Inside the Market’s roundup of some of today’s key analyst actions
National Bank Financial analysts warn investors should expect volatile returns from precious metals equities in 2025 given the “uncertain path” of both interest rate cuts and inflation.
“The USD gold and silver spot price finished up about 27 per cent and 22 per cent in 2024, respectively, the best annual performance in more than a decade,” the firm said. “We begin the 2025 calendar year optimistic on the outlook for gold and silver prices and correspondingly equities given historical price appreciation in periods of declining or flattening real rates. That said, we continue to anticipate near-term volatility around key U.S. economic data prints as they pertain to expectations around the magnitude, timing and quantity of future U.S. Fed rate cuts. Geopolitical tensions continue to be topical for gold demand, and we could see further safe haven support from escalating tensions across the globe. The uncertain policy direction of the incoming Trump administration will likely lead to shifts in inflation forecasts and Fed Funds Rate expectations, further amplifying near-term price volatility as some policies could have dramatic impacts on the outlook for U.S. inflation. Thus, in these uncertain times, we believe that the best precious metals companies to invest in are those with well-funded near-term production growth, as well as those with a strong balance sheet and/or a catalyst rich NTM [next 12 months].”
In a research report released Thursday titled Don’t Stop Believin’ (in Gold), analysts Mike Parkin, Shane Nagle, Don DeMarco and Rabi Nizami argued market conditions continue to be supportive of consolidation, while they also emphasize operational excellence is rewarded.
“In our view, near-term price volatility and favourable long-term fundamentals create a market environment where gold producers will continue to shop for opportunities to add long-term precious metal growth to their portfolios at attractive valuations,” they said. “We outline near-term FCF generation and production growth across our universe and when weighed against balance sheet strength/valuations, identify: ABX, AEM, DPM, FNV, LUG, K, PAAS, OGC, ORA and WDO as likely consolidators and ABRA, AMX, ARTG, ELD, EQX, IAU, IMG, KNT, MAG, NGD, ODV, OR, PPTA, SGD and VZLA as potential acquisition targets.”
“In 2024, the market rewarded companies within our coverage that were able to deliver on their original guidance, with the market punishing those who failed to deliver or are showing at risk of missing guidance. We believe this trend will continue into 2025 as the market will continue to reward companies with the ability to meet or exceed guidance from a production and cost perspective.”
The firm made two rating revisions in the note:
* Mr. DeMarco moved O3 Mining Inc. (OIII-X) to “tender” from “outperform” in response to its mid-December agreement to be acquired by Agnico Eagle Mines Ltd. (AEM-T) with a $1.67 target, down from $2.40 and matching the average on the Street.
“We expect remaining shareholders to comply and tender shares by the due date given unanimous support by OIII’s largest shareholders and a sizable premium. Shares are already trading near the offer price,” he said.
* Mr. DeMarco upgraded i-80 Gold Corp. (IAU-T) to “outperform” from “sector perform” with a $1.75 target, down from $2.25. The average is $2.51.
“We are upgrading IAU to outperform following recent share price underperformance, improved valuation and looking ahead to multiple catalysts teed up in Q1/25, which are expected to de-risk and underpin the valuation. IAU shares have eased 46.3 per cent (vs down 2.5 per cent for the S&P TSX Gold Index) since our downgrade,” he said.
“The new management team is now solidly in place led by Richard Young, ex Teranga and Argonaut, and advancing their re-capitalization and development plans. The team is moving forward targeting challenges that contributed prior share price underperformance including lack of strategy, story complexity, exploration funds competing with development and mounting balance sheet pressures.”
While making a series of target price adjustments to stocks in their coverage universe after updating their price deck for both metals and foreign exchange, the analysts also named their seven “top picks” for the year ahead. They are:
Seniors
* Kinross Gold Corp. (K-T) with an “outperform” rating and $20 target (unchanged). The average on the Street is $18.11.
Mr. Parkin: “Kinross maintains significant opportunities for growth within its North American portfolio, which should help to further improve its geopolitical risk profile. This includes the Great Bear project (Ontario), the potential Curlew Basin restart (Washington State) and the Round Mountain U/G development project (Nevada).”
* Pan American Silver Corp. (PAAS-T) with an “outperform” rating and $45 target, rising from $44.25.. Average: $41.64.
Mr. DeMarco: “Improving operational performance marked by FCF of $151-million in Q3/24, expected to continue, with flagship La Colorada ventilation fixed lifting throughput and grade, and Jacobina optimization study on deck.”
Intermediates/Juniors
* Aya Gold & Silver Inc. (AYA-T) with an “outperform” rating and $21.25 target, down from $21.75. Average: $21.98.
Mr. DeMarco: “Only pure-play silver producer on the TSX, with sight lines for NAV expansion vis-à-vis Zgounder plant ramp-up to 2,700 tons per day (from current 700 tpd), with commercial production achieved in early July. This should drive peer-leading production CAGR, peaking at 9.0 million ounces in 2028 per the Zgounder Feasibility Study (FS; Dec. 2021), over 4 times the FY23A of 2.0 million oz Ag. The resource accretion opportunity is compelling with visibility for 150 million oz (NBF est., from the current 103 million). Strong operations with a FY23 guidance beat, while mining rates and throughput buoyant, lending de-risking and confidence ahead of expansion completion.”
* Calibre Mining Corp. (CXB-T) with an “outperform” rating and $3.40 target, down from $3.60. Average: $3.65.
Mr. DeMarco: “Valentine mine development in the homestretch, first pour approaching in Q2/25 and de-risking advanced, with final capex revision, a site visit showing well and led by a strong management team with a track record of success. We highlight visibility for a valuation re-rate to reflect increased production in Tier 1 jurisdiction.”
* G Mining Ventures Corp. (GMIN-T) with an “outperform” rating and $16 target, up from $15.75.. Average: $17.02.
Mr. Nizami: “Tocantinzinho is ramping up smoothly into Q1, and we expect the mine to enter a higher grade sequence in 2025/2026. Over the N3Y period (2025-2027), we model cumulative mine-site FCF of more than US$700-million, sufficient to cover US$65-million deferred acquisition payments to ELD, repay or refinance the US$75-million FNV Term Loan (we assume a US$350-million Oko West credit facility) and substantially self-fund $US1-billion development capex for Oko West”
* Iamgold Corp. (IMG-T) with an “outperform” rating and $12 target, down from $12.50. Average: $10.14.
Mr. Parkin: :”We came away from the recent Côté site tour pleased with the ramp-up progress at the new mine and believe there is strong potential for the mill to outperform nameplate capacity (36ktpd) through the installation of a second secondary crusher expected in 2H25 at a relatively low capital cost of US$20-million.”
Royalty Companies
* Osisko Gold Royalties Ltd. (OR-T) with an “outperform” rating and $35 target, up from $33.50. Average: $31.79.
Mr. Nagle: “We are maintaining Osisko Gold Royalties as our top royalty pick owing to an attractive near-term growth outlook from existing operations driving 3- and 5-year growth CAGR’s of 10 per cent and 8 per cent respectively. Several potential expansion opportunities from the Company’s top royalty interests at Malartic, Mantos Blancos, Island Gold, CSA etc... offer further optionality.”
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RBC Dominion Securities analyst Sam Crittenden expects turbulent investing conditions through the quickly approaching fourth-quarter earnings season for North American base metals producers.
“Copper is treading water above $4.00/lb as we await further details on new potential U.S. tariffs and any new stimulus announcements and economic targets in China at the two sessions meeting starting on March 5th,” he said. “As a result the next few months could be volatile; however, the outlook could improve throughout the year if China takes steps to improve the economy, tariffs have a modest impact on global trade, and global economic activity picks up from a low base. At the same time, we expect increasing supply from new mine builds and improving operations but that could fade into 2026 leaving the potential for deficit markets thereafter. We expect a deluge of operating and guidance updates in the coming weeks and while we don’t envision any major surprises, there is always a risk of negative estimate revisions due to cost inflation, higher than expected capex, and more conservative production outlooks.”
In a report titled Guidance risk, an annual tradition, Mr. Crittenden emphasized equity valuations now sit slightly above historical averages.
“North American copper equities under coverage were up 24 per cent in 2024, outperforming copper up 3 per cent and the stocks have held in well despite weakness in the commodities with valuations still near historical averages on spot prices at 1.0 times NAVPS (1.0 times at RBC estimates), 7.4 times 2025E EBITDA (7.8 times at RBCe), and 3-per-cent FCF/EV yield vs. 10-year average of 0.8 times NAVPS and 6.4 times NTM [next 12-month] EBITDA and 3-year average of 1.0 times NAVPS and 5.6 times NTM EBITDA.”
The analyst made a single target adjustment to the TSX-listed stocks in his coverage universe, raising First Quantum Minerals Ltd. (FM-T, “outperform”) to $24 from $23, exceeding the average of $21.65.
Mr. Crittenden also named four “preferred” names in the sector:
* Hudbay Minerals Inc. (HBM-T, “outperform” and $16 target) “as they continue to demonstrate strong FCF and de-risk Copper World.”
Analyst: “We could see a positive reaction to Q4 results as we expect a strong quarter driven by a further increase in the output out of the Pampacancha pit at Constancia with support from stronger gold prices; although, we think consensus estimates may be overly optimistic at present. We anticipate minimal changes to 2025 guidance but could see adjustments to Copper Mountain based on stabilization progress and Manitoba if strong operational performance can be sustained. With the final state-level permit for Copper World received, we expect the focus to shift to the JV process to further derisk development paired with ongoing FCF generation and exploration of regional targets near Constancia.”
* Capstone Copper Corp. (CS-T, “outperform” and $12 target) “as they execute on a production and FCF inflection.”
Analyst: “We see potential for downside to Capstone’s Q4 results and 2025 guidance release. We anticipate both production and cost guidance could come in below current consensus estimates due to the slightly slower progress on costs of the ongoing ramp ups at both Mantoverde and Mantos Blancos which could continue into 2025 and be reflected in more conservative guidance. However, following the guidance release, we see a constructive set-up for Capstone as we think shares could continue to re-rate towards larger-cap peers as production growth and cost improvements are delivered on. Key catalysts in 2025 include finalizing the ramp up at MVDP, bringing in a partner at Santo Domingo (mid-year), receipt of MV Optimized permit (mid-year), and a Mantos Blancos Phase II study (H2/25)”
* Ivanhoe Mines Ltd. (IVN-T, “outperform” and $24 target) “where completing the smelter is significant milestone which can lower costs while production continues to grow.”
Analyst: “We anticipate a neutral reaction to Ivanhoe’s Q4 results as improving production in October and November paired with reset guidance sets up a solid quarter at Kamoa-Kakula. We think the focus will be on 2025 guidance, which was verbally tempered on the Q3 call leading us to forecast 575kt of 2025 production vs. post-Phase 3 nameplate of ~650ktpa. The Western Forelands exploration update could come anytime now which could be a positive catalyst. The focus in the year ahead will be ramping up the 500ktpa smelter (expected construction completion imminently), updated LOM plan for KamoaKakula (early 2025), Kipushi ramp up (2025), Platreef start up (H2/25), and potential for further value unlocked from Western Forelands exploration (2025).”
* First Quantum Minerals Ltd. (FM-T, “outperform” and $24), noting “any progress in Panama could be positive.”
Analyst: “We expect a neutral reaction to First Quantum’s Q4 results which we think are likely to be uneventful with guidance implying a slight reversion to the mean following a strong Q3 while we think 2025 guidance should also contain minimal surprises given the recent Kansanshi technical report update. We expect the focus to remain on potential Cobre Panama negotiations with President Mulino stating discussions could begin in early 2025 with an immediate focus on if/when First Quantum will receive authorization to ship stockpiled concentrate (31kt of contained copper in concentrate). We estimate First Quantum is currently pricing in 55 per cent of Cobre Panama (70 per cent at spot). The other key catalysts include progress on the S3 expansion at Kansanshi (slated for mid-2025) and the ongoing process to sell a minority stake in the company’s Zambian operations. We value Zambian operations at $9-billion/$8-billion at spot, while consensus marks the assets at $9.5-billion, implying 20 per cent could be worth $1.5-$2.0-billion”
Elsewhere, several analysts lowered their targets for Ivanhoe shares following the release of its 2024 production results and 2025 production guidance on Wednesday before the bell.
* Scotia’s Orest Wowkodaw to $20 from $21 with a “sector outperform” rating.
“IVN released markedly improved but largely in-line Q4/24 operating results at its flagship Kamoa-Kakula Cu mine in the DRC [Democratic Republic of the Congo],” he said. “More important, maiden 2025 Cu production guidance was 5 per cent below our expectations, while planned capex was 35 per cent higher. Moreover, the company warned that the near-term start-up of the new DRC smelter could be delayed by up to three months due to a recent fire that damaged back-up power generators at the operation. Overall, we view the update as negative for the shares.
“Although geopolitical risk is elevated, we rate IVN shares Sector Outperform based on the company’s world-class asset base, strong growth profile, and impressive management track record.”
* TD Cowen’s Craig Hutchison to $24 from $25 with a “buy” rating.
“On a positive note, production at both Kamoa-Kakula and Kipushi was better than expected; however, 2025 copper guidance will be impacted by power issues through at least the first half of this year. Overall, the growth outlook remains intact for Ivanhoe with several initiatives currently underway to accelerate production,” he said.
* Raymond James’ Farooq Hamed to $24 from $25 with an “outperform” rating.
“4Q24 production results at Kamoa Kakula were better than our expectations driven by higher throughput at the phase 3 mill with FY24 production in-line with guidance. 2025 copper production guidance included a wide range with the midpoint lower than our expectation. We believe the conservative end of the range reflects potential for power availability issues impacting operation,” said Mr. Hamed.
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While CIBC World Markets analyst Robert Catellier emphasized 2024 was a bullish year for his pipeline and midstream coverage universe, “with many companies at the top of their five-year valuation ranges due to continued tailwinds for natural gas,” he thinks there will be a slowdown for further expansion this year.
“The market’s optimism for secular gas exposure was spurred by LNG, electrification, AI/data centres and industrial markets,” he said. “We see the midstreamers on the precipice of a period of new capital projects stemming from the advancement of major industry egress projects, namely the LNG Canada and the Trans Mountain Expansion. Longer term, the DOW, Inc. ethylene cracker should generate growth projects for supporting infrastructure as well, including low-carbon hubs. Capacity utilization remains high in key areas of the value chain.
“Larger-market-cap pipelines seem likely to continue with both capital projects and tuck-in M&A. We also expect asset sales in 2025 to continue given historically tight credit spreads, with AltaGas’ minority stake in the Mountain Valley Pipeline (MVP) being the most anticipated. High sector valuations indicate that future returns may rely more heavily on steady dividend growth. Opportunistic share repurchases are a possibility, although with growth emerging in the midstream area, repurchases are likely to slow in favour of capex and balance sheet flexibility.”
In a 2025 outlook report released Thursday, Mr. Catellier said interest rates are likely to act as both a catalyst and a potential risk factor in the near term.
“U.S. and Canadian yields are expected to diverge, with the former expected to soften and the latter relatively flat before increasing in 2026.,” he said. “The projected rate cuts would help ease shorter-term borrowing costs, but potential U.S. tariffs on imports could increase U.S. inflation risk. The weaker CAD in 2025 should benefit companies with more USD earnings.
“Overall, we see mid-single-digit increases in fee-based EBITDA in our newly introduced 2026 estimates. The incoming U.S. presidential administration’s proclamations that favour higher oil and gas production could act as a tailwind for investments in new capacity. Given the U.S. reliance on Canadian energy, we expect any potential tariffs to be transient, but they could increase risk while creating higher volatility that could benefit marketing activities.”
The analyst made one rating revision, raising South Bow Corp. (SOBO-N, SOBO-T) to “outperformer” from “neutral” with a US$25 target, up from US$23. The average is US$22.85.
Mr. Catellier also made these target adjustments:
- AltaGas Ltd. (ALA-T, “outperformer”) to $42 from $40. The average is $38.
- Brookfield Infrastructure Partners L.P. (BEP-N/BEP.UN-T, “outperformer”) to US$40 from US$39. Consensus is US$39.40.
- Enbridge Inc. (ENB-T, “outperformer”) to $66 from $63. Average: $62.11.
- Superior Plus Corp. (SPB-T, “outperformer”) to $9 from $8.50. Average: $9.09.
- TC Energy Corp. (TRP-T, “neutral”) to $70 from $68. Average: $69.93.
- Tidewater Midstream and Infrastructure Ltd. (TWM-T, “neutral”) to 40 cents from 30 cents. Average: 32 cents.
“Our preferred names include GEI for its solid financial profile and higher growth visibility from new Gateway developments, and ALA for tailwinds in Utilities and Midstream segments,” he said.
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Ahead of Friday’s release of its first-quarter 2025 financial results, RBC Dominion Securities analyst Drew McReynolds thinks Corus Entertainment Inc.’s (CJR.B-T) equity value is “in flux pending a more sustainable capital structure.”
“Given the step-back in earnings visibility following the non-renewal of WBD programming and in light of an underwhelming television advertising recovery and recent CEO change, we believe Corus’ back is against the wall with channel rebranding, cost reductions, balance sheet/liquidity management and regulatory relief remaining four key priorities,” he said. “Until more progress is demonstrated on each of these fronts including instituting a more sustainable capital structure, we expect equity value to be under considerable pressure and in flux with the risk profile of the stock notably elevated.”
Mr. McReynolds is projecting revenue and EBITDA for the Toronto-based media to fall 10.3 per cent and 24.6 per cent year-over-year, respectively, in the quarter to $332-million and $91-million. That’s driven by a 15-per-cent drop in television advertising revenue and shrinking margins across its business.
The analyst said investors are now awaiting an update to Corus’ capital structure, noting: “A credit facility amendment that increased the financial covenant to 7.25 times from January 1, 2025 through to and including March 31, 2025 (returning to 4.25 times thereafter) provides Corus with some breathing room to properly explore strategic/financial options. We continue to expect an eventual broader restructuring that effectively right-sizes the balance sheet with likely multiple options being considered.”
While he lowered his full-year 2025, 2026 and 2027 earnings per share projections to 10 cents, 13 cents and 12 cents, respectively, from 19 cents, 15 cents and 14 cents, Mr. McReynolds kept a “sector perform” rating and Street-high 20-cent target for Corus shares. The current average is 9 cents.
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TD Cowen analyst David Kwan is expecting “less robust” fourth-quarter 2024 financial results from Blackline Safety Corp. (BLN-T) on Jan. 16, believing macroeconomic and geopolitical-related headwinds have negatively impacted hardware spending in recent months and likely led to “a less seasonally strong Q4.”
“Despite our bullish long-term view, we believe near-term risks could limit further share-price gains, particularly given the 45-per-cent gain since the Q3/24 release in September,” he added.
Mr. Kwan reduced his forecast for the Calgary-based connected safety monitoring technology company, noting he now sits at the bottom of the consensus. He’s projecting revenue of $37-million, up 23 per cent year-over-year but down from $39.1-million previously and below the Street’s estimate of $38.4-million. That drop was driven by a 9-per-cent cut to his Product revenue forecast.
“BLN achieved positive Adjusted EBITDA last quarter, and we expect a similar performance in Q4/24,” he said. “Our updated Adjusted EBITDA estimate of $0.9-million (was $1.3-million) is also at the bottom end of consensus ($1.2-million) and implies a margin of 2.4 per cent, flat quarter-over-quarter. We expect BLN to remain focused on driving strong organic growth and thus expect measured improvements in margins in the coming years.”
Despite his 2024 forecast reductions, Mr. Kwan kept a “buy” rating and $7.50 target for Blackline shares. The average is currently $7.43.
“Driven by its flagship G7 fully connected portable gas detector, which has a multi-year lead-time advantage over its key peers, and its continued focus on product innovation that has led to a steady pace of new product introductions, Blackline Safety has been able to consistently generate organic growth of more than 30 per cent for most of the last decade,” he said. “We believe this superior organic growth can continue in the coming years, while we also expect its margins to continue to increase. Despite the sharp rebound in the share price over the last year, we believe the stock is attractively valued, with it still trading well below its peers and near the bottom end of its historical range. We also believe the company is an attractive takeout target.”
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In other analyst actions:
* BMO’s Stephen MacLeod raised his Aritzia Inc. (ATZ-T) target to $65, exceeding the average by 37 cents, from $60 with an “outperform” recommendation.
* Accountability Research initiated coverage of Bank of Nova Scotia (BNS-T) with a “buy” rating and $82 target, exceeding the $80.43 average.
* Following Wednesday’s release of an updated technical report for its Cauchari Olaroz asset, Canaccord Genuity’s Katie Lachapelle trimmed her target for Lithium Americas (Argentina) Corp. (LAAC-T) to $9.50 from $10 with a “buy” rating, while National Bank’s Mohamed Sidibé moved his target to US$3.75 from US$4 with a “sector perform” recommendation. The average is US$8.98.
“Changes from the prior technical report reflect updated reagent prices, increased labor costs and general inflation that have impacted the industry over the past five years,” said Mr. Sidibé. “While the operating costs highlighted came in right in line with our prior estimates, the taxes and royalties came in higher. We have now updated our model with the new estimates provided, as well as reflected Q4/24 production results and the 2025 guidance. Given the added visibility on the asset we lower our discount rate on the asset from 9 per cent to 8 per cent.”