Inside the Market’s roundup of some of today’s key analyst actions
Ahead of the Feb. 6 release of its fourth-quarter financial results, National Bank Financial analyst Cameron Doerksen warned the threat of a blanket tariff on Canadian imports into the United States represents a significant risk to his positive thesis of Bombardier Inc. (BBD.B-T), however he reiterated his bullish stance, saying “all else equal we see further upside on the stock as the market gains more confidence in the sustainability of strong free cash flow generation to the end of the decade.”
“A blanket 25-per-cent tariff on aerospace imports into the U.S. would be highly detrimental to U.S. industry and would also impact Bombardier’s business jet competitors to varying degrees, but given that final jet production and completion of all Bombardier planes is in Canada, a tariff has the potential to have significant consequences for Bombardier,” he said. “We are hopeful that reason will prevail and aerospace will be exempted from any potential tariffs, but this issue remains a key risk to our investment thesis on Bombardier.”
For the quarter, Mr. Doerksen thinks delivery results may come in “a bit light,” but end markets remain positive for the Montreal-based company are “still positive.” He is currently projecting revenue of $3.125-bilion and earnings per share of $1.83, falling from his previous expectations of $3.341-billion and $2.03. They now sit below the Street’s expectations of $3.249-billion and $2.24.
“Bombardier has guided for 150-155 deliveries in 2024, which implies at least 61 deliveries in Q4,” he said. “However, based on data sources we track, we estimate that Bombardier delivered 57 planes in Q4. While our data has generally proven to be fairly accurate, it is often the case that our estimates are off by a handful of planes. Furthermore, any deliveries that missed the 2024 year-end window will be delivered in early 2025, so we view any potential delivery miss as a timing issue only.”
“According to business aviation data provider WingX, global business jet flying activity for the full year 2024 was down 1 per cent, but up 30 per cent versus 2019 while December flying activity was up 7 per cent year-over-year. For the full year, fractional operators, which are important Bombardier jet customers, saw departures up 11 per cent year-over-year.”
Seeing Bombardier’s valuation as “attractive,” Mr. Doerksen raised his target for its shares to $134 from $130 with an “outperform” rating (unchanged) after introducing his 2026 financial forecast. The average is $120.60.
“While the threat of a blanket tariff on Canadian imports into the U.S. is a risk to our positive thesis, all else equal we see further upside on the stock as the market gains more confidence in the sustainability of strong free cash flow generation to the end of the decade,” he said. “Based on our updated 2025 forecast for just under $1.6 billion in EBITDA (slightly lower than management’s target), the stock is trading at just 7.3 times EV/EBITDA, which is a discount to the airframer OEM peer group average of 11 times.”
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Following the release of its fourth-quarter 2024 production results as well as its production, cost, and capex guidance through 2027 on Wednesday evening, Canaccord Genuity analyst Dalton Baretto downgraded First Quantum Minerals Ltd. (FM-T) to “hold” from “buy” previously, citing the “significant” rally in its share price last year, a limited implied return to his revised target and seeing its balance sheet “becoming a concern yet again.”
“Copper production guidance was below our estimates for all three years, which management attributes to conservatism on the ramp-up of the S3 project at Kansanshi, as well as mine sequencing changes at Sentinel,” he said. “Gold production was higher than we had forecast at both Kansanshi and Guelb Moghrein. That said, despite the significantly higher gold credits, as well as a $600/oz increase in the assumed gold price, C1 guidance was held flat. While some of this is attributable to the lower copper production, we believe this implies meaningful pressure on the underlying operating costs. Overall capex guidance across the 3-year period was 26 per cent above our estimates. Given the lower copper production, higher costs, and significantly higher capex, we now see a funding gap of $500-million beyond the available room on the credit facility.”
With a reduction to his earnings and revenue forecast and increase to his net debt assumption for 2025, Mr. Baretto cut his target for First Quantum shares to $20 from $24. The average is $21.30.
Elsewhere, Scotia’s Orest Wowkodaw trimmed his target to $21.50 from $22 with a “sector perform” rating.
“FM posted a strong Q4/24 but released slightly weaker than anticipated three-year operating guidance. As expected, there was no material Cobre Panama (CP) update. Overall, we view the update as a modest negative for the shares,” he said.
“We rate FM shares Sector Perform due to CP uncertainty and heightened balance sheet risks.”
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In a research report previewing fourth-quarter 2024 earnings for North American railway companies titled Catchup Trade or Dead Money? The Rail Conundrum, Stifel analyst Benjamin Nolan upgraded Canadian National Railway Co. (CNI-N, CNR-T) to “buy” from “hold” previously, seeing its shares having “fallen to a more attractive entry point.”
“Canadian National faced numerous challenges this year, leading to continuous disruptions since May,” he said. “Considering the impact of the Canadian port strike, we estimate the company’s RTMs [revenue ton miles] fell by (3.2 per cent) year-over-year in the fourth quarter,
although sequential volumes improved by nearly (up 5 per cent). Consequently, we anticipate a 2.3-per-cent decline in revenues to $4.370-billion CAD in Q4, resulting in a 1.4-per-cent top-line growth for the full year. Despite CN lowering its guidance to low single-digit growth, we believe the port disruptions in Q4 will prevent the company from meeting its FY24 guidance. We project the company’s FY24 EPS to decline by 2.8 per cent year-over-year to USD $5.25/$7.20 CAD. However, the quarterly increase in volume is expected to drive a sequential improvement in OR [operating ratio] by 160 bps to 61.5 per cent for Q4, reflecting a 256 bps year-over-year deterioration, leading to an FY24 OR of 62.6 per cent, a 180 basis point decline.
“CN’s share price performance was the worst among its peers, and although the company underperformed relative to expectations for most of the year, the underperformance was not self-inflicted. We view current valuation as a window of opportunity, with shares down approximately 14 per cent since the start of Q4 and trading at 18 times our 2025 EPS estimate. We believe there is room for upside in current valuations as the situation stabilizes and the company refocuses on growth initiatives. Therefore, we are upgrading CNI shares.”
His target slid to US$120 from US$132. The average on the Street is US$124.88.
Mr. Nolan also cut his target for Canadian Pacific Kansas City Ltd. (CP-N, CP-T) to US$76 from US$82 with a “hold” rating. The average is US$92.54.
On the broader sector, he said: “Last year was a forgettable year for rail equities, with the group ending down 7 per cent relative to the S&P up 23 per cent. So it should not be surprising that 2024 did not turn out to be the year of momentous volume growth for the Class 1 railroads as were largely expected a year ago which was partially attributable to the many unexpected disruptions but also a slower-than-anticipated freight environment resulting in only a 2.2-per-cent volume growth this year. We do expect modest volume growth and pricing improvements in 2025, but don’t know if that is significant enough to drive share price appreciation, i.e. multiple expansion. While we do not see high risk at current valuation, not do we expect significant upside in most names.”
“While we are only assuming modest EPS growth for 2025, the industry remains tied to the volatile trucking market and overall economic backdrop. Should the trucking environment improve, especially in the latter half, we expect there is upside in current expectations. Although we remain cautious for 2025, opportunities for recovery do exist, especially as valuation dynamics have shifted, with the peer group trading at historical lows. CN’s valuation has been negatively impacted by factors outside of their control, which make for easier comps next year, and shares are now only trading at 18 times consensus EPS relative to a typical multiple in the low 20′s. Therefore, we are upgrading CN from Hold to Buy and maintaining Buy ratings on CSX and UNP. While valuations have come down on CP and NSC, both names continue to trade at premiums relative to the peer group, leaving more downside risk with minimal room for upside in our view.”
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Stifel analyst Martin Landry sees Aritzia Inc. (ATZ-T) poised for a strong end to its current fiscal year and “well positioned” for the following 12 months.
“We attended the ICR conference held in Orlando, where several apparel retailers presented, including Aritzia,” he said. “Most of the apparel retailers appear to have had a strong holiday period, four of them increasing their guidance ahead of the conference. Aritzia could be the retailer with the strongest growth rate for Q4 (ending February 2025) with revenues expected to increase by 28-31 per cent year-over-year.”
“FY25 was a big year for Aritzia with the roll-out of a new large DC [distribution centre] in Toronto, the opening of three large flagship stores in the United States, leading to the company’s largest annual square footage growth since the company’s IPO. Hence, with several of the company’s large projects completed ATZ’s story appears de-risked for FY26, in our view. In conjunction with reduced execution risks, the company’s momentum is increasing with comparable sales expected in the high teens for Q4FY25, perhaps the fastest organic growth rate amongst publicly traded peers. Hence, it is not difficult to see why investors have pushed ATZ’s shares to all-time highs in the last month. However, with only 61 stores in the U.S. and no stores oversea, we see a long growth runway for ATZ.”
In a research note released Thursday, Mr. Landry thinks the Vancouver-based clothing retailer is poised to benefit from accelerating digital investments, which could set the stage for notable international expansion.
“With the arrival of Chief Digital Officer, Margot Johnson, hired a little over a year ago, ATZ has increased its investments in digital marketing,” he said. “Previously, the company had essentially no paid digital marketing. Investments have paid off, especially in Canada, where customer response has been strong. This translated into and acceleration of sales in Canada each month throughout Q3FY24 and finishing strong in November. In addition, ATZ expects to launch its mobile app within the next 10-12 months.”
“The enhancement of ATZ’s international e-commerce site, set to launch this spring, marks the company’s next step towards global expansion. This upgrade will enable ATZ to better evaluate the strength of its international markets, including Great Britain, Germany, France, Taiwan, Hong Kong, China, and Australia. ATZ’s next multi-year plan (which we think could be announced in 18 months) should include setting specific targets for international expansion.”
Noting recent credit card data also suggests continued momentum, the analyst thinks square footage growth will drive revenue growth again in its next fiscal year.
“ATZ is on track to increase its square footage by 25 per cent in FY2025 by adding 12 new stores and repositioning 3 existing ones,” he said. “Since most new openings skewed towards the end of the fiscal year, there is a spillover effect into FY2026. In FY2026, square footage is expected to grow in high teens in FY2026 with a minimum of 10-12 new stores and 4-5 expansions and repositions planned. Hence, FY2026 should again be a year of strong revenue growth which could exceed 20 per cent year-over-year, absent any major hiccups. This suggests potential upside to our FY2026 forecasts calling revenue growth of 19 per cent.”
Given that increased confidence in his 2026 estimates, he increased his valuation multiple slightly, resulting in an increase of $3 to his target price for Aritzia shares to $73 with a “buy” recommendation. The average is $72.25.
“Despite ATZ’s strong share performance recently, we see further upside as valuation is in-line with historical averages despite strong momentum and cash building on the balance sheet,” he concluded.
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Project delays have turned American Lithium Corp.’s (LI-X) stock into a “show me story,” according to National Bank Financial analyst Mohamed Sidibé, who lowered his rating to “sector perform” from “outperform” following the late Wednesday release of its third-quarter 2025 financial results.
“The MD&A once again highlighted further delays in the timelines for the receipt of the semi-detailed EIA [environmental impact assessment] at Falchani, for the release of a mineral resource update at TLC [lithium project in Nevada], as well as for the updated PEA [preliminary economic assessment] on Macusani,” he said. “Additionally, the completion of the TLC PFS [prefeasibility study] is now contingent on market conditions and overall exploration spend continues to trend lower.
“In our opinion, given the less than attractive market conditions in the lithium market, stock specific catalysts are key for potential re-rates. Until we gain more confidence and clarity on key catalysts such as the Peruvian Supreme Court decision, timeline of economic studies (previously delayed) and receipt of the Falchani EIA, we view American Lithium as a show me story that has potential to re-rate as future catalysts are achieved. Given the above, we have reduced our in-situ value for exploration upside at TLC.”
The Vancouver-based company’s quarterly results did exceed Mr. Sidibé's expectations with a net loss of $4.13-million beating his estimate of a loss of $5.68-milion on exploration and evaluation expenditures. The ending cash balance of $3.49-million was above his $2.59-milllion projection.
“We continue to forecast equity financing of $20-million in Q1/FY26 and Q1/FY27 prior to project financing for Falchani in Q4/FY28,” he added.
The analyst trimmed his Street-low target for American Lithium shares to 70 cents from 80 cents. The current average is $5.17.
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Wajax Corp. (WJX-T) offers investors “an attractive risk-return skew,” according to TD Cowen analyst Patrick Sullivan, who tours “an opportunity to buy a company with improving competitive capabilities, trading below its 5- and 10-year historical averages, and offering a healthy dividend (approximately 7 per cent).”
Assuming coverage of the Toronto-based industrial products and services provider with a “buy” rating, he also thinks its shares are now trading “at attractive levels following a deep and prolonged sell-off, which has coincided with a reset of earnings expectations, creating a more favourable setup into 2025.”
“WJX is trading at 7.6 times P/2025 estimated EPS (consensus), which is toward the low end of its 10-year range of 6.9-12.6 timss P/FTM [forward 12-month] EPS,” said Mr. Sullivan. “2025/2026 consensus EPS estimates have been revised 20-30 per cent lower over the past nine months, better reflecting the more competitive operating environment, creating an improved setup into 2025.
“Improved capabilities to compete in heavy equipment space, but will take time to see full benefits. The direct distribution relationship established with Hitachi in March 2022 excited investors, but the full benefits of the improved relationship will take longer to materialize in the financial results than originally anticipated. Improved access to new equipment/parts and competitive customer financing options are expected to translate into improved equipment sales, but the product support gains will take longer to materialize as the installed base grows and equipment ages.”
Seeing its near-record backlog providing “resilience” even though margin expansion may be “muted” in the medium term, he set a $24 target for Wajax shares, matching the average on the Street.
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While he thinks Converge Technology Solutions Corp.’s (CTS-T) transformation is “bearing early fruit,” Stifel analyst Suthan Sukumar said low visibility on the hardware recovery is keeping him “cautious” in the near term.
Accordingly, he initiated coverage of the Toronto-based provider of software-enabled IT and cloud solutions with a “hold” rating on Thursday.
“Early progress with a shift to a services and software-led model is fueling more end-to-end engagements and customer wallet share expansion in the underserved mid-market for IT services, which we expect to yield stronger organic growth with more recurring revenues and structural improvements to margins and cash flows,” he said. “That said, persisting headwinds in hardware (approximately 50 per cent of CTS’ revenues) have weighed on organic growth progress and our proprietary IT spending survey points to limited visibility for a recovery in hardware spending. Despite recent FCF strength and potential for increased share buybacks/SIB, we don’t see investor sentiment materially improving till uncertainty around CTS’ hardware business and ability to drive a sustained recovery are addressed.”
Mr. Sukumar set a target of $4 per share. The current average is
“At 5 times calendar 2026 estimate EBITDA, valuation appears de-rated, but our HOLD rating is predicated on limited visibility on timing of hardware spend recovery and CTS’ ability to deliver consistent organic growth, and sustained margin and FCF expansion given recent earnings volatility,” he said.
“Where we could be wrong is improved discretionary spending and resulting pent-up hardware demand, or a greater acceleration in services and software to offset hardware softness.”
In a separate report, Mr. Sukumar initiated coverage of Telus Digital Inc. (TIXT-N, TIXT-T) with a “buy” rating and US$5 target, exceeding the US$4.89 average.
“Major technology shifts take time and risk of widespread AI disruption is overblown near-term,” he said. “We see opportunity for CX providers to leverage AI/GenAI to solve higher-value use cases and benefit from automation longer-term. Our due diligence with clients reaffirms this. We view TIXT as better positioned to navigate a transitioning industry vs slower incumbents with a differentiated hybrid model and self-disruption with AI to drive new sources of growth. We believe this will support share of wallet expansion with existing clients and fuel new share gains, driving recovery in organic growth and margin expansion. We may be early but a +60% drawdown in valuation suggests the stock is washed out. With new leadership, strategic growth initiatives underway, and a controlling shareholder as a backstop, we believe the stock now has disproportionate upside potential vs. downside risk.”
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In other analyst actions:
* Canaccord Genuity’s Robert Young downgraded Haivision Systems Inc. (HAI-T) to “hold” from “buy” with a $5.50 target, down from $7 and below the $6.88 average on the Street, while Acumen Capital’s Nick Corcoran moved his recommendation to “hold” from “buy” with a $5.25 target, down from $7.
“Haivision reported disappointing FQ4 results due to delays in U.S. government contracts and, to a lesser degree, an ongoing shift in business model that foregoes lower margin MCS hardware sales. Management remains bullish on the outlook but suspended quarterly and annual guidance to reflect the lack of certainty on U.S. government program timing. A resumption in growth is not expected until H2/F25. Given manifold near-term risks and challenges spanning tariffs, timing of large US government deals, and the impact of business model changes, we are downgrading to HOLD (from BUY),” said Mr. Young.
* CIBC World Markets’ Mark Petrie initiated coverage of A&W Food Services of Canada Inc. (AW-T) with a “neutral” rating and $38 target.
“A&W is one of Canada’s leading quick-service restaurant (QSR) chains. It has strong competitive positioning and brand awareness, particularly in Western Canada and among younger demographics. We see unit growth, menu innovation, loyalty and Pret A Manger (Pret) development as important levers for growth. Valuation is reasonable and the 5.7-per-cewnt dividend yield is attractive, but macro softness, a lack of near-term catalysts, and a relatively modest growth outlook limit near-term upside,” he sai.
* Desjardins Securities’ Gary Ho raised his AGF Management Ltd. (AGF.B-T) target to $13, exceeding the average on the Street by 8 cents, from $12.50 with a “buy” rating.
“With stronger retail flows reported through IFIC over the last few months, we expect net flows of $20-million,” he said. “Continued solid performance should support further inflows. Offsetting this, we increased our SG&A estimates for 4Q25 and FY25 given higher expected performance-based comp and a higher AUM base.”
* In response to its temporary halt at its Loulo-Gounkoto mine in Mali, National Bank’s Mike Parkin lowered his Street-low Barrick Gold Corp. (ABX-T) target to $24 from $26 with a “sector perform” rating. The average is $32.95.
“The Loulo-Gounkoto mine is a large FCF contributor to Barrick and we would expect a prolonged shutdown of the mine to weigh on future FCF generation of the company,” said Mr. Parkin.
* Following the release of its fourth-quarter operating results and an update to its Skouries development project in Greece, Mr. Parkin reduced his Eldorado Gold Corp. (ELD-T) target to $27 from $28 with an “outperform” rating. The average is $29.12.
“We continue to view Eldorado as having one of the best medium-term growth profiles in our coverage universe as the Skouries development project comes online,” he said.
* Canaccord Genuity’s Aravinda Galappatthige raised his target for Cineplex Inc. (CGX-T) to $12.50 from $11.50 with a “buy” rating. The average is $13.58.
“Following the release of its December box office update, we have revised our estimates for both F2024 and F2025, and introduced F2026 estimates. At a high level, we see F2025 as a year in which Cineplex’s financials could revert back to some normalcy on a full-year basis following the impact of the Hollywood strikes which were felt through H1/24. Thereby, F2025 could serve as a more reliable basis for valuing the stock. Overall, we see F2025 FCF rising above $1/sh for the first time since the pandemic with adj. EBITDAal reaching 75 per cent of pre-pandemic levels. This translates to a healthy 9% FCF yield,” he said.
* JP Morgan’s Matthew Boss raised his Lululemon Athletica Inc. (LULU-Q) target to US$437 from US$428 with an “overweight” rating, while Barclays’ Adrienne Yih bumped his target to US$411 from US$378 with an “equal-weight” recommendation. The average is US$394.88.
“Preliminary 4Q24 results are strong, as holiday demand topped expectations. The consumer remains resilient and is responding to promotions. Within our coverage, AEO, JWN, LULU, and URBN expect upside to sales for 4Q24. VFC and ONON did not provide updates but our confidence in both remains high,” said Ms. Yih.
* Raymond James’ Farooq Hamed cut his Lundin Mining Corp. (LUN-T) target by $1 to $14 with a “market perform” rating. The average is $16.70.
* Canaccord Genuity’s Doug Taylor bumped his Vitalhub Corp. (VHI-T) target to $12.50 from $12 with a “buy” rating. The average is $13.36.
“We hosted VitalHub management for a series of virtual meetings this week,” he said. “Management spoke to the ongoing integration of Strata and MedCurrent (both acquired in Q4) noting that, while both are expected to depress near-term margins, cross sales into existing customers of these new tools could accelerate the margin ramp towards corporate averages. Despite the heightened recent acquisition activity, management continues to actively engage with additional opportunities. We have refreshed our model to factor in the recently closed equity financing, suggesting pro forma cash on hand of $83-million with no financial debt ($65-million in capacity), noting that at this point, we do not factor in unannounced acquisitions. The small associated dilution from the recent equity raise is offset as we roll forward our valuation to 2026. Using a 21 times multiple produces our new $12.50 target price (from $12.00). VitalHub trades at 25.0 times consensus NTM [next 12-month] EBITDA, but we note that this valuation does not yet reflect full synergies from recent acquisitions or the potential for further accretive capital deployment.”