post-MEG) with few midcap heavy oil alternatives.”
Mr. Hulshof touted “strong visibility” on a sustained 10-per-cent production compound annual growth rate through at least 2031, while he thinks improving liquidity is “removing a key impediment to institutional ownership.”
“Production is set to compound at 10 per cent to 200mbbl/d by 2031, underpinned by repeatable brownfield SAGD expansions, modular CPFs, and drill-to-fill opportunities across fully-delineated reservoirs (51-yr 2P RLI), and attractive capital intensities ($27-32k/bbl/d),” he said.
“As Waterous Energy Fund distributes shares, SCR’s free float — currently 33 per cent, up from 9 per cent through 4 pass-throughs—should expand, improving trading liquidity, index eligibility, and relevance for larger institutional mandates."
Also seeing its “valuable, low-cost optionality not reflected in [its] current valuation,” Mr. Hulshof kept his $47 target for Strathcona shares. The average is $44.
“SCR is a differentiated offering with higher-than-average growth targets (10-per-cent total production CAGR through at least 2031) and balance sheet leverage (but normalizing quickly on higher spot WTI prices),” he concluded. “Its plan is well articulated and largely driven by ‘drill-to-fill’ and brownfield SAGD expansions. SCR has a strong track record of creative deal structuring, including a USGC CBR back-stopped crude purchase agreement (advantaged cost structure) and the counter-cyclical acquisition of the Hardisty Rail Terminal. We estimate it is cash tax sheltered through year-end 2026. Our TP increases to $47/sh on our new price deck.”
In a concurrent note, Mr. Hulshof and colleague Aaron Bilkoski said they largely marked oil and gas assumptions to strip, but emphasized “geopolitics skews outcomes.”
“While war premiums are volatile, downside to 2027 strip oil may prove limited absent a major demand shock, with upside if disruptions persist,” the analysts said. “Near-term coverage FCF up materially; stocks, on average, trade at mid-cycle 2027 strip FCF yields on US$73/bbl WTI, with strong balance sheets driving asymmetric upside.”
“While this time truly does feel a bit different (first-ever closure of the Strait of Hormuz, higher-than-average contagion risk etc.), history tells us that geopolitical premiums can be volatile and are often mean-reverting. We have lower-than-normal conviction in strip prices given the massive range of potential outcomes, but it strikes us as asymmetric with downside to 2027 oil prices potentially limited barring a major demand shock and upside if the conflict drags on and supply disruptions persist and/or increase.
The analysts added: “Investor implications: Projected FCF generation for the oil weighted names is up materially since late Feb. (at least through YE2026) and many coverage names are now trading at high single-digit, low double-digit strip 2027 FCF yields - we generally consider this ‘midcycle’. Moreover, these ‘mid-cycle’ FCF yields are underpinned by US$73/bbl WTI (US$78/ bbl Brent) which strikes us as border-line low given a ME conflict that likely only partially deescalates – i.e., we struggle to envision full normalization of ME relations and the energy markets anytime soon. ... At the industry level, balance sheets remain very strong vs. historical norms, shareholder capital returns remain generous (and are accelerating in some instances), and operating leverage is material if oil prices rally further. When combined with largely mid-cycle valuations, this largely points to asymmetric upside without paying too much for tail risks that have yet to materialize."
With their price deck changes, the analysts made a series of target price changes to stocks in their coverage universe. For integrated companies, their changes are:
- Canadian Natural Resources Ltd. (CNQ-T, “buy”) to $72 from $64. The average is $67.59.
- Cenovus Energy Inc. (CVE-T, “buy”) to $45 from $35. Average: $40.34.
- Imperial Oil Ltd. (IMO-T, “sell”) to $157 from $110. Average: $141.80.
- Suncor Energy Inc. (SU-T, “buy”) to $113 from $91. Average: $92.88.
Citing an improving forecast and higher valuation for its Cable segment, TD Cowen analyst Vince Valentini upgraded Quebecor Inc. (QBR.B-T) to “buy” from “hold” previously.
“Pricing in the Canadian wireless market has continued to improve slightly in April, so our fears of an escalating price war (including an aggressive response from QBR/Freedom) have diminished,” he explained. “Furthermore, with an ARPU [average revenue per user] starting point of $35, QBR faces less downside repricing risk if competitive tension gets worse again.
“This backdrop, combined with the recent 9-per-cent pullback for the stock, has allowed us to revisit our thesis. Updating for our end of quarter channel checks, we expect solid underlying EBITDA and FCF results in Q1/26, which have pushed up our estimates for FY27 (less impact on Q1/26 or FY26 results owing to yet another quarter of elevated non-cash stock-based compensation expense). We believe core telecom operations will post strong EBITDA growth of 5 per cent year-over-year, with contributions from both cable (see below for more on our increased segment target multiple) and wireless.”
Mr. Valentini raised his target for Quebecor shares by $3 to $63. The average is $60.19.
“QBR.B shares remain the most expensive in the Canadian telecom sector at 7.9 times 2026 estimated EBITDA, but superior growth justifies the premium, in our view,” he said. “Also, over a 12-month time horizon, we are cautiously optimistic that valuations for the peers will also increase, which would make QBR.B look less expensive on a relative basis, in part owing to management teams at the incumbent carriers adopting better wireless pricing discipline.
“Quebecor continues to effectively manage both capex and FCF, as it expands both revenue and EBITDA as a result of its acquisition of Freedom. In time, we are confident that QBR will accentuate Freedom’s quality with additional marketing initiatives, as opposed to relying on pricing. Meanwhile, Quebecor can continue to expand through a potential MVNO offering, its Fizz wireless brand, and bundling opportunities. In other countries, we have seen the newer entrant and faster growing wireless carrier trade at a meaningful premium to incumbents (notably T-Mobile in the U.S.), consistent with what we are currently seeing with Quebecor. However, the cable segment is barely growing, which was never an issue for T-Mobile, and it still accounts for more than half of telecom segment EBITDA.”
Scotia Capital analyst Jonathan Goldman thinks “solid” preliminary first-quarter results from Savaria Corp. (SIS-T) were overlooked by investors, who took a skeptical view on the release of five-year financial targets alongside its Investor Day event on Tuesday.
Shares of the Brampton, Ont.-based personal mobility equipment manufacturer closed down 0.6 per cent on Wednesday after it revealed it is targeting a 7-8-per-cent organic compound annual growth rate through 2030, which the analyst conceded “might be viewed as a show-me story given recent performance (3.7 per cent in 2024 and 1.9 per cent in 2025).”
“We believe the slightly negative share price reaction following a preliminary 1Q beat and compelling 5-year targets was a function of skepticism around organic growth targets, conservative margin targets, and profit-taking with shares up 27 per cent year-to-date, and 20 per cent in the past six weeks,” said Mr. Goldman.
He does think “things are moving in the right direction” for Savaria, estimating first-quarter growth was 5 per cent and saying “the company has built credibility following the success of Savaria One.”
“The management presentations and accompanying site tour really emphasized how the company has internalized the capabilities and formal processes, and shifted the organizational culture to support the next leg of growth,” Mr. Goldman added.
“The 20-per-cent margin target includes growth investments (expanded sales force, marketing spend, product launches) and the impact of acquisitions, which are initially dilutive. Assuming acquisitions come at 10-per-cent to 15-per-cent margins, the 5-year targets imply legacy margins of 25 per cent. At $1.6 billion sales, we estimate normalized earnings power is closer to $400-million, or 25 per cent above the 2030 guide.”
Seeing Savaria possessing sufficient capital to meet its growth targets as well as its goal of 4-5-per-cent annual growth through M&A activity, Mr. Goldman raised his target for the company’s shares to $33 from $30, reiterating a “sector outperform” rating. The average target on the Street is $33.60.
“SIS shares trade at 10.9 times on our 2026/2027 estimates,” he said. “We think that’s undemanding for a business with defensive end-markets targeting 12-per-cent EBITDA/share growth over the next five years. We believe a reacceleration of organic growth consistent with IR Day targets will be a catalyst for a re-rate: between June 2014 and March 2018, organic growth averaged 8 per cent while valuation averaged 12.7 times EV/EBITDA. SIS also deserves a premium for capital optionality since acquisition growth (4-5-per-cent CAGR) is expected to be funded fully with internally generated cash flows and net debt neutral by 2030.”
Elsewhere, Desjardins Securities’ Frederic Tremblay raised his target to $35 from $32 with a “buy” rating.
“Savaria’s well-attended investor day on April 14 included management presentations and a site visit. We came away from the event with increased confidence in the company’s ability to accelerate top-line growth (driving the 2030 revenue target of $1.6-billion; a 12-per-cent CAGR). We believe some conservatism is embedded in the 20-per-cent margin goal. We are raising our target ... based on revised 2027 estimates and, longer term, we believe that Savaria’s financial targets offer a path to a $47‒53 share price,” said Mr. Tremblay.
In other analyst actions:
* Seeing its Global Logistics Network as a competitive advantage that offers “strength and defensibility amid the rise of AI” and touting its market share gains despite growing international trade complexities as well as positive sales momentum, Rothschild Redburn’s Lachlan Brown upgraded Descartes Systems Group Inc. (DSGX-Q, DSG-T) to “buy” from “neutral” with a US$90 target, down from US$100 and below the US$102.33 average.
* Analysts continue to lower their ratings and targets for BRP Inc. (DOO-T) following the suspension of its financial forecast for the coming fiscal year. The latest moves include a downgrade from National Bank’s Cameron Doerksen to “sector perform” from “outperform” with a $80 target, down from $125 and below the $106.21 average.
“Although we expect the company will find some ways to mitigate the impact and other powersports competitors will also be impacted by this change, the size of the cost impact fundamentally changes the profitability profile for BRP and injects a high degree of uncertainty into the outlook,” said Mr. Doerksen. “As such, we prefer to move to the sidelines on the stock until there is more clarity on mitigation measures and whether the new tariff rules remain in place longer-term.
“Future changes to the tariff rules are a distinct possibility as well given that multiple industries have likely been caught up in the tariff rule changes that have resulted in what we view as an unintended consequence (the rule changes were meant to simplify tariff collections, not impose large new tariffs). However, there is no visibility on whether the U.S. Administration will make changes.”
Elsewhere, analysts making target revisions include: Desjardins Securities’ Benoit Poirier to $97 from $138 with a “buy” rating and Scotia’s Jonathan Goldman to $80 from $117 with a “sector perform” rating.
“BRP shares were down 35 per cent (TSX/S&P flat) following amendment of Section 232 tariffs on steel, aluminum and copper U.S. imports, representing over $500-million of incremental tariff costs for the remainder of FY27,” said Mr. Poirier. “We expect several OEMs with a manufacturing presence in Mexico to be impacted. We expect mitigating factors (mostly pricing but also costs) to reduce about half of the impact in FY28. While we expect uncertainties to remain, we view the 35-per-cent drop as a buying opportunity for long-term investors.”
* Canaccord Genuity’s Aravinda Galappatthige raised his Cineplex Inc. (CGX-T) target to $10.50 from $9 with a “hold” rating. The average is $12.70.
“Cineplex reported its March box office results, confirming the final Q1/26 numbers,” he said. “Overall, box office sales for the quarter came in at $127.4-million, up 25 per cent year-over-year. This compared to consensus expectations of 14-per-cent growth. The encouraging result was mainly driven by strong March numbers, in particular the standout performance of Project Hail Mary and Hopper. As a result, we expect a better Q1 result with adj EBITDAal of $10.6-million (vs consensus of $7.1-million).
“Looking into Q2, we are seeing continued strength in box office, led by The Super Mario Galaxy Movie. With a solid slate ahead, including The Devil Wears Prada 2, Michael, The Mandalorian and Grogu, and Toy Story 5, we expect a strong Q2, albeit against a somewhat robust comp last year.”
* BMO’s Michael Goldie raised his Exchange Income Corp. (EIF-T) target to $111 from $100 with a “market perform” rating. The average target is $121.36.
“We see limited impact from the macro backdrop of higher energy prices on the current earnings outlook,” said Mr. Goldie. “While there is some potential risk in Aircraft Sales & Leasing, we believe the Strait would need to be closed for longer and customer flight activity decline.
“More broadly, we expect the geopolitical climate to only further existing trends of increased global defense spending, buoying the outlook for Aerospace operations.”
* In response to Linamar Corp.’s (LNR-T) announcement after the bell on Wednesday that it is maintaining its 2026 projections for sales growth, normalized EPS growth, and free cash flow after an initial evaluation of the amendment to Section 232 tariffs, Raymond James’ Michael Glen cut his target to $90 from $100 with a “market perform” rating. The average is $104.25.
“We spent some time working the annexes and tariff lists fromwhitehouse.govto assess any changes. This is a difficult exercise as we do not have full knowledge or insight into the correct / accurate HTS codes for the different products. We do find it reassuring that with Linamar’s initial evaluation they are maintaining 2026 projections, but we will also look forward to hearing a more detailed assessment of the situation in conjunction with 1Q. In the interim, we are opting to take a more conservative approach to our valuation, and lowering our target to $90. We would highly encourage investors to wait for clarity on the impact of the revised Section 232 tariffs," said Mr. Glen.
* Raymond James’ Steve Hansen hiked his target for Methanex Corp. (MEOH-Q, MX-T) to US$65 from US$52 with a “market perform” rating. The average is US$65.63.
“We are increasing our target price on Methanex ... to reflect a sharp uplift in global methanol prices driven by an unprecedented supply shock stemming from the recent U.S.–Iran conflict,“ said Mr. Hansen. ”While early signs of de-escalation have emerged, we expect energy prices to remain higher for longer, supporting our constructive medium-term outlook. Against this backdrop, we believe Methanex is poised to collect a hefty earnings and FCF windfall over the next two years, enabling accelerated deleveraging and future shareholder returns (buybacks/dividends). Despite this fortuitous backdrop, we maintain our Market Perform rating as we expect the market to heavily discount these elevated cash flows as crude prices gradually normalize—a pattern consistent with prior energy-driven dislocations (i.e., Russia-Ukraine war)."