Inside the Market’s roundup of some of today’s key analyst actions
Heading into third-quarter earnings season for Canadian industrial product companies, National Bank Financial analyst Maxim Sytchev thinks “rates directionality is not helpful but commodity backdrop and proposed magnitude of CAD CapEx spending should be a bigger positive, over time.”
In a client report released before the bell, Mr. Sytchev said he’s rates as a headwind across the sector, but he emphasized the impact is “not as bad as one might have thought/ feared.”
“When examining prior escalating rate backdrops (2013, 2016, 2017, 2021, and now, starting October 2025), in the three earliest instances, our coverage did better than the broader market (and Industrials sub-indices) with 2021 showing a still positive but less productive than the overall market outcome. In this hiking cycle, we are lagging by close to 600 basis points and 400 bps vs. the TSX and S&P 500, respectively,” said Mr. Sytchev.
“Rates are, of course, only one input as engineering de-rating is really the lagging culprit here although the mirror opposite in construction and equipment & metals distribution is the same AI trade that lifts the mean (though our year-to-date median coverage return is 15 per cent lower, highlighting the extent of bifurcation).”
For the quarter, the analyst laid out his “tactical expectations,” which are:
“Beats – RUS is being helped by much stronger HRC / plate and better than expected volumes; STN is getting less bad in the U.S. based on our most recent marketing; RBA has de-rated, had a management change, and now just upped its guide; FTT remains in a good spot to win additional packages in multiple geographies as the commodity backdrop is strong. Names that are witnessing an incrementally worsening backdrop are CIGI (rates, IM margins, too much engineering at the wrong time), SJ (Poles pricing appears to have stalled while ties are still sluggish), ACQ (rates and affordability are offsetting positive balance sheet moves), and AFN (we suspect Commercial will get worse before it gets better).”
“Momentum is split across construction / distribution and engineering fault lines. RBA/ FTT/ATRL/STN/ACQ/ATS were active on NCIB facilities.”
He named three “top ideas” in the space:
* RB Global Inc. (RBA-N/RBA-T, “outperform”) with a US$132 target, up from US$130. The average on the Street is $129.18.
Analyst: “The take-rate ‘race to the bottom thesis feels too negative to us, and with construction/agriculture under pressure, the thesis now imputes trough valuation on trough EPS – we don’t think that will last).”
* GFL Environmental Inc. (GFL-T, “outperform” ) with a $81 target (unchanged). Average: $76.58.
Analyst: “Our de facto non-AI trade; a takeout would be nice, but if that fails, we are back to the compounding algorithm and with SECURE in the fold investors should be excited about incremental growth).”
* AtkinsRéalis Group Inc. (ATRL-T, “outperform”) with a $108 target. Average: $117.17.
Analyst: “Nuclear is transformational in terms of scale and is not contingent on the U.S. AI buildout; top line for this division could hit $7-billion by 2031E vs. the current run rate of $2.5-billion if new builds in Ontario go its way; we don’t believe the shares are anywhere close to reflecting this potential).”
Mr. Sytchev’s other target adjustments are:
- Aecon Group Inc. (ARE-T, “outperform”) to $66 from $64. Average: $57.90.
- Ag Growth International Inc. (AFN-T, “sector perform”) to $11 from $19. Average: $16.36.
- AutoCanada Inc. (ACQ-T, “sector perform”) to $21 from $23. Average: $25.
- Colliers International Group Inc. (CIGI-Q/CIGI-T, “outperform”) to US$109 from US$110. Average: US$137.22.
- Russel Metals Inc. (RUS-T, “sector perform”) to $101 from $75. Average: $89.43.
- Wajax Corp. (WJX-T, “outperform”) to $42 from $36. Average: $37.
“The valuation disintermediation narrative persists while median earnings revisions have been lagging the broader market (2027E EPS expectations are flat over the last six months for our names vs. up 14 per cent for S&P 500), explained by a highly bifurcated nature of positives (picks & shovels – construction, equipment, metal distribution) and narrative compression/cycle troughs (engineers, RBA, ATS, AFN, ACQ),” he said. “Looking forward, we think that earnings growth should in fact inflect further upwards in 2027E as the CapEx beneficiaries are still enjoying a highly buoyant spending environment (CAD government commitments to catalyze close to $400-billion in investments - Canada Investment Summit 2026: Project prospectus underlines a historic pivot, and significant opportunities for our coverage, and most commodities are robust across the board) while the laggards are benefitting from re-based (read lower) 2026E levels, creating an easier hurdle, prospectively.”
In a client report titled It’s a Mad, Mad World, Scotia Capital analyst Jonathan Goldman warns investors to prepare for turbulence during the approaching earnings season for Canadian diversified industrial companies, emphasizing the trajectory of share performance is far from clear.
“We don’t anticipate any major surprises in 3Q except for RUS and TVK (positive),” he said. “But even in-line results could have positive/negative implications for stocks as investors scrutinize the short-term rate of change (rate of sentiment?) and trade regardless of whether trends lean cyclical or secular. How else do you make sense of a world in which DXT is trading at a 0.5-times premium to WSP? Or that BYD is back to 2018 levels despite growing EBITDA/share more than 2 times over that period and consensus estimates moving up 1 per cent since the start of the year?
“The set-up provides ample opportunities for value investors who are willing to look out a few quarters...or more...especially as we head into tax-loss selling season. The best way to surface value, in our opinion, is to introduce a price-agnostic buyer into the marketplace (i.e., buybacks), which for our most sold-off names (ATS/BYD/WSP), is more likely a 2027 event. In the near term, we prefer stocks with idiosyncratic catalysts (ATRL – nuclear; CAS – pricing/deleveraging; NFI – execution/deleveraging) or benefiting from strong/accelerating end markets (Dealers/RUS/VNP).”
After updating his forecast and target prices for stocks across his coverage universe, Mr. Goldman named three “top picks” heading into earnings season:
* Russel Metals Inc. (RUS-T, “sector outperform”) with a $113 target (unchanged). The average is $89.43.
Analyst: “For RUS, consensus estimates imply flat steel prices quarter-over-quarter despite the benchmark rising 8 per cent in 3Q. A rising price environment also supports margin expansion (i.e., inventory holding gains). We see upside on volumes against a strong demand backdrop and Kloeckner integration. We expect steel prices to remain higher for longer supported by the strong demand environment and positive tariff impact. Straight-lining spot gets EBITDA 10 per cent/20 per cent above consensus in 2026/2027.
* NFI Group Inc. (NFI-T, “sector outperform”) with a $28.50 target (unchanged). The average is $31.56.
Analyst: “For NFI, we expect another clean quarter (three and counting) supporting increased confidence in the full-year guide and 2027 expectations. For a stock that is still institutionally under-owned, consistent results and deleveraging are the path of least resistance for a further re-rate. We estimate mid-cycle earnings power is 30 per cent higher than LTM [last 12 month] implying shares are trading at 6.5 times EV/EBITDA on mid-cycle vs. the company’s 10-year average of 8.5 times.”
* Terravest Industries Inc. (TVK-T, “sector perform”) with a $130 target, up from $129. The average is $162.
Analyst: “For TVK, we are materially ahead of consensus as we see upside to data center tank deliveries. ACT Research recently raised its 2026-2030 trailer production forecast, the first upward revision since 2024, suggesting the industry may be moving past the trough.”
Mr. Goldman also centred out two other companies he “likes”:
* AtkinsRéalis Group Inc. (ATRL-T, “sector outperform”) with a $114 target, up from $105. Average: $117.17.
Analyst: “For ATRL, the next nuclear milestone is Monark safety case acceptance from CNSC, expected towards the end of 3Q. A positive report should read as preferred vendor selection (and eventual PO) since FOAK is the main customer concern. Using 25 times for Nuclear and 10.5 times for Engineering supports a share price of $114 (up 30 per cent).”
* Cascades Inc. (CAS-T, “sector outperform”) with a $108 target. Average: $19.58.
Analyst: “For CAS, the industry implemented another price increase in September, which should more than offset input cost inflation and tariffs. Continued deleveraging should support a re-rate.”
National Bank Financial analyst Cameron Doerksen predicts higher fuel costs will have a noticeable impact on Air Canada’s (AC-T) financial performance through the end of the fourth quarter, however he does emphasize fare increases are “still seeing traction.”
“Jet fuel averaged $1.55/litre in Q3, an incremental increase from the average spot price of $1.46 in Q2,” he said. “Air Canada’s underlying assumption was that fuel would average C$1.38/litre in Q3 and C$1.29/litre in Q4. Higher than expected fuel prices will impact Q3 expected profitability, but the bigger headwind concern is for Q4 as the current spot price of jet fuel is C$1.89/litres it is unlikely in our view that Air Canada will fully offset higher fuel costs in Q4.”
“Air Canada was expecting to offset 60 per cent of higher fuel costs with higher yields in Q3 and 100 per cent in Q4, but given the higher than expected fuel costs so far in Q4, it is unlikely that the Q4 target can be achieved. Nevertheless, Air Canada indicates that it has been successful in raising fares in recent weeks to offset higher jet fuel prices. According to Canadian CPI data, airfares in Canada were up 15.0 per cent year-over-year in August. We further note that in the most recent week Kayak’s Canada Airfare Trends Dashboard shows that Domestic fares are up 55 per cent year-over-year while International fares from Canada are up 23 per cent year-over-year.”
Ahead of the release of the airline’s third-quarter financial report on Nov. 4, Mr. Doerksen adjusted his forecast to reflect higher assumed jet fuel prices “with some offsetting higher yield estimates.”
“Our Q3 EBITDA forecast is now $750-million versus $810-million previously,” he added. “We now forecast 2026 EBITDA of $2.8 billion which is below the low end of Air Canada’s guidance range of $2.9-$3.2-billion as we do not expect a full fuel price recovery in Q4. For 2027, we have lowered our EBITDA forecast to $3.3-billion versus $3.5-billion previously.”
With those changes, the analyst reduced his target for Air Canada shares to $37 from $40, keeping an “outperform” rating. The average on the Street is $35.92.
“Higher jet fuel prices will weigh on results in the near-term, but longer-term we remain positive as we see Air Canada being successful in raising fares to offset higher costs while competitors may be forced into further capacity reductions,” he concluded. “We also see 2027 as an inflection year for Air Canada as profitability normalizes, non-fuel unit cost increases moderate, and the current capex cycle peaks.”
In a quarterly earnings preview for Canadian transportation companies titled Cheap Valuations Set the Stage for Outperformance on Beats/Raises, Scotia Capital analyst Konark Gupta said he remains constructive on the industry despite lowering his stock price targets " amid the recent rise in bond yields."
“We have also rolled forward our base period to 2028 (was mid-2028) while largely maintaining our 2026-2028 estimates,” he added.
“Our positive thesis is underpinned by: (1) improving underlying freight trends after a multi-year downturn despite the ongoing inflationary concerns due to tariffs and geopolitical tensions; (2) further momentum in defence and space amid nations’ growing focus on sovereignty; (3) resilience in solid waste pricing along with further rebound in recycled commodities; and (4) highly attractive valuations in most cases. Following the recent pullback and/or corporate actions, we see the most upside potential in AC, CAE, CJT, MDA, and TFII through 2027. That said, nearly two-thirds of our coverage is now undervalued vs. history. Our top-conviction names for potential beat and/or raise are BBD.B, CHR, CNR, GFL, MDA, and RSG. We are cautious on CP due to high Street expectations. Similarly, we see downside risk to AC’s guidance and Q4 consensus on fuel. Lastly, there is potential for a catalyst from CAE and GFL in the form of asset sales and privatization, respectively.”
Mr. Gupta made these target revisions:
- Air Canada (AC-T, “sector outperform”) to $33 from $37.50. The average is $35.92.
- Bombardier Inc. (BBD.B-T, “sector outperform”) to $370 from $380. Average: $356.83.
- CAE Inc. (CAE-T, “sector outperform”) to $48 from $50. Average: $45.71.
- Chorus Aviation Inc. (CHR-T, “sector outperform”) to $37 from $33.50. Average: $33.36.
- Canadian National Railway Co. (CNR-T, “sector outperform”) to $198 from $199. Average: $194.38.
- GFL Environmental Inc. (GFL-N/GFL-T, “sector outperform”) to US$55 from US$57. Average: US$55.06.
- Mullen Group Ltd. (MTL-T, “sector perform”) to $30 from $29. Average: $30.11.
- TFI International Inc. (TFII-T, “sector outperform”) to $235 from $263. Average: $230.43.
- Transat AT Inc. (TRZ-T, “sector underperform”) to $1.25 from $1.65. Average: $1.88.
RBC Dominion Securities analyst Bart Dziarski lowered his target multiples for property and casualty (P&C) insurance providers on Thursday to reflect “a softening pricing environment in Canadian commercial and de-celerating Canadian personal auto premiums in Ontario.”
“With Canadian commercial softening and Personal Auto in Ontario de-celerating within a global context of softening prices, investor sentiment remains subdued,” he said. “We have updated our DFY & IFC models to reflect pre-announced CAT losses, with 2026 on pace to potentially be the 2nd largest CAT loss year on record after 2024. Investment portfolios should benefit from higher interest rates with P&C companies sporting 2.3-2.7-times asset leverage and net investment income representing 45 per cent to 60 per cent of pre-tax profitability though book values are likely to be impacted by unrealized losses on bond portfolios.”
In a report previewing earnings season for P&C providers as well as other diversified financial companies in his coverage universe, Mr. Dziarski emphasized he’s “cautious” on Element Fleet Management Corp. (EFN-T) and removed it as his “top growth pick” moving forward.
“We have lowered our originations estimate from $1.8-billion to $1.6-billion and think EFN’s $6.5-$6.9-billion full-year guidance range is at risk of being cut (we estimate $6.3-billion),” he explained. “A guidance reduction would reduce management’s credibility at a time when execution has been disappointing, which management was candid enough to admit at a recent conference.
“EFN is down 40 per cent year-to-date due to multiple de-rating and tax loss selling into year-end could put further pressure on the shares. So why are we not capitulating and downgrading? The short answer: valuation. EFN currently trades at an 11-per-cemt FCF yield with 10-per-cemt EPS growth expected in 2027, which we view as attractive. EFN is trading at 9.5 times 2027 P/E, the lowest multiple since 2020 and well below FleetPartners Group (FPR - not covered), which is currently trading at 12.8 times 2027 P/E driven by an ongoing acquisition process for a business that has higher credit risk and a sub-scale position in a smaller market when compared to EFN.”
Mr. Dziarski lowered his target for Element Fleet shares to $33 from $40, maintaining an “outperform” rating. The average is $37.56.
His other target adjustments are:
- Brookfield Business Corp. (BBUC-N/BBUC-T, “outperform”) to US$34 from US$40. Average: US$40.57.
- Definity Financial Corp. (DFY-T, “outperform”) to $87 from $94. Average: $87.36.
- Fairfax Financial Holdings Ltd. (FFH-T, “outperform”) to $2,223 from $2,316. Average: $2,859.89
- Fiera Capital Corp. (FSZ-T, “sector perform”) to $4.70 from $5. Average: $5.29.
- Intact Financial Corp. (IFC-T, “sector perform”) to $285 from $308. Average: $315.33.
- Onex Corp. (ONEX-T, “sector perform”) to $129 from $135. Average: $154.
- Sprott Inc. (SII-T, “outperform”) to $207 from $204. Average: $189.25.
- TMX Group Ltd. (X-T, “outperform”) to $67 from $69. Average: $65.64.
- Trisura Group Ltd. (TSU-T, “outperform”) to $54 from $60. Average: $57.39.
Raymond James energy equity analysts Michael Barth and Luke Davis updated both their commodity price deck and company-specific assumptions ahead of earnings season in the sector, leading to a pair of downgrades.
“In C$ terms, WTI/WCS were down 7 per cent/9 per cent sequentially in 3Q26, although strip pricing does improve slightly from the last time we updated the price deck,” they explained. “The biggest change to our price deck was wider WCS differentials, which have rapidly blown out to US$25/bbl,and are a drag on near-term cash flow estimates. We also revised our long-term WCS differential assumption from US$15/bblto US$18/bblwhich does modestly reduce our target prices across the heavy oil group.
“On the natural gas side, an impending ‘Super El Nino’ (warmer-than-normal winter) suggests Western Canada will remain well supplied through winter with inventories already tracking 16-per-cent higher than the prior 5-year average; as such, we remain cautious on the near-term gas macro.”
Citing its valuation, Mr. Barth lowered Canadian Natural Resources Ltd. (CNQ-T) to “market perform” from “outperform” with a $69 target, down from $70 previously. The average is $74.19.
“After updating our price deck and estimates, our target on CNQ declines modestly with this publication (largely our LT WCS differential assumptions). At the same time, strong stock performance has left the stock trading through our new target. As such, we’re downgrading CNQ to Market Perform on valuation. We acknowledge that there is plenty of positive regulatory/political momentum that could lead to improved royalty rates, better capital efficiencies, and lots of incremental egress (all good things for the industry broadly), but ultimately see better ways to play that thematic in large cap (namely SU and CVE). At the margin, we also still have a strong preference for large caps with A) refining exposure in the strongest global crack macro environment we’ve ever seen, and B) with proportionally greater in-situ growth potential within portfolios than CNQ seems to have today.”
He added: “In Senior Oil & Gas we expect strong volumes, SCO premiums, and crack spreads to translate into very strong cash flow generation in 3Q26. Many of those themes should persist into 4Q26 and 2027+, although one emerging headwind is rapidly widening WCS differentials (up to US$25/bbl from just US$15/bbl at the end of the summer). That widening differential should represent the largest headwind for CVE and CNQ, with SU largely insulated. Given SU’s relative immunity to wider heavy differentials coupled with solid exposure to rising SCO premiums and record crack spreads, we continue to have SU at the top of our pecking order in the peer group. Lastly, we are downgrading CNQ from Outperform to Market Perform on valuation; strong stock performance coupled with a modest reduction in our target (driven by an increase in our LT WCS differential assumption) has resulted in the stock trading through our updated target.”
Given its pending takeover by Cenovus, Mr. Barth also lowered Athabasca Oil Corp. (ATH-T) to “market perform” from “outperform” with a $12 target, down from $14 The average is $12.44.
In other analyst actions:
* Canaccord Genuity’s Yuri Lynk downgraded Bird Construction Inc. (BDT-T) to “hold” from “buy” with a $83 target, which sits below the $88.13 average on the Street.
“Aecon and Bird re-rate while U.S. peers de-rate. Construction sector valuations are dominated by a U.S. peer group with significant leverage to the data centre and related power build-out. Group valuations appear to be undergoing a de-rating on data centre pushback (NIMBY) and negative earnings surprises from Primoris, Mastec, Cardinal Infrastructure, and Limbach Holdings. Bird has executed well and been rewarded for it; it is the best-performing construction stock in North America YTD but now trades at a premium and is better positioned as a HOLD, in our view. While Aecon’s valuation has also improved, it hasn’t been to the same extent, and we maintain our BUY rating,” he explained.
“In our view, Bird’s solid outlook is largely reflected in its share price. Bird’s stock has delivered a total return of 186 per cent year -to -date, while the rest of the group is up 10 per cent, including Aecon, which is up 69 per cent. When looking at historical valuations back to 2016 , two things stand out to us: (1) the entire Construction Group has re - rated to reflect an improved macroeconomic outlook, especially for power, T&D, and utility -exposed names, and (2) Bird’s valuation multiple has not only closed its gap with the group but now trades at a premium.”
* Based on valuation, Canaccord Genuity’s Katie LaChapelle upgraded Lithium Americas Corp. (LAC-T) to “speculative buy” from “hold” with a $5.25 target, down from $7 and downgraded Critical Elements Lithium Corp. (CRE-X) to “hold” from “speculative buy” with a 35-cent target, sliding from 85 cents. The average targets are $7.29 and 85 cents, respectively.
* Raymond James’ Christian Reiter initiated coverage of Atlas Salt Inc. (SALT-X), a St. George’s, Nfld.-based company focused on developing its wholly owned Great Atlantic Salt Project on the west coast of the province, with an “outperform” rating and $4 target, which he noted represents a potential 180-per-cent upside to Tuesday’s closing price.
“Great Atlantic is one of the most differentiated late-stage development assets in the Canadian small-cap mining universe, featuring: 1) a large, shallow, high-purity salt deposit with a modern mine design; 2) direct marine access; and, 3) a target market structurally dependent on imported and logistically constrained supply. With key development milestones increasingly falling into place, we believe the current valuation materially understates the value of the asset and the potential for continued de-risking to drive a market re-rate,” said Mr. Reiter.
* ATB Cormark’s Gavin Fairweather raised his targets for Canadian National Railway Co. (CNR-T, “sector perform”) to $190 from $185 and Canadian Pacific Kansas City Ltd. (CP-T, “outperform”) to $146 from $143. The averages are $194.38 and $142.49, respectively.
* Stifel’s Cole McGill reduced his target for Luca Mining Corp. (LUCA-X) to $2.75 from $3.25 with a “buy” rating. The average is $2.74.
“We think the announcement of LUCA’s acquisition of Cozamin transitions the company from a deleveraging yet capital constrained dual asset producer to a free cash flowing, better capitalized value growth story with better market presence. Where difficult to comp on a metal equivalent basis - we now see a vehicle capable of generating 68% of its EV in ’27-’28 FCF, alongside financially derisking growth initiatives at Campo Morado. We see opportunity for mine life extension at Cozamin, especially via WPM’s second endorsement of the asset, and the potential for a revaluation of LUCA equity on a forward FCF basis as execution/cost stabilization measures are advanced across the prior existing portfolio.”
* In a report titled Silver, sooner: milling toward a Mexican mid-tier, Desjardins Securities’ Simon Wildsmith became the first analyst to initiate coverage of Vancouver-based Silverco Mining Ltd. (SICO-X), giving it a “buy” rating and $16 target.
“Within the last 12 months, the company has acquired two silver-polymetallic underground mines in Mexico: the producing La Negra mine in Querétaro State and the Cusi mine in Chihuahua, currently in the process of a restart. Through what we see as a relatively low-capex investment cycle, Silverco aims to increase production from both assets and emerge as a Mexican mid-tier silver producer,” he said.
* Desjardins Securities’ Benoit Poirier increased his target for Mirabel, Que.-based Volatus Aerospace Inc. (FLT-T) to 95 cents, which is a penny above the average, from 90 cents with a “buy” rating, while Ventum Capital Markets’ Rob Goff bumped his target to $1 from 95 cents with a “buy” rating
“[Wednesday], FLT announced the acquisition of AISPECO, a developer and manufacturer of modular airborne sensor systems and proprietary flight-management software. We view the acquisition as highly strategic, adding commercially deployed technology, expanding FLT’s participation across the aerial-intelligence value chain and creating opportunities for higher-value services and technology sales,” said Mr. Poirier.