Inside the Market’s roundup of some of today’s key analyst actions
TD Cowen analyst Brian Morrison is expecting in-line third-quarter results from Canadian auto parts suppliers, predicting 2026 guidance will be maintained with “a softer year-over-year production backdrop, margin benefits from efficiencies/ AI/improved contract economics, and strong FCF supporting active NCIBs.”
“Our Q3/26 EBITDA/EPS estimates are in line/nominally below consensus,” he added. “Lower year-over-year global production volumes should pressure pre-acquisition sales, but be offset by margin benefits including operational excellence, AI-driven productivity gains and improved contract economics. Strong FCF has been supportive of active NCIBs, and we expect MGA (aside from sales on updated FX assumptions), MRE and LNR to maintain 2026 guidance metrics.
”Industry Trends: U.S. LV demand resilient through Q3 despite a rising rate environment/ affordability concerns. The U.S. SAAR/N.A. production volumes were modestly lower year-over-year, but remained in line with expectations with inventory remaining balanced/lean. We continue to monitor affordability trends and potential moderation in consumer demand."
In a client report released before the bell, Mr. Morrison warned he’s “growing cautious on the recent/rapid rise in U.S. bond yields and potential impact upon the sector.”
“Increased borrowing costs for consumers/dealers could pressure affordability and vehicle purchasing activity,” he added. “We highlight this based upon the historical inverse relationship between U.S. 5-year bond yields and U.S. auto sales.
“Financial Update: We made modest downward revisions to our financial forecasts based upon our updated 2027 production forecast; MGA FX exposure (Euro); MRE aluminum prices; LNR ongoing pressure in Agriculture segment.”
With those changes, Mr. Morrison made these target revisions to the three stocks in the space that he covers:
- Linamar Corp. (LNR-T, “buy”) to $120 from $123. The average target on the Street is $112.40.
- Magna International Inc. (MGA-N/MG-T, “buy”) to US$77 from US$80. Average: US$69.69.
- Martinrea International Inc. (MRE-T, “buy”) to $15 from $16. Average: $13.13.
“We continue to see upside opportunity to our coverage but are admittedly more cautious in recent months given the rising rate environment, and if elongated the potential for that to impact our 2027 forecasts. Our pecking order (MRE, MGA, LNR) favours Martinrea currently based on its potential to monetize non-core assets,” said Mr. Morrison.
National Bank analyst Patrick Kenny sees Emera Inc.’s (EMA-T) $14.3-billion combination with Canadian Utilities Ltd. (CU-T) as a “merger of equals,” creating “a Top 20 North American utility with $72-billion combined enterprise value and $45-billion in rate base.”
“The transaction results in approximately 95 per cent of pro forma earnings being generated from regulated operations with 80 per cent from Florida and Alberta (70-per-cent electric/30-per-cent gas rate base mix),” he added. “The combined capital plan of $32-billion through 2030 ($20-billion standalone) reaffirms EMA’s standalone average annual rate base growth guidance of 7-8 per cent, 5-7-per-cent average annual adj. EPS growth, and 1-2-per-cent annual dividend growth target, while enhancing the company’s capabilities to pursue additional growth opportunities driven by electrification, transmission, energy security, large-load customers and other energy infrastructure.”
Analysis: The logic behind Emera’s $14.3-billion acquisition of Canadian Utilities is murky so far
With the deal, Mr. Kenny’s 2028 estimated adjusted earnings per share forecast rose by 2 per cent to $3.92 (from $3.85), while his debt-to-EBITDA projection increased to 5.9 times (from 5.5 times).
“That said, we note the credit rating agencies have recognized the benefits of size and scale by adjusting the downgrade thresholds to 6.4 times D/EBITDA (was 6.0 times) and 11-per-cent FFO/D [funds from operations to debt] (was 12 per cent).
“Overall, the company is expecting modest accretion in the first full year for adj. EPS and a 20-per-cent dividend uplift for CU shareholders,” he said.
Keeping a “sector perform” recommendation for Emera shares, the analyst increased his target by $1 to $74. The average target on the Street is $76.32.
“Based on modest accretion to our estimates offset by slightly higher pro forma leverage, our target remains largely unchanged at $74 (was $75),” he said. “Combined with EMA expanding its longer-term growth platform into Western Canada with improved scale and capabilities to execute growth projects while maintaining customer affordability, we reiterate our Sector Perform rating ahead of the company rolling over its standalone five-year capital plan prior to year end.”
In concurrent reports, Mr. Kenny made these target changes:
* Canadian Utilities Ltd. (CU-T) to $56 from $55 with a “sector perform” rating. The average is $54.33.
“Combined with viewing the transaction as strategically positive, providing immediate dividend accretion, greater geographic diversification, improved funding flexibility, and continued participation alongside Alberta’s longer-term growth prospects, we maintain our Sector Perform rating,” he said.
* Parent Atco Ltd. (ACO-X-T) to $93 from $79 with a “sector perform” rating.
“With 29,000 global space-rental and workforce-housing units, 44 branches and 13 manufacturing locations across 5 countries, ‘New ATCO’ is poised to benefit from long-term demand across modular construction, mining, public infrastructure, data centres, and defence,” said Mr. Kenny. “‘New ATCO’s’ defence platform is uniquely positioned to participate in federal plans earmarking approximately $180-billion towards defence procurement opportunities and $290-billion of defence-related capital investment over the next decade. Elsewhere, ‘New ATCO’ will retain its diversified investments in Neltume Ports including its 40-per-cent interest in Latin American ports with additional growth from developing its Vancouver, Washington port and planned Brazilian operations.”
Elsewhere, RBC’s Maurice Choy raised his target for Atco to $94 from $80 and Canadian Utilities to $63 from $58 with “sector perform” ratings for both.
“The Emera-Canadian Utilities merger, if completed, should unlock a better public market valuation of ATCO’s remaining assets, particularly the Structures & Logistics (S&L) business, which not only has delivered solid financial performance over recent years, but is also positioned to accelerate its growth given favourable infrastructure themes in the U.S. and Canada. Through this New ATCO/ATCO SpinCo, investors gain a more direct exposure to favourable national- level trends relating to increased housing, defence and Canada North infrastructure spending, while progressively enabling a valuation that is closer to its industrial services peers over time,” said Mr. Choy.
TD Cowen analyst Derick Ma initiated coverage of a pair of Vancouver-based “emerging” precious metals focused royalty and streaming companies - Versamet Royalties Corp. (VMET-T) and Gold Royalty Corp. (GROY-A) - with “buy” ratings on Thursday, expecting both will have “high near-term organic growth that will drive a significant uplift in EBITDA and deal making capacity over the next 5 years.”
“This should position the companies well to continue to drive aggressive growth and bridge the gap with their intermediate royalty peers,” he added.
Mr. Ma thinks Versamet, formerly known as Sandbox Royalties Corp., is “rapidly establishing itself as stream financing company despite the company’s short operating history, and the portfolio offers investors very strong EBITDA growth of 50 per cent through 2030.
“The organic growth profile is supported by a catalyst-rich 24 months, that includes first production from Toega and Eskay Creek, the ramp-up of Cuiú Cuiú and the Rosh Pinah 2.0 expansion,” he added." Longer term, the portfolio should benefit from expansion plans at Blackwater, first production at El Pilar, among others. Furthermore, we expect the production growth outlook will accelerate balance sheet deleveraging and position to the company to continue to aggressively pursue portfolio growth. The management team has proven its ability to originate and structure its own stream transactions, which is a differentiator amongst similar sized peers.
“Executing on stream transactions is important to growth and portfolio construction because streams could be structured to feature larger deal sizes and more favourable production profiles, which could result in future step changes in VMET’s GEOs profile. The management team, led by former Maverix Metals CEO Dan O’Flaherty, has a demonstrated track record of royalty portfolio construction, stream financing, and M&A execution.”
Mr. Ma set a target of $21 per share, pointing to a 73-per-cent total return based on his current price. The average target is $19.12.
“We believe VMET should trade at a premium EV/EBITDA multiple to the peer group due to the high expected near- and medium-term growth outlook and stream financing capabilities, albeit as a slightly lower EBITDA multiple compared to GROY despite its elevated levels of debt and exposure to some higher risk jurisdictions (Burkina Faso),” he said.
He called Gold Royalty “a high growth, junior royalty company with more than 260 assets in the portfolio” and offering a “superior geopolitical risk exposure with its Americas focused portfolio.”
“The company is approaching an EBITDA inflection point (200-per-cent increase through 2030), underpinned by a diversified pipeline of development assets including Canadian Malartic, REN, Jerritt Canyon, Vares, Borborema, and Blackwater. Unlike many of its similar sized peers,” he said.
“GROY has multiple avenues for value creation including royalty generation, in addition to the traditional royalty business activities of royalty and stream financing, third-party royalty acquisitions, and corporate M&A. This differentiated approach allows management to pursue its own opportunities without having to directly compete with its peers on each transaction. Importantly, the royalty generation activity focused on just two Tier 1 jurisdictions (Nevada and Ontario) where management has local experience and expertise and GROY does not engage in any project development activities. The leadership team has in-depth experience and industry relationships, which it has successfully leveraged into bilateral transactions for all eight of its royalty and stream acquisitions.”
He set a target of US$4, indicating a 39-per-cent total return. The average i US$5.18.
“We believe GROY should trade at a premium EV/EBITDA multiple to the peer group due to the significant expected near- and medium-term organic growth in the portfolio, which will drive improved cash flow generation and deal capacity,” said Mr. Ma.
The third quarter is shaping up to be “another challenging” period for MTY Food Group Inc. (MTY-T), according to TD Cowen analyst Cheryl Zhang, emphasizing “consumer spending pressure, cost inflation, and elevated promotions persist.”
“Recently announced corporate store closures should weigh on near-term results before delivering longer-term benefits,” she said. “We expect the shares to remain range-bound pending clearer macro and industry improvement and/or a favourable outcome from the strategic review.”
In a note released early Thursday, Ms. Zhang warned same-store sales growth for the Montreal-based franchisor and operator of quick-service and casual dining restaurants, which has 80 different banners in Canada, the U.S. and internationally, is likely to remain negative in the quarter with network contraction likely through the second half of 2026.
“While MTY begins to lap easier comps in Q3, we see little evidence that macro or competitive pressures are easing,” she explained. “Elevated energy costs are creating fresh pressure on consumer budgets: our U.S. restaurant analyst Andrew Charles estimates that higher gas prices could reduce Q4 U.S. restaurant industry sales by 60 basis points. At the same time, major QSR [quick-service restaurant] brands remain heavily promotional in an effort to capture share of wallet (e.g., McDonald’s $5 Meal Deal, Domino’s 50-per-cent off all pizzas). We do not view this backdrop as conducive to sales growth and forecast Q3 SSSG of negative 1.0 per cent in Canada and negative 1.5 per cent in U.S./Intl.”
“Despite a healthy pipeline of restaurant openings over the coming quarters (led by Cold Stone and Wetzel’s Pretzels), this should be more than offset by the announced closure of 68 underperforming corporate stores, with the impact heavily weighted to Q3 and led by Papa Murphy’s. We forecast a net quarter-over-quarter reduction of 18 locations in Q3 which, together with negative SSSG, should drive a 6-per-cent year-over-year revenue decline.”
Ms. Zhang reduced her revenue forecast for 2026-2028 revenue by 4-5 per cent and adj. EBITDA by 1-5 per cent to “better reflect the closure of 68 corporate stores announced on the Q2/26 call, as well as a stronger USD outlook.”
“This is partially offset by lower depreciation expectations (to better reflect store closures), resulting in a modest 2-3-per-cent reduction in our 2027-28 EPS,” she added.
She kept a “hold” rating and $38 target for shares of MTY, which initiated a formal strategic review in November of 2005. The average target is $41.17.
There are “plenty of tailwinds ahead” for Exchange Income Corp. (EIF-T), according to National Bank Financial analyst Cameron Doerksen, who emphasizes key aviation end markets “remain positive.”
“As the largest aviation provider into Canada’s North and other remote areas, EIC is ideally positioned to see growth from Canada’s investment in defence and other infrastructure in the North. The current Canadian government has set the stage to advance multiple major projects in the North, which should support growing passenger, cargo, and charter activity for EIC’s northern airlines for years. In addition, demand trends for EIC’s Regional One aircraft parts and leasing subsidiary remain highly positive.”
In a client report previewing the Winnipeg-based company’s third-quarter results, Mr. Doerksen also emphasized demand growth for demand growth for its environmental access-matting division, which falls under its Manufacturing segment, is “poised to accelerate.”
“EIC’s Environmental Access Solutions segment (matting) is also poised for breakout growth in the coming years supported by investments in new power transmission lines in both Canada and the U.S., potential new pipelines in Canada, and other infrastructure investments,” he added. “The segment makes up 10 per cent of total EIC revenue and revenue growth should be supportive of EIC’s Manufacturing margins as matting rentals come with high EBITDA margins.”
The equity analyst increased his third-quarter revenue projection to $1.042-billion from $1.033-billion previously with his fully diluted adjusted earnings per share estimate rising 6 cents to $1.59.
Also increasing his full-year 2026 and 2027 forecast, Mr. Doerksen reaffirmed an “outperform” rating and $145 target for Exchange Income shares. The average on the Street is $148.82.
“We were previously forecasting full-year 2026 EBITDA towards the lower end of management’s guidance range, but with underlying end market trends even more positive across most of EIC’s segments, we are more confident that 2026 EBITDA can beat our prior estimate,” he added. “Management will introduce its preliminary guidance for 2027 with the Q3/26 report. We have also increased our 2027 estimates and now forecast EBITDA of $984-million (from $974-million) with the consensus sitting at just over $1.0-billion.”
“On our updated 2027 forecast, the stock trades at 9.2 times EV/EBITDA versus the stock’s historical forward average of 8.0 times, but still reasonable in the context of the strong outlook across the company’s key end markets and projected multiyear growth for the company. We value the stock by applying an 11.0-times EV/EBITDA multiple to our 2027 forecast. After some modest upward adjustments to our EBITDA estimate, offset by higher assumed capex to support growth, our $145.00 target is unchanged.”
TD Cowen analyst David Kwan has “a greater appreciation for the many attractive organic growth opportunities” across Wellstar Technologies Corp.’s (WSTR-X) three business lines after hosting recent investor meetings with its CEO Amir Javidan.
He said the Vancouver-based software-as-a-service company, which commenced trading on the TSX Venture Exchange on Oct. 1 after going public through parent Well Health Technologies Corp. (WELL-T), is nearing “some potentially large multi-year deals with provincial governments (e.g., Ontario PCMR RFP) that would be key catalysts and could drive continued Rule of 40 performances.”
“With $90-million in cash/no debt, we also see M&A upside (not baked into our forecasts),” he added.
In a client note released Thursday, Mr. Kwan emphasized Ontario’s procurement process for its province-wide Primary Care Medical Record (PCMR) system, which is a part of its $3.4-billion Primary Care Action Plan, could be “a key near-term catalyst” for investors to watch.
“The goal is to ‘integrate patient records, reduce paperwork for doctors and improve the quality of care received by patients,’” he explained. “The PCMR system will ‘securely connect patient information, reduce duplication and help health-care providers deliver faster, more connected and coordinated care.’
“Multiple qualified vendors are expected to be selected, with a decision expected in the near-term. We believe WSTR is well-positioned to be one of the approved vendors given its open-source OSCAR Pro EMR meets key selection criteria, including interoperability (a core part of the PCMR initiative), with additional functionality including a growing number of AI features that enhance patient care and reduce administrative burden. If WSTR is selected, there could be attractive opportunities to grow its market share at the expense of vendors who did not make the cut, while we think there are other solid avenues to expand its EMR footprint.”
He also emphasized other provinces are “pursuing quicker procurement processes for primary care-to-specialist eReferrals, which we think could benefit WSTR, as we note Ocean has already won three province-wide mandates (Ontario, B.C., N.S.).”
Mr. Kwan reaffirmed a “buy” rating and $8.50 target for Wellstar shares. The average on the Street is $7.20.
In other analyst actions:
* Canaccord Genuity’s Mark Neville reduced his target for shares ot Air Canada (AC-T) to $29 from $33, keeping a “hold” rating. The average is $36.38.
“While the price of oil is well off the highs seen since the start of the war, jet fuel prices are back near highs as crack spreads have moved materially higher due to disruptions in global refining capacity. In fact, the price of jet fuel is 25 per cent higher than the levels at the time of our most recent update (in mid-August). With resilient demand, Air Canada has shown (more than once this year) its ability to pass on (at least a portion of) higher jet fuel costs to customers. In fact, at a recent investor conference, management indicated it has been pricing fares 5 per cent to 10 per cent above the US$4.00/gallon level referenced on the Q2 call, which would still be below spot. Despite the success to date, we have moderated our estimates to reflect higher fuel costs and near-term capacity adjustments, partially offset by higher yields. Our revised 2026 adjusted EBITDA estimate (of $3,062 million) sits near the midpoint of guidance (of $2.9 billion to $3.2 billion) and is roughly in line with consensus. However, our 2027 estimate (of $3,252 million) is 11 per cent below consensus but directionally consistent with recent estimate revisions on the Street,” said Mr. Neville.
* Previewing quarterly results for IT service providers in his coverage universe, Desjardins Securities’ Jerome Dubreuil reduced his targets for Alithya Group Inc. (ALYA-T, “hold”) to $1.10 from $1.15 and CGI Inc. (GIB.A-T, “buy”) to $115 from $118. The averages are $1.20 and $117.16, respectively.
“Accenture’s (ACN, NYSE, not rated) robust quarterly results, reported on October 1, improved sentiment across the IT services sector,” Mr. Dubreuil said. “While this data point alone does not lead us to expect a similarly strong quarter for GIB, it reinforces our view that IT services providers are likely to remain relevant in the AI era, particularly as enterprises navigate the transition toward broader AI adoption. Our 4Q FY26 forecast for GIB is broadly in line with consensus expectations.”
“Keeping things in perspective. ACN’s quarterly results were strong, and the acceleration in consulting revenue was a positive signal for the health of discretionary demand, which has been an industry headwind for years. However, at the midpoint of its guidance, ACN is expecting a year-over-year deceleration in organic growth in the coming fiscal year, suggesting that demand headwinds are still present. Some uncertainty remains regarding how roles will evolve as AI adoption increases. For example, we anticipate that IT services companies and software companies could overlap (or compete) in the development and governance of agents.”
* BMO’s Stephen MacLeod lowered his target for Aritzia Inc. (ATZ-T) to $191 from $196 with an “outperform” rating. The average is $183.43.
“Our September 2026 web traffic, app, and observed sales takeaways are positive, indicating a strong start to Q3. Web traffic growth accelerated (up 73 per cent year-over-year) in both Canada (up 56 per cent) and the U.S. (up 87 per cent); app data show continued solid engagement; Bloomberg Second Measure data indicates U.S. sales remain robust (up 61 per cent). We continue to believe Aritzia is well-positioned to execute on its significant U.S. growth opportunity, reflecting its growing brand affinity and Everyday Luxury positioning,” he said.
* In a third-quarter earnings preview for Canadian telecom companies, CIBC’s Stephanie Price lowered his targets for BCE Inc. (BCE-T, “outperformer”) to $38 from $39, Cogeco Communications Inc. (CCA-T, “neutral”) to $65 from $71, Cogeco Inc. (CGO-T, “neutral”) to $60 from $67 and Telus Corp. (T-T, “neutral”) to $14 from $15. The averages are $37.30, $69.44, $74 and $14.19, respectively.
“Q3 was a slower quarter amid ongoing immigration headwinds and the termination of activation fees, though the promotional environment was disciplined through back-to-school. We are forecasting flattish consolidated industry revenue and adjusted EBITDA. We are expecting a 0.9-per-cent year-over-year average industry wireless ARPU decline in Q3, flat sequentially from a 0.9-per-cent year-over-year decline in Q2, as we expect pricing action will not fully offset the lost activation fee revenue. Our estimate is 2.4 per cent above the Street on FCF, and we expect the sector will focus on FCF amid weaker top-line growth. Our top pick remains Quebecor, which continues to see industry leading wireless net adds and ARPU growth despite the slower environment,” she said.
" With this preview, we have reduced our Q3 EBITDA assumptions at TELUS (down 1.5 per cent), BCE (down 0.9 per cent), and Rogers (down 0.5 per cent). The changes reflect activation fee and immigration headwinds, as well as lower loading amid a muted promotional environment. We have kept our estimates for the quarter roughly unchanged for Cogeco and Quebecor."
* ATB Cormark’s Jeff Fenwick trimmed his Fairfax Financial Holdings Ltd. (FFH-T) target to $2,500 from $2,600 with a “sector perform” rating. The average on the Street is $2,874.18.
“We expect Fairfax to report strong underwriting profitability in Q3, with premium growth continuing to be very modest. Rising bond yields and muted equity market performance appear set to drive mark-to-market investment losses, weighing on reported earnings, while adjusted operating earnings will remain solid. Soft market conditions continue to temper the outlook for growth and profitability, which we believe is likely to keep Fairfax’s valuation range-bound. Post Q3, Fairfax announced an agreement to acquire 50-per-cent ownership of UK health and beauty retailer The Boots Group, in partnership with the Weston family (via Wittington Investments). We offer up some initial views on this transaction,” said Mr. Fenwick.