Inside the Market’s roundup of some of today’s key analyst actions
Stifel analyst Martin Landry thinks Alimentation Couche-Tard Inc. (ATD-T) could reward investor patience moving forward.
“Couche-Tard’s shares increased 6 per cent [on Wednesday, their best performance in six months,” he said. “While Q3FY25 results were not that exciting, with EPS up 5 per cent year-over-year, it is the first time in seven quarters that net earnings increased year-over-year. Shares reflected pessimism heading into the quarter due to the 7&i deal overhang combined with depressed operational performance by ATD. Looking ahead, we ascribe a low probability that a deal with 7&i occurs, and believe that as this becomes clearer, the deal overhang will dissipate and valuation could re-rate to pre-deal levels of 17-18 times forward earnings. However, this may take another 6-9 months, given ATD’s persistence. We should get some insights at 7&i’s AGM in May, when shareholders will have the opportunity to vote for/against the re-election of Directors. In the meantime, with a valuation of 15 times forward earnings, 2 turns lower than historical average, shares provide investors with an appealing entry point.”
Couche-Tard looking at other global acquisition opportunities as pursuit of Seven & i inches forward
Before the bell on Wednesday, the Laval, Que.-based convenience store giant reported third-quarter 2025 earnings per share of 68 cents, up 5 per cent year-over-year and topping both Mr. Landry’s 65-cent estimate and the consensus target on the Street of 66 cents.
“On the positive side, the U.S merchandise margin expansion of 90 basis points year-over-year is notable, the first expansion in the last five quarters,” he said. “On the negative side, the U.S. fuel volume decline of 3 per cent year-over-year caught our attention as it is the largest decrease in more than two years, but still compares favorably to 7-Eleven, which registered a decline of 3.6 per cent year-over-year in average retail gallon sold per store.”
While Mr. Landry applauded the company’s progress on its food initiatives, including a reduction in stock keeping units, he warned “pockets of weakness remain.”
“Management refrained from giving much color on the current quarter,” he said. “There are pockets of weakness in markets such as Arizona, Texas, and Florida, where fewer snowbirds is having an impact on traffic. In addition, Mexican tourists seem to have declined as management is seeing softness along the southern borders, particularly in Texas. This could suggest that U.S. merchandise SSS [same-store sales] growth may remain below historical levels in Q4FY25. We have reduced our Q4FY25 same-store-sales down by 100bps to flat year-over-year.
“Robust M&A pipeline despite 7&i. Contrary to media reports, management stated that Couche-Tard has not signed a non-disclosure-agreement (NDA) with 7&i. Rather, ATD is working with 7&i on a divestment package in the U.S. to satisfy regulatory requirements. ATD mentioned that some NDAs are signed with potential buyers of assets expected to be divested. Aside from the potential acquisition of 7&i, management continues to actively engage on other files, indicating that some large deals are available in Europe and that there is a robust pipeline in the U.S.”
The analyst reduced his fiscal 2025 and 2026 EPS estimates by 2 per cent and 3 per cent respectively, while introducing his 2027 projection of $3.45, representing an increase of 9 per cent year-over-year, “calling for low-single digit merchandise SSS growth, flat to down same store fuel volume, modest merchandise gross margin expansion and stable fuel margins.”
Maintaining a “buy” recommendation for Couche-Tard shares, Mr. Landry lowered his target to $86 from $88 with the cuts to his forecast. The average target on the Street is $86.91, according to LSEG data.
Elsewhere, other analysts making adjustments include:
* Scotia’s John Zamparo to $83 from $85 with a “sector outperform” rating.
“ACT is gaining momentum with internal efforts to grow same-store sales, while fuel margins remain healthy as ever,” said Mr. Zamparo. “Regardless of whether the Seven & i deal gets done, ACT has multiple forms of potential capital deployment in this fragmented industry, and leverage (GAAP basis) sits at just 1.4 times. ACT is a proven compounder with minimal/modest tariff exposure; current valuation provides an attractive risk-reward profile.”
“[Wednesday’s] 6.3-per-cent move was probably overly positive given a good-not-great quarter, so this points to an unjustly negative view from investors coming into FQ3. The Seven deal presents an interesting dynamic: investors likely favour a deal, but do not wish to be meaningfully buying ahead of a potential equity offering. [Wednesday’s] print and industry commentary should at the very least alleviate concerns about the impact of low income consumers on results in C25.”
* National Bank’s Vishal Shreedhar to $86 from $88 with an “outperform” rating.
“We view performance to be better than expected, aided by better fuel margins across all regions and good SG&A control,” Mr. Shreedhar said. “Also, sequential merchandising sssg/margin improvements, particularly in the U.S. were encouraging. ATD highlighted signs of consumer resilience, albeit amid continued cautious spending.”
“We view the c-store backdrop as challenged; however, we expect ATD to deliver improving performance (in part due to easy year-over-year comparisons) in the coming quarters, assuming normalized fuel margins.”
* Desjardins Securities’ Chris Li to $82 from $84 with a “buy” rating.
“While the macro environment remains a headwind, ATD is focused on the controllables and on providing value for pressured consumers,” he said. “Encouragingly, U.S. merch SSSG, excluding the unfavourable impact from weather, turned slightly positive in 3Q after five consecutive quarters of decline. We expect ATD to remain range-bound pending improved macros and more clarity on Seven & i. Our positive view is based on ATD’s attractive long-term growth and strong financial position.”
* CIBC’s Mark Petrie to $84 from $87 with an “outperformer” rating.
“FQ3 results were better than feared, and we view underlying trends as better than reported results, which were clipped by unfavourable conditions in the U.S. Our growth expectations remain modest given a cautious consumer and uncertain macro environment, though we are confident in ATD’s execution. While firm progress remains illusive, we are gaining confidence in some form of transaction with Seven & i,” said Mr. Petrie.
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Seeing weakening fundamentals even before global tariff take effect, Citi analyst James Hardiman downgraded both BRP Inc. (DOO-T) and peer Polaris Inc. (PII-N) to “sell” recommendations (from “neutral”) on Thursday.
“Both are dealing with a deteriorating and increasingly promotional end market, meaningful headwinds from incremental Chinese tariffs, and a potentially untenable situation with respect to Mexico and Canada tariffs,” he said. “Were 25-per-cent tariffs on Mexican and Canadian imports to be levied indefinitely (an unlikely but distinct possibility), we believe that both companies would immediately incur significant losses, impacting their long-term prospects . Even in the absence of this scenario, however, the weakening of fundamentals in conjunction with the incremental Chinese tariffs is enough to weigh on valuations going forward.”
Mr. Hardiman said his most recent dealer checks for Minnesota-based Polaris point to North American off-road vehicle retail sales trending toward a low-double-digit decline in the first quarter.
“This consists of a high-single-digit decline in January, a high-teens decline in February, and a mid-single-digit decline through the first half of March,” he said. “Dealers report a deterioration in sentiment and higher-than -deal inventory levels overall despite efforts by PII/DOO to cut shipments. The dealer consensus is that price increases from tariffs will be bad for the industry, with most expecting at least some incremental slowdown as a result.
“Our base case now assumes the indefinite levying of an incremental 20-per-cent tariff on goods from China into the U.S., bringing the total Chinese tariff to 30 per cent. While not in our numbers, we also believe that some base level of tariffs (albeit far short off 25 per cent) on Mexico and Canada is increasingly possible.”
Concluding both companies face “untenable” situations, the analyst called Valcourt, Que.-based BRP “more of a barbell with respect to potential outcomes.
”The company’s China sourcing is significantly more limited than that of PII, and so if the incremental 20-per-cent Chinese tariffs prove to be the entirety of the incremental tariffs going forward, the company will be fine and BRP shares will almost certainly rally,” he said. “However, in the event of a 25-poer-cent Mexico tariff, BRP would get hit substantially harder than PII, and would have few if any options in terms of manufacturing relocation, as the company has no real production in the U.S., with the notable exception of its marine business which is currently for sale. As we think through the event calendar, all eyes will be focused on the April 2nd date. While we do not think that 25-per-cent tariffs will be permanently levied on goods from Canada and Mexico, we also do not believe it likely that President Trump deescalates the situation and takes the Mexico/Canada tariffs off the table. At best, then, PII and DOO are likely to remain stuck in a quagmire for some time, while at worst, these companies will have to scramble to stay afloat amidst some level of Mexico/Canada tariffs.
“In the meantime, DOO will need to report earnings next week, while PII will report in approximately 5 weeks. Based on our most recent dealer checks (discussed later in this note) we believe these reports are likely to have little in the way of good news, whereas on the subject of tariffs management will have a number of paths. Given the relative magnitude of China and the uncertainty surrounding China and Mexico, DOO is likely to include the former and exclude the latter from its guide. Depending on what gets communicated from the Trump administration on April 2nd, we would not be surprised to see PII pull its guidance when reporting in late April. In both cases, we believe that the ex-tariff fundamentals have worsened since both companies last updated their outlooks.”
For both companies, Mr. Hardiman “slashed” his financial estimates, pointing to " a combination of significantly weaker near-term (pre-tariff) fundamentals, a more muted medium-term outlook, and the significant impact (especially for PII) of incremental Chinese tariffs.”
“Our estimates do not include incremental tariffs on Mexico and Canada, whereas our target multiples factor in this existential risk (especially for DOO),” he added.
With those changes, he dropped his target for shares of Valcourt, Que.-based BRP to a Street-low $41 from $70, while his Polaris target slid to US$33 from US$49. The averages on the Street are $82.83 and US$51.17, respectively.
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National Bank Financial analyst Zachary Evershed thinks Boyd Group Services Inc.’s (BYD-T) “stubbornly slow recovery in claims volumes is tilting 2025 towards being a transition year,” however he remains bullish on the opportunities stemming from its roll-up runway and margin improvements.
In a note release Thursday titled A winning winter, but a frosty forecast, he said the Winnipeg-based company’s better-than-expected fourth-quarter 2024 results were offset by weaker-than-anticipated outlook for the current fiscal year.
“SSSG [same-store sales growth] clocked in at negative 2.6 per cent (NBF estimate: negative 2.5 per cent), in line with our expectations and significantly better than the industry’s repairable claims decline of 6 per cent as Boyd takes share,” he said. “Though weather is now a tailwind and management’s commentary indicates an improvement in Q1 vs. Q4, SSSG is not yet in positive territory as claims volumes remain pressured by higher insurance premiums and economic uncertainty. Management further noted that March is not looking significantly stronger than January or February, prompting a cut to our Q1 forecast to down 2 per cent (was 0 per cent). With lower velocity approaching positive territory due to continued consumer/economic uncertainty weighing on claim volumes, we temper our expectations for the remainder of 2025 as well, seeing our 2025e organic growth forecast drop to 2.7 per cent (was 6 per cent).
“Q1/25e Adj. EBITDA is trending below Q1/24′s $81.7 million. Typical seasonality sees headwinds from higher payroll tax accruals in Q1, while Q4 potentially benefits from expense accrual reductions, but in combination with the dimmer outlook for SSSG, we reset our 2025 margin expectations. We note that costs related to Project 360 will be added back to Adj. EBITDA, as was the case with Q4′s $4.4-million.”
After revising his estimates to reflect the latest industry data, management’s remarks and changes in foreign exchange rates, Mr. Evershed reduced his target for Boyd shares to $260 from $275, keeping an “outperform” rating. The average target is $269.69.
“Our forecasts do not explicitly include tariff impacts,” he noted. “Management speculated that the direct impact of U.S. tariff implementation would likely be a positive for Boyd, as any increase in pricing for parts can be passed through given the list price model, translating to SSSG (BYD’s parts margin is driven by a discount to list), and an increase in the cost of new vehicles would likely also cause used vehicle prices to rise, suppressing total loss rates (and thus increasing repairable vehicles). In the broader context, however, tariffs likely represent a net negative as inflation caused by tariffs would likely cause further pressure on collision claims counts as consumers contend with still greater economic uncertainty.”
Elsewhere, other changes include:
* Desjardins Securities’ Chris Li to $255 from $270 with a “buy” rating.
“4Q results were in line. However, the 1Q outlook did not provide much enthusiasm, with management expecting a modest SSSG recovery sequentially but a weaker margin profile. However, Project 360 cost-saving benefits should commence in 2Q25 (70 per cent of US$100-million run rate expected by end 2026). We are also cautiously optimistic that a more normal winter, easy comps and recovering used car prices could aid SSSG going forward, but patience is required,” said Mr. Li.
* CIBC’s Krista Friesen to $286 from $281 with an “outperformer” rating.
“After reporting Q4 results, BYD’s shares traded down 4 per cent. While we appreciate the outlook for Q1 is weaker than had been hoped and that uncertainty around claims volumes remains, we remain optimistic on the longer-term outlook for the company. We have tweaked our estimates to reflect a more gradual recovery in SSS, and along with some other minor adjustments to our model, our price target moves to $286,” said Ms. Friesen.
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While he expects a “slight” earnings beat when Lululemon Athletica Inc. (LULU-Q) reports its fourth-quarter 2024 financial results on March 26, Citi analyst Paul Lejuez expects the Street’s focus to remain on the trajectory of its U.S. business, warning of the possibility of “choppy” trends persisting.
“On the 3Q call, management sounded confident around a 1Q U.S. comp inflection driven by better product (and easier comparisons),” he said. “However, weak first-quarter-to-date industry data and mixed store checks/customer feedback suggest 1Q U.S comps could be negative. Given this dynamic, we expect management to guide F25 sales (ex 53rd-week impact) to high-single-digits, below their long-term algo of low-teens, likely leading to questions around the challenges facing LULU’s U.S. biz (mis-execution, category weakness, increased competition), which could further pressure the multiple (shares trade at an F25E P/E multiple of 21 times). We note, however, that short interest sits at a 2-yr high and sentiment is negative, suggesting a balanced risk/reward into 4Q EPS.”
In a research note released Thursday, Mr. Lejuez raised his fourth-quarter earnings per share forecast to US$5.97 from US$5.97, exceeding the Street by 11 US cents driven by stronger sales/GM. However, he maintaining his full-year fiscal 2025 projection of US$15.59 (versus the consensus of US$15.45), assuming “flattish Americas comps and EBIT margin [declining] 30 basis points due to 53rd week impact.”
“While the focus has primarily been on LULU’s issues in the U.S., most investors still expect very strong growth in international markets, particularly in China,” he adde. “We believe trends in China remain strong despite broader macro weakness in the region. Stronger int’l sales may help to offset weakness in the U.S., however, without the core US market growing, we believe LULU’s multiple will remain pressured. And we note, any signs of growth slowing more than anticipated in China would likely be viewed negatively by investors.”
“Despite weaker than expected topline results in F24 and management subsequently lowering their initial F24 sales guidance range, LULU is on track to deliver F24 EPS above its initial F24 EPS guidance range this year driven by more disciplined expense management. Given we view F25 as another below-algo sales growth year (we expect mgmt to guide F25 sales to up high-single-digits ex-the negative impact of the 53rd week vs low-teens algo), we will be interested to hear what levers LULU can pull within SG&A to protect margins (incentive comp, store labor, T&E).”
After valuation adjustments, Mr. Lejuez reduced his target for Lululemon shares to US$330 from US$380, keeping a “neutral” recommendation. The average on the Street is US$401.91.
“Short interest currently sits at 6.4 per cent of the float, above the 5 per cent level three months ago and the highest short interest levels in two-years,” he said. “Based on our conversations with investors, sentiment on LULU is negative on the trajectory of LULU’s U.S. business. Bearish investors expect management to guide F25 sales growth below their long-term algo (of low-teens growth) to the high-single-digit range (ex-53rd week impact) driven by weakness in the U.S. (and potentially Canada given macro uncertainties in that market). With another year of weakness expected in the U.S., the debate is turning to what multiple to assign LULU shares if the market can’t count on consistent double-digit topline grow.”
“We rate shares of lululemon as a Neutral. After years of benefitting from outsized growth in active apparel, trends in the category have slowed in F24 with data in Yoga & Active apparel pointing to a further deceleration 2Q quarter-to-date vs 1Q (which was a big decel vs F23). This dynamic, coupled with LULU’s execution issues (lackluster product assortment/lack of color/sizing) leave LULU more susceptible to increased competition and promotional pressures in 2H24/F25. We believe category weakness and a tougher macro backdrop makes it unlikely LULU sees a reacceleration in U.S. trends in 2H. Additionally, while LULU has performed extremely well in China over several years, incremental weakening of the China consumer environment is an added risk to the stock (as expectations remain high on China growth).”
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National Bank Financial analyst Vishal Shreedhar is predicting Dollarama Inc. (DOL-T) will post “good” fourth-quarter 2025 results and a “resilient” outlook for its current fiscal year on April 3 despite macroeconomic “uncertainty.”
“We expect Q4/F25 sssg [same-store sales growth] to sequentially improve, reflecting, among other factors, two key Halloween days shifted to Q4/F25, improving article price inflation (our data suggests 2.6-per-cent year-over-year inflation), proprietary NBF data suggesting spending was strong, StatsCan data indicating solid December 2024 core retail sales and peer commentary highlighting both continued consumer pressure and cautious optimism. DOL previously guided to F2025 sssg around the midpoint of 3.5-4.5 per cent (NBF estimate is 4.4 per cent),” he said.
“We model F2026 sssg of 3.6 per cent (vs. consensus at 3.7 per cent), with sssg to progressively accelerate through F2026 (stronger comparison in H1/F26). NBF models F2026 EPS of $4.49 (vs. cons. at $4.51), higher by 10.4 per cent year-over-year. Our expectation reflects gross margin of 44.8 per cent (higher by 8 basis points year-over-year) and an SG&A rate of 14.4 per cent (lower by 9 basis points year-over-year).”
For the quarter, Mr. Shreedhar is now projecting earnings per share of $1.30, up 15 cents from the same period a year ago and a penny ahead of the consensus estimate on the Street. That gains comes despite a year-over-year drop in same-store sales growth to 4.0 per cent from 8.7 per cent. His EBITDA forecast is $632-million, rising from $559-million in fiscal 2024 and above the consensus of $622-million.
“We project a lower gross margin rate (higher logistics costs) and slight SG&A deleverage (wage pressures and higher operating costs, partly offset by scaling and efficiency/labour productivity benefits),” he said.
Maintaining his “sector perform” rating for Dollarama shares, Mr. Shreedhar raised his target to $156 from $149 to reflect higher estimates and a higher multiple. The average is $149.31.
“We continue to hold a positive view on DOL’s shares given its defensive growth orientation supported by strong cash flows, a solid balance sheet and resilient sales performance,” he said. “We also believe international growth will become increasingly important, likely aided by acquisitions. That said, given premium valuation, difficult year-over-year compares and significant capital outlay over the medium term, we expect returns to be limited until sssg returns to historical levels.”
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Citing its valuation, CIBC World Markets analyst Anita Soni downgraded Lundin Gold Inc. (LUG-T) to a “neutral” recommendation from “outperformer” after adding its fourth-quarter results, which were released in late February, to her forecast.
“With financials, LUG reiterated its previously issued 2025 production, cash costs, all-in sustaining costs (AISC), and sustaining capital guidance,” she said. “We also now model the YE2024 reserve and resource (R&R) update, which extended mine life at Fruta Del Norte by approximately one year. On capital allocation, LUG announced an increase to its quarterly dividend from $0.20/share to $0.30/share, representing the second increase in less than a year.
“Over the last 12 months and year-to-date, LUG has been a top performer amongst its peers. With the strength in gold prices providing a rising tide to all boats, we have seen investor risk appetite has begun to diversify away from marquee names (operational excellence, strong management, and exploration upside) such as LUG to higher risk, lower valuation stocks. While we are still very positive on the stock, we expect to see LUG trade slightly more in line with peers.”
Ms. Soni raised her target to $44 from $41. The average on the Street is $39.37.
She also made these target changes:
- B2Gold Corp. (BTG-N/BTO-T, “neutral”) to US$3.60 from US$3.30. Average: US$3.71.
- Centerra Gold Inc. (CG-T, “neutral”) to $10.30 from $9.80. Average: $11.34.
- Iamgold Corp. (IAG-N/IMG-T, “outperformer”) to US$8.40 from US$7.60. Average: US$7.42.
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In other analyst actions:
* Desjardins Securities’ Allison Carson trimmed his Andean Precious Metals Corp. (APM-T) target to $2 from $2.10 with a “buy” rating. The average is $2.40.
* Ms. Carson raised her Wesdome Gold Mines Ltd. (WDO-T) target to $18 from $17.50 with a “buy” rating. The average is $17.32.
* CIBC’s Krista Friesen cut her AutoCanada Inc. (ACQ-T) target to $15 from $17, keeping an “underperformer” rating. The average is $19.93.
“ACQ reported a solid Q4, with EBITDA coming in at $47-million on a total operations basis, above our and Street expectations of $36-million. However, 2025 seems to be off to a challenging start, with ACQ noting a 2.8-per-cent year-over-year drop in Canadian new LV sales. The company also provided an update on its strategic revenue, noting the decision to close all remaining RightRide locations and classify its U.S. operations as discontinued operations. While ACQ deserves credit where its due, we believe the soft demand outlook on top of possible tariffs clouds the name,” said Ms. Friesen.
* Canaccord Genuity’s Yuri Lynk reduced his Decisive Dividend Corp. (DE-X) target to $6 from $7 with a “hold” rating. The average is $7.19.
* National Bank’s Jaeme Gloyn raised his Power Corp. of Canada (POW-T) to $55 from $50 with a “sector perform” rating, while TD Cowen’s Graham Ryding bumped his target to $54 from $53 with a “buy” rating. The average is $54.
“This is a neutral to positive quarter for POW,” he said. “Opco’s continue to deliver solid results and NAV upside. POW announced a 9-per-cent increase in the quarterly dividend to 61.25 cents/share, above our forecasted 5-per-cent bump. And, with $450-million in excess cash as at Q4-24, we expect POW to remain active on the buyback. We believe this should outweigh the ongoing drag on earnings and NAV from Alternatives and Standalone businesses. Notably, Standalone businesses now represent a negligible 20 bps of NAV, significantly reducing POW’s NAV risk in our view. Therefore, our price target moves higher ... on higher NAV, but also a narrower discount to NAV of 20 per cent (was 25 per cent).”
* JP Morgan’s John Ivankoe cut his Restaurant Brands International Inc. (QSR-N, QSR-T) target to US$78 from US$80 with an “outperform” rating. The average is US$78.58.
* Seeing the Street’s production estimate for the first quarter as “too optimistic,” TD Cowen’s Menno Hulshof trimmed his Suncor Energy Inc. (SU-T) target to $61 from $63 with a “buy” rating. The average is $62.84.
“Near-perfect finish to 2024 may have set Q1/25 expectations too high, in our view: Recall, Q4/24 production averaged a record-setting 875mbbl/d (900mbbl/d in Dec.) as mild weather, limited turnarounds and operational enhancements took hold. This resulted in quarterly records set across most business lines and 82mbbl/d of y/y prod’n growth in 2024 (vs. 60mbbl/d target).
“The Street may be extrapolating record Q4/24 rates into Q1/25. 45-day trailing Q1/25 consensus is 866mbbl/d (excl. 904mbbl/d outlier), only 1 per cent lower than Q4/24 at 875mbbl/d. This is especially problematic since Q1 is often the coldest and most operationally challenging,” he said.
* Desjardins Securities’ Benoit Poirier bumped his Titanium Transportation Group Inc. (TTNM-T) target to $3.25 from $3 with a “buy” rating. The average is $3.07.
“On the whole, 4Q results turned out to be much less worrisome than the market had expected (especially after the dividend cut in February), despite the absence of targets,” he said. “As we had already brought down our numbers ahead of the 4Q release (to account for tariff uncertainty and the weaker trucking backdrop), we have only tweaked our 2025 estimates slightly. On an encouraging note, management stated that only ⅓ of TTNM’s freight moves cross-border, lower than our previous estimate of 50 per cent.”
* Canaccord Genuity’s Mark Rothschild lowered his target for True North Commercial REIT (TNT.UN-T) to $11, below the $11.63 average, from $12 with a “hold” rating.