Inside the Market’s roundup of some of today’s key analyst actions
While National Bank of Canada’s (NA-T) first-quarter 2025 earnings per share exceeded his expectation, RBC Dominion Securities analyst Darko Mihelic warns of “signs of credit quality deterioration.”
“We were surprised that there was little discussion on potential tariff impacts (and NA’s position in Quebec is a slight mitigant),” he said in a report titled Integrating during uncertain times. “We model higher impaired PCL ratio assumptions in Personal and Commercial. We do not expect Financial Markets earnings to repeat and uncertainty came at an inopportune time for the CWB integration.
Shares of the Montreal-based bank slid 5.5 per cent on Wednesday after it reported adjusted EPS of $2.93, topping both Mr. Mihelic’s estimate of $2.52 and consensus of $2.65. He attributed the beat to solid revenues, provisions for credit losses (PCLs), and non-interest expenses relative to his estimates.
“Total PCLs were $254 million (up 57 per cent quarter-over-quarter), below our estimated $266 million, as lower than expected performing PCLs more than offset higher than forecasted impaired PCLs,” said the analyst. “Similar to peers, NA did not build large performing PCLs this quarter as we expected and we update our model to reflect a build in Q2/25.
“NA increased its 2025 impaired PCL ratio guidance to 25-35 basis points (from 25-30 bps previously), the only bank to raise PCL guidance so far. NA shared that the new guidance includes CWB and market uncertainties. We increase our impaired PCL ratio assumptions in Personal and Commercial (P&C), and our 2025 overall impaired PCL ratio increases to 30 bps (was 27 bps), in the middle of NA’s new guided range.”
To reflect his new PCL assumptions, Mr. Mihelic lowered his 2025 EPS forecast to $10.27 from $10.36, while his estimate increased to $11.50 from $11.25.
“In Personal & Commercial (P&C), we model a performing reserve build in Q2/25 as it didn’t happen this quarter like we expected and we expect higher impaired PCLs through the rest of our forecast period (hitting the midpoint of their new range for 2025 at the all-bank level), driving a decrease in our overall adjusted earnings for 2025,” he said. “For 2026, our core EPS estimate increases as we have higher earnings expectations in Financial Markets, which more than offset reduced P&C earnings estimates. We also updated our model for updated accounting considerations relating to the CWB acquisition.”
Maintaining a “sector perform” rating for National Bank shares, he reduced his target by $1 to $144. The average target on the Street is $136.86, according to LSEG data.
Elsewhere, others making target adjustments include:
* Desjardins Securities’ Doug Young to $136 from $140 with a “hold” rating.
“Adjusted pre-tax, pre-provision (PTPP) earnings were 15 per cent above our estimate. However, 90 per cent of the beat was from capital markets, Canadian banking missed and PCLs were higher than expected,” said Mr. Young.
* TD Cowen’s Mario Mendonca to $131 from $135 with a “hold” rating.
“NA delivered a strong EPS beat driven by trading revenue (as we expect from all banks). NII growth remains strong, but moderating loan growth (evident at ABA this quarter) could hamper growth going forward (ex. CWB). Impaired PCLs/GILs in commercial were weak and speak to growing stress domestically (again, not unique to NA). Capital, post the CWB is impressive and gives NA ample flexibility,” he said.
* BMO’s Sohrab Movahedi to $135 from $143 with an “outperform” rating.
* Jefferies’ John Aiken to $147 from $149 with a “buy” rating.
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Despite Fiera Capital Corp.’s (FSZ-T) fourth-quarter 2024 financial results falling short of expectations, National Bank Financial analyst Jaeme Gloyn raised his rating for its shares to “sector perform” from “underperform” previously, seeing its valuation becoming “reasonable.”
“Revenues, EBITDA and EPS all missed while the organic growth engine that seemed to fire up in Q3 paused,” he said. “Management remains optimistic that outflows to PineStone are in the rearview and the regional distribution model will deliver positive flows in H1-2025. While we await proof of this outcome, the share price is down 27 per cent since our downgrade last summer (total return of negative 23 per cent). Downside risk remains, however, we are upgrading to Sector Perform given a positive total return to our target price of $7.00 (was $8.50). Our estimates are largely unchanged.”
On Wednesday, shares of the Montreal-based asset manager plummeted 11.2 per cent following its premarket quarterly release, which included weaker-than-anticipated revenue of $184-million (versus Mr. Gloyn’s $223-million estimate and the Street’s projection of $211-million), due, in large part, to soft performance fee revenues. Adjusted earnings per share of 21 cents came in 16 cents below the consensus forecast.
“While private markets continue to perform nicely and a stable adjusted EBITDA margin are positive long-term drivers, weak revenue drivers in public markets (in particular at PineStone) keep us on the sidelines for now,” said the analyst. “That said, management continues to express optimism the company’s new regional CEOs in Canada, the U.S., EMEA and Asia will deliver positive results in H1-2025. Given H2-2024 didn’t deliver on the positive flows management expected, we continue to await evidence these new hires will drive success on FSZ’s revamped “regionalized distribution” strategy to improve net flows on Fiera-managed mandates.
“We now forecast adjusted EBITDA per share of $1.91 in 2025 (was $1.79) and $1.91 in 2026 (was $1.80), largely reflecting the removal of a 15 million share dilution impact as the share price is currently anti-dilutive (translates to 14-per-cent share count reduction). This is offset by a somewhat softer JV and other revenue outlook and slightly higher SG&A.”
Mr. Gloyn’s new target of $7 per share falls 79 cents under the current average on the Street.
Elsewhere, others making changes include:
* Scotia’s Phil Hardie to $8.75 from $10 with a “sector perform” rating.
“Investors reacted negatively to a disappointing quarter that saw earnings and flows fall well short of expectations, and some deterioration of relative investment performance across several large equity mandates,” said Mr. Hardie. “2024 proved to be a challenging year for Fiera given leakage from AUM sub-advised by PineStone driving significant outflows and creating a headwind for AUM growth.
“We expect sales momentum to improve in the back half of 2025, but are forecasting a significant outflow in Q1/25 reflecting an announced $6B redemption from Canoe Financial. We believe weak flows have weighed on investor sentiment for some time, but we expect the successful demonstration of improved sales momentum and inflows in the back half of the year to act as a catalyst to reverse this trend and support multiple expansion.”
* Desjardins Securities’ Gary Ho to $7.25 from $9 with a “hold” rating.
“FSZ reported a sizeable 4Q miss, driven mainly by lower-than-expected performance fees (can be lumpy). We anticipate that redemption concerns ($6.2-billion forecast in 2025), an elevated payout ratio (105 per cent at 4Q) and leverage (3.3 times at 4Q) will remain overhangs on the story near-term. We lowered our estimates, tempering our performance fee expectations, and decreased our multiple, which led to a decline in our target price,” said Mr. Ho.
* TD’s Graham Ryding to $6.50 from $8.50 with a “hold” rating.
“Results were below expectations due to lower than expected performance fees, which weighed on adjusted EBITDA margins (below management’s 30-per-cent target). AUM and management fees were in line. Outflows remain an overhang on AUM growth. FCF is trending in line to support the high dividend payout. Leverage ticked up quarter-over-quarter.” said Mr. Ryding.
* CIBC’s Nik Priebe to $6.75 from $9 with a “neutral” rating.
“Fiera Capital reported a sizeable earnings miss driven by lower-than-expected performance fees. This is clearly a setback from a cash flow standpoint, but we acknowledge that the dividend has been sustained throughout periods with much lower free cash flow generation. Considering the source of the earnings variance, we suspect that 2025 EPS estimate revisions will be much more benign than the scale of the Q4 miss,” he said.
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While he saw Wednesday’s release of its fourth-quarter 2024 results as a “solid performance to start 2025,” Scotia Capital analyst John Zamparo is moving to “the sidelines” on George Weston Ltd. (WN-T) in response to its performance thus far in 2025, downgrading his recommendation to “sector perform” from “sector outperform” previously.
“WN is up nearly 5 per cent year-to-date, while L [Loblaw Companies Ltd.] has posted negative 1 per cent,” he said. “There’s no perfect mechanism that we can discern in calculating the ‘correct’ discount to WN’s SoTP [sum-of-the-parts]. A credible argument can be made that it should be narrower than the current 13 per cent. However, achieving a double-digit return for WN would require a 5-per-cent move for both L and CHP [Choice Properties REIT], and also a narrowing of the SoTP discount to 9 per cent, nearly two standard deviations below its typical level.
“WN has shown a recent propensity for outsized moves on earnings days, despite the relative lack of incremental information (perhaps these days serve as a reminder on SoTP discounts). After opening relatively flat, WN closed up 2.8 per cent, compared with 0.4 per cent for L and 0.8 per cent for CHP.”
Seeing it “well-suited to benefit from defensive positioning,” Mr. Zamparo bumped his target to $241 from $240. The average on the Street is $244.36.
“We remain cautious on Canadian consumer spending expectations for 2025, and believe the macro picture (mostly ongoing tariff threats) could cause both greater investor preference for relative safety, and also more conservative spending patterns from consumers,” he said. “This likely involves an extension—or even acceleration—of 2024′s themes, which included prioritizing essentials over discretionary items, and value-seeking behaviour (elevated private label and promotional penetration). This scenario favours L, and therefore WN. However, we believe L faces modest headwinds to achieving higher earnings growth this year, in the form of strategic investments for future growth (new DCs, new store acceleration), while at 19.5 times forward P/E, L’s valuation continues to lead the grocers.”
Elsewhere, others making changes include:
* RBC’s Irene Nattel to $264 from $266 with an “outperform” rating.
“Our constructive outlook on WN is predicated on our favourable outlook for 52.6-per-cent-owned Loblaw, augmented by share buyback funded in large part through participation in L NCIB,” said Ms. Nattel. “Current discount to NAV 13-per-cent broadly in line with the long-term average and holdco discount embedded in our NAV.”
* Desjardins Securities’ Chris Li to $251 from $255 with a “buy” rating.
“After reducing our target for L, we are lowering our target for WN to $251 (based on a 7–8-per-cent holdco discount). Given WN’s simple structure with two high-quality assets (L and CHP.UN) and strong financial position, we believe a high-single-digit holdco discount is appropriate (vs 14 per cent currently). An improvement in sentiment on the REITs could be a catalyst for the discount to narrow,” said Mr. Li.
* CIBC’s Mark Petrie to $268 from $269 with an “outperformer” rating.
“GWL’s Q4 results did not contain any surprises and come after the reporting of both Loblaw and Choice’s results in the preceding weeks. The 2025 outlook is consistent with expectations. Most importantly, the company will continue to prioritize share buybacks with the cash it receives from its L and CHP-U holdings,” he said.
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National Bank Financial analyst Zachary Evershed initiated coverage of Dentalcorp Holdings Ltd. (DNTL-T) with a “buy” recommendation on Thursday, touting further potential gains from its aggressive “rinse and repeat” M&A strategy to compliment “stable” organic growth.
“During our due diligence interviews with industry participants (dentists, office managers and a DSO consultant) the overwhelming consensus was that Dentalcorp was the industry’s acquirer of choice,” he said. “DNTL has only 7-per-cent market share by revenue (3.5 per cent by location count), leaving a significant runway for consolidation, even after having acquired 600+ practices since 2011. The long history of acquisitions has allowed the company to refine its integration playbook, which, through a proprietary technology stack and centralized procurement, results in Day-1 EBITDA accretion of 10-15 per cent. The technology platforms and centralized back-office functions free up partner dentists’ time, translating to better operating leverage, and the same technology platforms fill the freed up time by driving a 15-per-cent increase in patient visits within 18-24 months post-closure.”
Seeing the Toronto-based company “improving the patient experience by supporting its dentists with a best-in-class technology stack of centralized CRM and back-office functions,” Mr. Evershed thinks Dentalcorp continues to shed its reputation for “excessive” leverage and is now establishing a track record of self-funding.
“Q3/24 marked six straight quarters since DNTL last drew on its credit facility, financing the acquisition program entirely from FCF, and over that time period, the increase in pro forma Adj. EBITDA and slight reduction in debt has pared leverage back to 4.0 times (ex-leases),” he said. “The most recent acquisitions, in combination with the $50 million equity issuance in December to accelerate debt repayment, should see leverage fall further to 3.6-3.8 times in Q4/24. We estimate that the current FCF generation of the business allows for a steady pace of $28-million+ in incremental Adj. EBITDA added through acquisitions ($25-million after rents) annually, while simultaneously seeing the balance sheet naturally delever towards management’s 3-3.5 times Net Debt/Adj. EBITDA target by 2026 (ex-leases, after rents, i.e., pre-IFRS 16), or by 2025, on pro forma Adj. EBITDA.”
Also emphasizing the company expects it can reach 4-per-cent same-practice revenue growth (SPRG) over the medium term, outperforming the general industry by 100-150 basis points annually, Mr. Evershed set a target of $15 for Dentalcorp shares. The average is $12.38.
“Our target implies an FY2 FCF yield (after leases and interest) of 6.8 per cent and can be replicated in our long-term discounted cash flow (DCF) with a discount rate of 11.8 per cent,” he concluded. “Given the steady flow of tuck-ins, M&A is explicitly baked into our forecasts, and while the majority of free cash flow is still directed towards acquiring dental clinics, the earnings power of the business has grown sufficiently to self-finance the disciplined acquisition program. Though the company has undoubtedly delivered lacklustre total shareholder returns over its public timeline, we believe the disconnect between valuation and fundamentals will fade over time as investors are familiarized with management’s modus operandi. As we expect leverage will gradually decline to a level more palatable to Canadian shareholders, even as the business continues to grow at a double-digit CAGR, we rate DNTL Outperform.”
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When Premium Brands Holdings Corp. (PBH-T) reports its fourth-quarter 2024 financial results on March 21, National Bank Financial analyst Vishal Shreedhar is expecting to “good” growth, reflecting capacity enhancements and an improving macroeconomic backdrop.
He’s currently projecting quarter earnings before interest, taxes, depreciation and amortization (EBITDA) for the Richmond, B.C.-based specialty food manufacturing and distribution company of $154-million, up from $147-million during the same period a year ago and $5-million above the consensus forecast on the Street. He attributes the 12-per-cent increase to organic sales growth and margin expansion in both its Specialty Foods (SF) and Premium Food Distribution (PFD) segments. He forecasts revenue to rise to $1.654-billion from $1.555-billion in fiscal 2023, also topping the Street’s estimate ($1.608-billion).
“We expect SF OVGR [organic volume growth rate] to accelerate sequentially (Q3/24 was negative 0.4 per cent, or 2.3 per cent on an adjusted basis), primarily reflecting new and delayed product launches (several major initiatives delayed to late 2024 and early 2025 due to several factors, including delays in customer onboarding, among others),” said Mr. Shreedhar. “We expect sequential improvements in organic growth at PFD, largely reflecting our expectation of higher pricing, as well as an improving consumer backdrop.
“Our review of commentary from select food operators indicate: (i) heightened inflation in poultry, (ii) sequential improvements in restaurant traffic (albeit still negative), and (iii) menu rationalization at a major QSR, in response to evolving customer preferences.”
The analyst also expects Premium Brands’ balance sheet to improving moving forward.
“We model Q4/25 senior debt to EBITDA of 2.9 times (from 3.5 times currently) and 3.4 times total debt to EBITDA (from 4.1 times currently),” he sai. “We model balance sheet improvement, primarily reflecting EBITDA growth, which will be welcomed by investors.
“PBH expects to spend $80-million in major capex project in Q4/24, in addition to $10-$15-milliob in smaller projects; NBF models $96-million.”
Reiterating a “sector perform” rating for the company’s shares, Mr. Shreedhar trimmed his target to $96 from $99. The average on the Street is $102.10.
“We value Premium Brands at 9.5 times (from 10.0 times; reflects heightened uncertainties related the consumer backdrop and potential tariffs) our 2026 EBITDA,” he explained. “The lower price target reflects a lower multiple, partly offset by a roll-forward of our valuation period and higher estimates.
“Over the medium term, we believe PBH’s outlook will be supported by solid organic growth and EBITDA margin expansion (to 9.4 per cent in 2025). PBH currently trades at 9.3 times our NTM [next 12-month] EBITDA, lower than the five-year average of 12.9 times.”
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In other analyst actions:
* CIBC’s Anita Soni downgraded Endeavour Mining PLC (EDV-T) to “neutral” from “outperformer” with a $37 target, down from $41 and below the $41.20 average on the Street.
“We have further fine-tuned our estimates for Endeavour Mining after previously incorporating 2024 preliminary financial and operating results and 2025 guidance released on January 30,” she said. “We saw the results as mixed, with Q4/24 beating and 2024 missing overall. The company’s 2025 outlook was slightly weaker on production but better on costs, and capital returns in 2024 were strong with potential for returns in 2025 to be further improved.
“We have now fine-tuned our modelled tax rates, royalties, and gold price accruals on withholding taxes in our model. After incorporating the adjustments that drove increased tax expense, our NAV5% decreases from $24.99/sh to $21.61/sh. Our CFPS estimate decreases from $6.66 (on an annualized basis from Q4/24E–2025E) to $6.21 (on a 2025E basis). Our NAV and CFPS multiples are unchanged at 0.8x and 5.0x, respectively. We are lowering our price target from C$41.00 to C$37.00. With the revised price target, there is insufficient return to target;”
* Ms. Soni also lowered her target for New Gold Inc. (NGD-N, NGD-T) to US$3.40, below the US$3.56 average, from US$3.60 with an “outperformer” rating.
* Canaccord Genuity’s Carey MacRury hiked his target for Alamos Gold Inc. (AGI-T) to $39 from $35 with a “buy” rating. The average on the Street is $39.74.
“The company posted record full-year production of 567koz and AISC of $1,281/oz in 2024 that was within the company’s guidance,” he said. “Alamos continues to work on optimization of the Magino plant and expects throughput to increase to 11,200 tpd by end of Q1/25. The acquisition, announced in March 2024, boosts Alamos’ production profile and combined with other projects such as the recently green-lit Lynn Lake project and with further expansion potential at Island/Magino, puts the company on a potential path to 1Moz/year. We continue to like Alamos for its low-risk jurisdictional profile, solid growth profile, exploration potential and track record as a steady operator.”
* Ahead of its March 18 earnings release, Canaccord Genuity’s Luke Hannan trimmed his Alimentation Couche-Tard Inc. (ATD-T) target to $84 from $85 with a “buy” rating. The average is $88.68.
“The reduction in consensus estimates over the last few weeks (and the related decline in the share price) suggests to us that expectations for a softer quarter are already baked into the stock, with it trading at nearly the lowest levels on an EV/EBITDA and P/E basis (both next 12 months) over the last three years,” said Mr. Hannan. “Couche-Tard’s exposure to a consumer cohort that remains under pressure could inhibit near-term multiple expansion; that said, we believe current levels are attractive for longer-term investors to add to positions.”
“We believe Couche-Tard’s organic growth initiatives should be supportive of consolidated margin expansion over the course of our forecast period, while structural market dynamics suggest fuel margins over the medium-to-long term should remain healthy.”
* ATB Capital Markets’ Nate Heywood lowered his target for Capital Power Corp. (CPX-T) shares by $1 to $62 with a “sector perform” rating, while BMO’s Ben Pham cut his target to $64 from $68 with a “market perform” rating. The average is $65.27.
“CPX shares traded off 2.0 per cent during Wednesday’s session following its pre-market Q4/24 release, underperforming peers in the space,” Mr. Heywood said. “The Q4/24 EBITDA print of $330-million was a modest increase year-over-year from $313-million, but fell short of the consensus estimate of $356-million by 7 per cent (ATB estimate: $345-million). On the conference call, management maintained its optimism for power demand, growth opportunities, and its positioning across North America, with data center opportunities and M&A growth a key focus. With regard to data center opportunities, management spoke to having queued up 1.5GW of connection potential at Genesee and currently views Alberta potential ahead of its US fleet given speed to market and direct-connect behind-the-fence opportunities. With respect to M&A, CPX is well capitalized after the recent equity raise and renewable asset sell-down, which we expect to be earmarked for M&A. Opportunities exist in the current market despite an increase to the number of buyers, but economics remain attractive with acquisitions being 50-60 per cent the cost of new builds.”
* National Bank’s Jaeme Gloyn increased his target for Element Fleet Management Corp. (EFN-T) by $1 to $40 with an “outperform” rating. The average is $32.81.
“This is a solid quarter that sets the stage for a strong 2025,” he said. “Investors will certainly appreciate the 25-per-cent year-over-year growth in service revenues, 4-per-cent quarter-over-quarter VUM [vehicles under management] growth, and accelerated spending on growth initiatives (including syndication setup costs with Blackstone) that temporarily hurt margins in Q4, but eases the path to margin expansion next year. Management reaffirmed strong 2025 guidance (including new guidance for 20-120 bps of margin expansion) that implies double-digit EPS and FCFPS growth. We reiterate our view that EFN is a ‘core holding’. We see continued upside for the shares through 2025 with catalysts from the details of a three-year plan expected in Q1-2025, including more data on the Insurance and SME growth strategies.”
* RBC’s Darko Mihelic cut his Street-high EQB Inc. (EQB-T) target to $147 from $153 with an “outperform” rating, while Desjardins Securities’ Doug Young lowered his target to $126 from $130 with a “buy” rating.. The average is $118.92.
“While we expect short-term PCL noise to persist related to the Pride facility, we believe credit quality is normalizing for the majority of EQB’s loan portfolio and we model lower impaired PCLs,” said Mr. Mihelic. “We lower our revenue expectations (securitization activities/derivatives gains), and we reflect lower NIMs that remain around management guidance of 2 per cent or above. We think revenue growth in 2025 may be a little challenged, but see it improving in H2/25 and into 2026 as we expect loan growth to accelerate while customer growth (deposits) remains impressive.”
* TD Cowen’s Steven Green raised his Lundin Gold Inc. (LUG-T) target to $46 from $40 with a “buy” rating. The average is $38.90.
“We are now incorporating a conceptual model for Bonza Sur (including new mill) in our valuation,” said Mr. Green. “A maiden resource for Bonza Sur is expected by June of this year. Despite the recent strong share price performance, LUG continues to have a FCF yield at the high end of its peer group. With ongoing positive catalysts expected, we remain positive on the stock.”
* TD Cowen’s Craig Hutchison increased his Pan American Silver Corp. (PAAS-N, PAAS-T) target to US$28 from US$25 with a “buy” rating. The average is US$29.40.
* Jefferies’ John Aiken raised his Power Corp. of Canada (POW-T) target to $54, exceeding the $52.29 average, from $52 with a “buy” rating.
* Canaccord Genuity’s Matthew Lee increased his Sprott Inc. (SII-T) target to $71 from $67 with a “buy” rating. The average is $64.50.
“Sprott reported Q4 results [Wednesday] morning with AUM, earnings, and EBITDA largely within our expectations,” said Mr. Lee. “Our key takeaway from the quarter was the flexibility that the firm has demonstrated in the current geopolitical environment with management highlighting its ability to deploy new products as a means of catering to shifting investor needs. While AUM fell in Q4, we were impressed by the strong capital inflows Sprott has seen quarter-to-date, which reflects the increasing demand from investors for ‘safe’ assets housed in politically stable jurisdictions. Post quarter, we have increased our forecast modestly to consider the stronger Q1 net sales but note that our forecast for the remainder of the year remains conservative at $240-million of capital inflows per quarter. Given strength in the gold and silver markets, we have also increased our precious metal price deck to be in line with the Canaccord Genuity mining team’s forecast.”