Inside the Market’s roundup of some of today’s key analyst actions
Ventum Capital Markets analyst Amr Ezzat sees 5N Plus Inc. (VNP-T) as a “linchpin in critical supply chains” in the renewable energy “gold rush.”
“5N Plus is no ordinary materials company — it’s a critical enabler to advanced industries, leveraging decades of expertise to develop proprietary know-how in specialty semiconductor compounds and performance materials,” he said. “This deep expertise has allowed the Company to establish very high barriers to entry, positioning it as a linchpin in essential supply chains that serve high-growth markets. Through a strategic transformation, 5N Plus has redefined its role in these sectors, standing out for its ability to meet the demands of industries characterized by innovation and scarcity.”
In a research note initiating coverage with a “buy” recommendation, Mr. Ezzat said 5N Plus, provides an “opportunity to capitalize on a high-calibre operator at the forefront of renewable energy, space-based technologies, and semiconductors.” He argued investors “remain tied to outdated perceptions” of the Montreal-based producer of high-purity metals and compounds for electronic applications, seeing them “clinging to a commodity-driven narrative that no longer holds water.”
“In reality, over the past several years 5N Plus has pivoted decisively toward high-margin, value-added operations, transforming its earnings profile and significantly reducing its risk profile,” he said. “This transformation is overlooked by investors, offering an opportunity for those who recognize its fundamentally re-engineered and value-added growth-focused business model.
“Amid growing geopolitical tensions and heightened scrutiny over semiconductor supply chain dependencies, 5N Plus emerges as a key non-China-based provider of ultra-high-purity semiconductor materials. Its unique positioning is reinforced by high-profile validation, including a $14.4-million award from the U.S. Department of Defense (DoD). As Western nations double down on supply chain localization, 5N Plus emerges as a critical player in the reshaping of global semiconductor and defense ecosystems.
Mr. Ezzat said his above–consensus estimates for the company underscore his bullish stance, believing “market’s underestimation of growth catalysts in specialty semiconductor and renewable energy applications presents a compelling case for multiple expansion as investors recognize the Company’s direct alignment with surging demand in advanced materials for clean energy and advanced tech applications.”
“Given the Company’s positioning in these high-growth markets and its potential to capture outsized growth relative to peers, we don’t think it’s inconceivable for the market to assign a premium to 5N Plus amid continued secular tailwinds,” he added.
The analyst set a target of $10 per share, equating to a 58.2-per-cent total return. The average target on the Street is $9.
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Following its $50-milion bought deal offering and a $50-million secondary offering of subordinate voting shares from four legacy shareholders, including CEO and chairman Graham Rosenberg, Desjardins Securities analyst Gary Ho thinks dentalcorp Holdings Ltd.’s (DNTL-T) M&A activity could “could nudge higher in FY25 while still spending within FCF [free cash flow].”
“While we were a bit surprised by the announcement given some recent momentum, it reduces leverage by 0.2 times,” said Mr. Ho, resuming coverage of the Toronto-based company.
While his revenue and earnings expectations were not adjusted, Mr. Ho said the 5.3 million increase in the share count caused a “modest” 1-cent dilution to his adjusted earnings per share from a lower financing cost offset by slightly higher share count. His FCF per share was also lowered for fiscal 2025 and 2027.
Despite the slight dilution, the analyst kept a “buy” rating and $12 target. The average is $12.08.
“We view DNTL as a quality compounder given its (1) proven M&A playbook in a fragmented market; (2) organic growth outlook; (3) compelling financial profile with resilient top-line and FCF growth; and (4) recession-resistant attributes,” he concluded.
Elsewhere, TD Cowen’s David Kwan resumed coverage with a “buy” rating and $12 target.
“At 10.0 times EV/EBITDA (C2025E), at a solid discount to its peers (15.9 times) and historical average (11.8 times), we think the stock is attractively valued given continued expected improvements in growth, margins, FCF, and leverage in 2025,” he said.
“We believe the financing will help DNTL maintain healthy cash levels without needing to borrow to fund its M&A program, even with an expected increase in cash tax payments next year. Our F2025 forecasts assume that DNTL’s FCF and cash payments for acquisitions are essentially in-line.”
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RBC’s Global Equity Team thinks the the current environment is “supportive for several infrastructure sub-sectors and stocks.”
“Whether it be data centres, onshoring/reshoring, coal-to-gas switching, or electrification, the theme of growing energy demand and the benefit for energy infrastructure has been a key driver of many stocks in our coverage,” the firm said. “With the valuation expansion that has occurred, we believe the market will begin to increase its focus on companies that can crystallize the upside associated with increased energy demand.”
“A year ago, we highlighted elections in several jurisdictions as something that investors should closely watch. Our eyes now turn to how the election promises will result in policy changes. Specifically, we look to the impact of a potential repeal of the Inflation Reduction Act (IRA), changes in corporate taxes (e.g., rates, deductions, etc.), the approach to conventional versus renewable energy, and tariff-related impacts on capital costs and operating margins.”
In a research note released Thursday titled A little something for everybody, the firm revealed its “Best Ideas” across several sub-sectors, including regulated utilities, power generation, midstream and transport infrastructure.
For Canadian power and utility companies, analyst Maurice Choy sees “still a long runway of growth ahead, as the sector shifts more towards energy resilience (versus energy transition).”
“We believe the favourable energy secular trends that support increased electricity and gas demand across North America will continue into the new year, which lead to higher utilization of the power and utility companies’ existing infrastructure, but also support the need for increased capital investments for incremental capacity,” he said. “To this end, even if energy transition-related investments may see a lower capital allocation than in recent years, we believe investors can expect the utilities to continue delivering strong rate base growth rates, while the Alberta Power companies are positioned to announce new projects to meet the province’s potential data centre electricity demand.”
He named three Canadian companies to the firm’s preferred stock list:
* AltaGas Ltd. (ALA-T) with an “outperform” rating and $40 target. The average on the Street is $38.
Analyst: “With a roughly 55-per-cent/45-per-cent split between Utilities and Midstream, we believe the fundamentals remain sound for the company to continue delivering both EBITDA and EPS growth over the long-term that is backed by low-risk commercial frameworks (e.g., more than 80 per cent of the company’s EBITDA comes from its utilities or are under take-or-pay and fee for-service contracts). In Utilities, we highlight the roughly 8% rate base CAGR (strongest amongst the Canadian Regulated Utility companies), and potential to benefit from data center-themed growth via its presence in North Virginia. In Midstream, we like the path ahead for the company’s Global Exports platform as management continues to de-risk the business, and we favourably view the potential for higher utilization and expansion opportunities in AltaGas’ other midstream infrastructure as the basin’s volumes experience multi-year growth ahead.”
* Emera Inc. (EMA-T) with an “outperform” rating and $60 target. Average: $56.50.
Analyst: “Growth through its $20 billion, five-year capital plan, the largest in Emera’s history. The company’s new $20 billion, five-year (2025-2029) capital plan will largely (80 per cent) be spent in the favourable Florida jurisdiction, with a focus on supporting the 2-per-cent and 4-per-cent customer growth at Tampa Electric and PGS, respectively. Approximately 55 per cent of the spend will be on transmission, distribution and gas infrastructure to support reliability and customer growth initiatives, while 17 per cent of the spend will be on renewable integration aimed at reducing fuel cost volatility exposure.”
* TransAlta Corp. (TA-T) with an “outperform” rating and $16 target. Average: $16.23.
Analyst: “Despite the relatively lower forward power prices in 2025 and 2026, we anticipate that TransAlta is positioned to deliver strong cash flows from its existing assets, which now include the facilities from the recently completed Heartland Generation transaction. If/when power prices rise (e.g., higher gas prices; improved power demand due to weather or data centers, among others; supply disruptions), we see upside to our EBITDA and cash flow forecasts without needing any material investments. Ahead, we do watch for progress from the ongoing design of the Restructured Energy Market (REM), which can provide further clarity on the long-term attractiveness of Alberta’s energy-only power market.”
For Renewable and Clean Energy companies, Mr. Choy emphasized power demand growth is mainly driven by data centres.
“Electricity demand in the U.S. is forecast to grow by 16 per cent through 2029 (+128 GW), with data centres driving 50-70 per cent of the growth (source: Grid Strategies). The largest load growth is in ERCOT (Texas), followed by PJM and Georgia,” he said. “In Canada, although AI and data centers may not be the primary growth drivers, many provinces are witnessing a surge in power demand fuelled by population growth, new manufacturing facilities, and ongoing electrification (e.g., the Ontario government forecasts 75-per-cemt power growth by 2050; Hydro-Quebec anticipates power demand doubling by 2050). These factors collectively highlight the shift in energy consumption patterns and underscore the need for diverse and reliable energy sources to meet this rising demand.”
Two Canadian companies were listed:
* Brookfield Renewable Partners LP (BEP-N, BEP.UN-T) with an “outperform” rating and US$31 target. Average: US$31.11.
Analyst: “Management continues to see strong corporate demand for renewable energy, particularly from the big tech companies. Management estimates that 50 per cent of its contracted generation will be with C&I customers in five years, up from 30 per cent currently. Management highlighted that eight of the top ten corporate buyers of clean energy are currently Brookfield customers, and more than 90 per cent of its 200 GW development pipeline is in the top ten data centre markets globally. The company’s ability to execute and deliver renewable energy in scale is highlighted by the 10 GW framework agreement signed with MSFT in early 2024.”
* Northland Power Inc. (NPI-T) with an “outperform” rating and $28 target. Average: $29.31.
Analyst: “We believe the company is in an advantaged position relative to peers with three fully funded projects that should generate $600-million of EBITDA and $200-million of FCF (CAFD) on completion (2025-27), which is equivalent to roughly 50 per cent and 60 per cent of the management’s 2024 EBITDA and FCF guidance, respectively. With financial close achieved on all three projects, the developments are fully funded, significantly de-risked, with fixed interest rates, hedged currency exposure, and the vast majority of construction costs are fixed. Pursuing incremental growth opportunities would be entirely discretionary.”
For midstream companies, Mr. Choy argues new takeaway capacities should “firm up long-term thesis on transformational WCSB growth.”
“On the back of having Canadian rig counts remaining above historical averages (despite the prevailing low commodity price environment), we believe the market can enter 2025 with expectations that the long-term fundamentals relating to the Western Canada Sedimentary Basin (WCSB) remain robust, particular reflecting: (1) the continued ramp up of the Trans Mountain Pipeline Expansion, which has performed better than many in the industry had expected since it was placed into service in May 2024; (2) the upcoming start of commercial operations at LNG Canada; and (3) continued progress relating to new energy export projects, including Pembina’s Cedar LNG and AltaGas’ REEF,” he said. “As the basin delivers multi-year volume growth in natural gas, natural gas liquids (NGLs), and crude oil, we expect the Canadian midstream companies to benefit from: (1) improving their existing asset utilization rates (with little to no capital expenditures required); (2) signing new long-term contracts and/or contract extensions that underpin new growth initiatives; and (3) delivering stronger margins in their trading and marketing businesses.
Two Canadian midstream companies were named:
* Pembina Pipeline Corp. (PPL-T) with an “outperform” rating and $65 target. Average: $61.80.
Analyst: “Uniquely positioned in the B.C. Montney to capture growing natural gas, NGL and crude oil production. We believe that the superior reach of Pembina’s integrated systems into the B.C. Montney will enable it to benefit from the growing natural gas, NGL, and crude oil production, which will lead to higher utilization rates on these systems, as well as drive new expansion or de-bottlenecking projects that are underpinned by long-term contracts. Beyond delivering financial results that are supportive of its guidance, we believe the year ahead offers a number of commercial and construction-related stock catalysts, including: (1) stronger year-over-year volumes across many of its systems; (2) progressing the construction of its major growth projects on time and on budget (e.g., RFS IV fractionation expansion, Cedar LNG); and (3) assigning of the company’s 1.5 mtpa capacity in Cedar LNG to third parties.”
* Gibson Energy Inc. (GEI-T) with an “outperform” rating and $28 target. Average: $27.
Analyst: “We believe Gibson Energy’s Hardisty and Edmonton terminals are positioned not only to continue delivering low-risk contracted cash flow from its existing infrastructure for years to come, but also to support the further sanctioning of new tankage as the basin’s crude oil production grows (notably, as TMX continues to ramp up). South of the border, with the recent Gateway announcements relating to recontracting two existing customers and moving forward with the dredging project, Gibson Energy should achieve its 15-20-per-cent EBITDA growth target on a run-rate basis by the end of 2025, thereby offering the company meaningful DCF/share growth over our forecast period”
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Eight Capital analyst Felix Shafigullin initiated coverage of Mako Mining Corp. (MKO-X) with a “buy” rating, touting the potential from the advancement of its “low-capex” open-pit Eagle Mountain gold project in Guyana.
“The company acquired Goldsource Mines Inc., the previous owner of the Eagle Mountain project, in July 2024,” he said. “Earlier in 2024, Goldsource completed a Preliminary Economic Assessment (PEA) study that envisioned the project as a 5,000 tons per day open-pit mine producing 66 koz [thousand ounces] of gold per year on average over a mine life of 15 years. While Mako’s management targets 2027 to commence production, we conservatively model first production at Eagle Mountain in 2028 to accommodate for potential delays during the construction stage.
“Compared to other undeveloped open-pit gold projects located in Latin America, Eagle Mountain requires a relatively low initial capex investment of US$96-million. The low capex intensity of the project is explained by the presence of soft-rock mineralized saprolite near surface that would be processed during the first 4.5 years of production (Phase 1). Crushing is not required to process the saprolite material, eliminating the need for a crushing circuit during Phase 1. The absence of crushing in the Phase 1 processing flowsheet reduces the initial capex requirements of the project and simplifies the construction phase.”
Mr. Shafigullin sees the progress for Mako being “subsidized” by gold and silver production at its San Albino mine in Nicaragua.
“San Albino is one of the highest-grade open-pit gold mines globally (silver accounts for a small portion of the property’s economic value) and has been in production since 2021,” he said. “Based on our estimates, San Albino’s remaining resource base of 388 koz AuEq in 1.0 Mt at 11.6 g/t [grams per ton] can support production until the end of 2027, though we see the potential for the property’s mine life to be extended as a result of Mako’s exploration activities.”
Currently the lone analyst covering the stock, he set a target of $5 per share.
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Touting its “aggressive growth profile,” Canaccord Genuity analyst Doug Taylor initiated coverage of Zedcor Inc. (ZDC-X), a Calgary-based provider of surveillance tower infrastructure and related monitoring services, with a “buy” recommendation on Thursday.
“In our view, the company stands at the foothills of a substantial growth opportunity as demand for effective surveillance persists amid an increasingly scarce and costly security guard environment,” he said.. “Zedcor expects to more than double its fleet of surveillance towers in the next few years, driving an equivalent step function change in revenue and profits.”
Mr. Taylor set a target of $4.25. The current average is $2.61.
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In a 2025 outlook for heavy equipment providers, CIBC World Markets analyst Krista Friesen made a series of target adjustments after assuming coverage:
Her changes include:
* Ag Growth International Inc. (AFN-T) to $72 from $70 with an “outperformer” rating. The average is $72.25.
Analyst: “While there is no denying the near-term headwinds AFN is facing in U.S. agriculture, we believe the current share price and valuation of AFN are overly punitive with regard to these headwinds, with AFN trading at 6 times 2025E consensus EBITDA, versus its historical average of 8 times. Longer-term we continue to see fundamentals which should be supportive of on-farm storage, and therefore AFN. In 2025 we will be keeping a close eye on the state of U.S. ag, while also watching for AFN to continue to pay down its leverage.”
* Finning International Inc. (FTT-T) to $50 from $48 with an “outperformer” rating. Average $47.33.
Analyst: “Our investment thesis for FTT largely centres around the company’s South America exposure and its compelling share buyback. We expect FTT’s outsized exposure to copper specifically to help drive near-term earnings growth, and with the company having reset expectations when it reported Q3/24 results, we believe FTT is on a path to now deliver more consistent earnings results, which should contribute to an improved multiple.”
* RB Global Inc. (RBA-N/RBA-T) to US$109 from US$102 with an “outperformer” rating. Average: US$101.10.
Analyst: “RBA is our top pick for M&A capacity given both its favourable balance sheet and flexibility for conducting acquisitions.”
* Toromont Industries Ltd. (TIH-T) to $128 from $127 with a “neutral” rating. Average: $134.67.
Analyst: “Our investment thesis is predicated on our cautious optimism for TIH’s end markets (construction and mining in Eastern Canada), strong balance sheet, and its current valuation trading in line with its historical multiple.”
Ms. Friesen added: “Our top pick in the space is RBA followed by FTT and AFN, all of which are Outperformer rated, followed by TIH, Neutral rated.”
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In other analyst actions:
* In a report titled 2025 cannot be nearly as bad as 2024, Jefferies’ John Aiken raised his Toronto-Dominion Bank (TD-T) rating to “buy” from “hold” with a $90 target, rising from $82. The average target on the Street is $82.62.
“We believe all the negatives are priced in and that its multiple should recover in the latter half of the year as the new CEO presents his new strategic vision for the bank,” he said.
* JP Morgan’s Richard Sunderland upgraded Emera Inc. (EMA-T) to “neutral” from “underweight” and raised his target to $56 from $51. The average is $56.50.
* CIBC’s Scott Fletcher lowered his DRI Healthcare Trust (DHT.UN-T) target to $18 from $19.50 with an “outperformer” recommendation. The average is $19.59.
* Scotia’s Orest Wowkodaw raised his First Quantum Minerals Ltd. (FM-T) target to $23 from $18.50 with a “sector perform” rating, while Morgan Stanley’s Ioannos Masvoulas increased his target to $22 from $20.20 with an “equal-weight” rating. The average is $21.75
“We have preemptively updated our estimates to reflect two anticipated scenarios ahead (1) a likely 20-per-cent minority interest sale in the Zambian assets for $2.0-billlion, and (2) our belief that FM may need to cede a 20-per-cent ownership stake in Cobre Panama (CP) in order to successfully negotiate a restart agreement and restore the social license for its flagship asset,” said Mr. Wowkodaw. “Although our NAVPS is essentially unchanged under this ‘20/20′ scenario (as we have offset economic losses with a lower CP discount rate), we believe the risk-reward outlook is relatively mixed at current levels despite our higher target price.
“We rate FM shares SP due to elevated debt leverage and heightened CP uncertainty.”