Inside the Market’s roundup of some of today’s key analyst actions
Desjardins Securities analyst Doug Young thinks the second-quarter financial report from Bank of Montreal (BMO-T) was merely “slightly positive” as earnings beat was driven largely by corporate gains, while U.S. and Canadian personal and commercial result fell short of his expectations.
BMO shares gained 1.5 per cent on Wednesday after it reported cash earnings per share of $2.62, exceeding both Mr. Young’s $2.43 estimate and the consensus forecast of $2.52. Adjusted pre-tax, pre-provision earnings topped his estimate by 4 per cent on corporate and wealth management beat, while capital markets, Canadian banking and U.S. banking missed projections.
The analyst said: “Positives. (1) Total PCLs were below our estimate (slightly above in performing, offset by lower impaired PCLs). There was nothing to note in new gross impaired loan formations or net charge-offs. The impaired PCL rate guidance of high 40 basis points for FY25 was maintained (plus a few basis points for tariff risk). (2) Adjusted expense ratio was below our forecast, and it recorded positive operating leverage (a focus). (3) All-bank NIMs, along with NIMs in Canadian and US banking, were above our estimates. It now expects NIMs to stabilize for the rest of this year. (4) Wealth management results were solid. (5) It expects capital markets adjusted PTPP earnings to be more than $625-million per quarter in 2H FY25. (6) Management is laser-focused on driving ROE improvements.
“Concerns. (1) Canadian P&C banking adjusted PTPP earnings were below our estimate due to lower non-interest revenue, but this should normalize in 2H FY25. (2) US P&C banking adjusted PTPP earnings missed our estimate; however, excluding a loss on the sale of a U.S. card book ($51-million pre-tax), the division beat. (3) Corporate drove the all-bank adjusted PTPP earnings beat, and losses at this segment should normalize higher in 2H FY25 (hard to model).”
Maintaining his “hold” recommendation for BMO shares, Mr. Young raised his target to $152 from $150. The average target on the Street is $149.93.
“We maintain our Hold rating, although we are warming up to the name,” he concluded.
Elsewhere, other analysts making target adjustments include:
* Scotia’s Mike Rizvanovic to $148 from $143 with a “sector perform” rating.
“We view BMO’s Q2 results as positive overall as credit performance improved sequentially, margin at the all-bank and segment level surprised to the upside, and Capital Markets put up a strong quarter that was ahead of our expectations,” he said. “And while our forward estimates have increased modestly to reflect a slightly better growth trajectory through F2026, that more constructive view is somewhat overshadowed by continued weakness in loan volumes in the bank’s U.S. business, which based on management’s comments could remain subdued over the next several quarters. Management did sound optimistic on the opportunity to deploy capital more efficiently into its U.S. footprint, which could result in upside surprise to our current margin and NII forecasts for the segment, even with a lack of lending growth, although we will wait to see that potential benefit start to show up more prominently in the bank’s results before becoming more constructive on the shares.”
* Canaccord Genuity’s Matthew Lee to $166 from $163 with a “buy” rating.
“Our key takeaway from the quarter was management’s constructive view on the U.S. business, which we view as the crux of its ROE improvement objectives,” said Mr. Lee. “While commercial lending growth remains muted, conversations with clients suggest a more positive tone amidst a seemingly manageable tariff environment. On the credit front, BMO noted that impaired PCLs could trend up slightly in the back half of the year, which was worse than we expected but reasonable given the current climate. Overall, we came away more constructive on BMO’s ability to continue improving profitability and ROE in the US business through balance sheet optimization, a focus on fee-based revenues, and recovering loan growth. We maintain the view that over the coming quarters, US commercial should outperform other areas of the loan book, barring further geopolitical disturbances. Given our forecast for double-digit earnings growth over the next three years, we maintain our BUY rating and raise our target.”
* National Bank’s Gabriel Dechaine to $160 from $144 with an “outperform” rating.
“We believe investors will place a higher valuation on U.S. exposure, considering diverging Canada vs. U.S. economic trajectories,” said Mr. Dechaine.
* TD Cowen’s Mario Mendonca to $150 from $144 with a “hold” rating.
=====
RBC Dominion Securities analyst Darko Mihelic said he’s “not alarmed” by National Bank of Canada’s (NA-T) credit performance in the second quarter but “not enthused either.”
In the quarter, National Bank set aside $545-million in provisions and included $315-million against loans that are still being repaid. Last quarter, National reserved $254-million in provisions.
“Excluding CWB, NA’s gross impaired loans (GILs) as a percentage of total gross loans (GIL ratio) increased 7 basis points quarter-over-quarter and 32 basis points year-over-year to 0.86 per cent, the highest quarter-over-quarter and year-over-year increases in the group so far. Including CWB, NA’s GIL ratio increased 19 basis points quarter-over-quarter and 44 basis points year-over-year to 0.98 per cent.“
“We thought NA might have ended the quarter with higher performing reserves on a relative basis (achieved either through an extra conservative credit mark on CWB or by higher stage 2 PCLs this quarter) given it just closed an acquisition, there is significant trade uncertainty and new economic headwinds are emerging in Western Canada.”
Overall, the Montreal-based bank reported adjusted earnings per share of $2.85, exceeding Mr. Mihelic’s estimate of $2.30 and the consensus projection of $2.39. He attributed the beat to stronger-than-anticipated results in Financial Markets. It also announced a 4-cent increase in its quarterly dividend to $1.18 per share, above the analyst’s 2-cent expectation.
Seeing its integration of Canadian Western Bank “on track,” Mr. Mihelic summarized the results by saying: “NA had another solid quarter of trading results. Credit quality was mostly as expected and NA maintained its impaired PCL guidance for the year (we model PCLs to moderate into 2026) although relative to peers we view NA’s allowance as slightly less conservative (a strong trading quarter afforded “room” for higher stage 2 PCLs). NA’s integration of CWB is under way and it had already transitioned one portfolio to AIRB which we view positively. We suspect more capital benefits will be realized in 2026."
“We update our model mainly reflecting PCLs that moderate into 2026 and lower Canada P&C loan growth in the next two quarters. On a segmented basis our estimates increase for Financial Markets and USSF&I, partially offset by a small decrease in Wealth. Our 2025 core EPS estimate increases to $11.10 (was $10.28) and our 2026 core EPS estimate increases to $11.54 (was $11.29). We introduce our 2027 estimates with this note and model a core EPS of $12.38 in 2027. We suspect a buyback of 3 per cent or so is a high possibility in the absence of a significantly weaker economy”
With those changes, Mr. Mihelic raised his target for the bank’s shares to $148 from $144, keeping a “sector perform” rating. The average target is $135.71.
Other analysts making target adjustments include:
* Desjardins Securities’ Doug Young to $136 from $130 with a “hold” rating.
“Cash EPS and adjusted pre-tax, pre-provision (PTPP) earnings were above our estimates and consensus. It was a record quarter for capital markets, leaving many to ponder if this is sustainable. While capital markets results are volatile, it is an important franchise for NA, and in the work we have done, the volatility in its capital markets results has been lower vs peers historically,” he said.
* Scotia’s Mike Rizvanovic to $142 from $135 with a “sector outperform” rating.
“While NA’s material EPS beat in the quarter was sourced largely from the seemingly always underappreciated Financial Markets business, we remain positive on the bank’s growth outlook through F2026, where we still believe there is potential for upside surprise related to both undisclosed revenue synergies with CWB, and a draw down of excess capital to fund organic growth that could happen in F2026, should ongoing economic headwinds moderate,” he said. “We are also encouraged on the credit front, which has been an area of concern for many investors, as PCLs fell sequentially, while management maintained its PCL guidance for the year and was constructive on the outlook for ABA bank. We continue to believe that NA’s relative valuation does not fully reflect the upside potential through F2026 setting for what we believe will be outperformance vs. peers.”
* Canaccord Genuity’s Matthew Lee to $136 from $130 with a “hold” rating.
“Management noted on the call that Q2 benefitted from discreet high volatility trading days in the quarter, which drove revenue in its equities business without disrupting volumes or product issuance across the remainder of the quarter. Looking forward, we expect trading results to be more in line with F24 trends, with puts and takes based on market oscillations. With that said, we believe that National has several other levers of earnings growth to pull, including CWB revenue, cost, and funding synergies, a recovery of Corporate and Investment Banking, and the eventual deployment of capital towards a share buyback program. Despite the strong quarter, NA maintained its mid-single-digit EPS guidance (excluding the amortization of the net fair value mark) with our model now at the high-end of that range. Post-quarter, we have raised our estimates for both Financial Markets and P&C Banking, which increases our target,” said Mr. Lee.
* BMO’s Sohrab Movahedi to $138 from $135 with an “outperform” rating.
“We like NA’s commitment to maintaining high ROEs while maintaining strong capital/reserve levels. NA’s earnings profile and profitability benefit from its duopoly in Quebec. The acquisition of CWB should add to earnings growth and diversification over time similar to its International strategy which has been both ROE and earnings accretive in recent years,” he said.
* Barclays’ Brian Morton to $141 from $140 with an “equal-weight” rating
* Jefferies’ John Aiken to $139 from $126 with a “hold” rating.
=====
Following Wednesday’s post-market release of weaker-than-anticipated second-quarter results, National Bank Financial analyst Gabriel Dechaine lowered his forecast for EQB Inc. (EQB-T), citing higher provisions for credit losses and lower loan growth.
The Toronto-based bank reported adjusted earnings per share of $2.31, falling below the $2.55 estimate of the analyst and Street. He attributed the miss to to higher PCLs (a 19-cent hit), mostly in the impaired category.
“$30-million of total PCLs were 50 per cent above our forecast, with impaired provisions representing the largest deviation (i.e., $24-million vs. our $15-million forecast),” he said. “The largest driver of provisions related to pre-existing impairments. Uninsured mortgage provisions increased on lower expected recoveries and extended duration of resolutions. Commercial mortgage provisions increased on previously impaired loans due to longer resolutions and lower expected recoveries. On the positive side, Equipment Finance provisions, which have been a recurring issue over the past two years, were stable quarter-over-quarter. Additionally, impaired personal loans balances (i.e., mortgages) were relatively steady sequentially (up 1 per cent).”
Mr. Dechaine said EQB did see a notable gain in mortgage originations, but he warned the outlook has since softened.
“The uninsured mortgage book grew 2 per cent quarter-over-quarter on strong originations (up 28 per cent year-over-year),” he said. “However, management anticipates ‘a more challenging housing market in the second half of the year’, which contrasts with the ‘preparing for continued strength over next several quarters’ messaging it shared with Q1/25 results.”
With his forecast changes, Mr. Dechaine lowered his target for EQB shares to $106 from $111, keeping a “sector perform” rating. The average is $118.70.
Elsewhere, Raymond James’ Stephen Boland cut his target to $108 from $121, maintaining an “outperform” rating.
“With this quarter, EQB will need a strong second 2H25 to achieve that guidance which may be doubtful,” said Mr. Boland. “In the Outlook section of their disclosure, management does acknowledge that near-term volatility is making markets difficult to predict at the current time.
“Credit remains a concern, although impaired formations are slowing and there is adequate collateral behind the loan book. As management indicated last quarter, the bank is spending to maintain future growth and thus non-interest expenses increased 9 per cent year-over-year. We believe this stock has tended to perform well when single-family originations are strong. That said, we are lowering our 2025 and 2026 estimates to adjust for higher PCLs, although we acknowledge there is some variability into how credit trends in the upcoming quarters. We are lowering our target.”
=====
Ahead of the June 11 release of its first-quarter fiscal 2026 results, RBC Dominion Securities analyst Irene Nattel reaffirmed her view that Dollarama Inc. (DOL-T) “remains a best idea and core holding in 2025 against the backdrop of heightened macro uncertainty and value-seeking consumer spending backdrop.”
“Sector-leading growth trajectory, further optionality around Dollarcity and The Reject Shop, strong FCF and consistent capital returns, augmented by favourable flow of funds all supportive of DOL premium valuation, in our view,” she said in a client note. “Introducing preliminary F28 forecasts with EPS up 12 per cent excluding TRS, rolling our valuation forward to mid-F28 (July 2027) to reflect the passage of time.”
For the quarter, Ms. Nattel is currently projecting earnings per share of EPS 84 cents, a gain of 9 per cent year-over-year and matching the consensus view on the Street. She said her forecasts is based on a same-store sales growth expectation of 3.75 per cent, which sits toward the high-end of the retailer’s annual guidance range 3-4 per cent, “reflecting value-oriented consumer behaviour, stable GM% and very modest SG&A leverage.”
“Looking ahead, evolution of consumer sentiment and spending remains unknown, but Dollarama’s deep value positioning should continue to appeal to a broad base of consumers, a relative advantage, in our view,” she said.
Despite modestly trimming her earnings projections for the next two fiscal years, Ms. Nattel increased her target for Dollarama shares to $190 from $183, keeping an “outperform” rating. The average is $172.46.
“Reiterating constructive outlook and OP rating, with DOL a secular winner as consumer value-seeking behaviour likely sustains gains in share of wallet, generating sector-leading results through the current cycle and beyond,” she said. “Our target multiple 20 times LTM [last 12-months] Q2/F28 is at the mid-point of the 2024-2025 EBITDA valuation range 21-19 times and in-line with late 2017/ early 2018, another period of investor and consumer caution. In our view, valuation should stabilize toward the high-end of the long-term range as investors seek refuge in ratable, predictable, and sustainable growth stories. Importantly, our target multiple also reflects optionality with respect to the Mexico and Australia opportunities, incremental to our published forecasts.”
=====
In a research report released Thursday titled We Love Trash Talk, Stifel analyst Ian Gillies initiated coverage of Secure Waste Infrastructure Corp. (SES-T) with a “buy” recommendation, touting “a crown jewel asset (network) that would be very challenging to replicate.”
“In our view, the company’s network of 55 waste processing facilities are unlikely to be replicated in today’s oil and gas spending environment where there are a limited number of competitors,” he said. “Our understanding is that a new large waste disposal facility has not been built in the WCSB since 2016. A number of upstarts over the last 15-years have tried to mimic SECURE’s approach but had limited success.
“There’s a multi-faceted growth approach for earnings: we anticipate organic growth for the top line will be relatively modest (mid single digits), with WCSB oil and gas production growing at low single digits and new/upgraded facilities allowing for some market share capture. Further aiding growth is the company’s balance sheet, which will allow the company to continue to pursue M&A focused on industrial waste and execute on NCIBs/SIBs. We believe the company has the flexibility to deploy $571-million on these initiatives through the end of 2026.”
In justifying his bullish view of the Calgary-based company, Mr. Gillies pointed to a pair of factors:
“Why an investor should own SECURE, part 1: there has been a dramatic improvement in SES’ financial metrics since the pandemic, primarily driven by the acquisition of Tervita in July 2021,” he explained. “For example, its 25-26E EBITDA to FCF conversion is forecast to be 31 per cent compared to the trailing 10-year average of 15 per cent while its 25-26E ROE is forecast to be 18 per cent compared to its trailing 10-year average of negative 1 per cent. The 24-26E EBITDA CAGR of 8 per cent is somewhat tepid but the company has slowed growth in an effort to improve return metrics.
“Why an investor should own SECURE, part 2: in spite of these positive changes, the 2026E valuation metrics for SES remain inexpensive in our view with EV/EBITDA at 7.5 times and P/E at 15.3 times. The company’s broad range of service offerings make it challenging to find a direct comparable, but we would point to industrial waste company Clean Harbors which trades at 10.9 times EV/EBITDA and 25.2 times P/E. Each additional turn of EV/EBITDA equates to $2.44/sh.”
He set a target of $18 per share. The current average is $17.25.
“We believe the business is more defensive today than either of the prior periods. However, investors will want to see “proof in the pudding” before the re-rate occurs given that there is no way to generate third-party verification," said Mr. Gillies.
=====
In other analyst actions:
* In response to the release of an updated mineral resource estimate (MRE) for its Perron Project, located in the Abitibi region of Quebec , Canaccord Genuity’s Jeremy Hoy raised his target for Amex Exploration Inc. (AMX-X) to $2.50 from $2.25 with a “speculative buy” rating. The average is $2.56.
“The company now plans to release an updated PEA [preliminary economic assessment] in late 2025, and based on the discussion in the analyst call following the press release, we believe it will feature a toll-milling phase which could commence as early as 2028, as well as a plant-processing phase,” said Mr. Hoy. “In our view, this new plan simplifies permitting and should be easier to finance (less capital required initially to get to revenue, toll-milling cash flow should support plant construction). On the analyst call, there was a focus on the drivers behind the increase in tonnes, grade, and ounces, and we highlight that the company intends to apply for a bulk sample permit in the coming months. In our view, the planned 40 kt bulk sample should serve as critical validation for this new, revised, narrow-vein focused resource. We believe AMX’s newly defined path forward is pragmatic and realistic and look forward to advancements towards the bulk sample, as well as the updated PEA.”
* Scotia’s Jonathan Goldman increased his target for shares of ATS Corp. (ATS-T) to $46 from $43 with a “sector perform” rating. Other changes include: TD Cowen’s Cherilyn Radbourne to $59 from $54 with a “buy” rating and RBC’s Sabahat Khan to $50 from $47 with an “outperform” rating. The average on the Street is $49.25.
“ATS reported good FQ4 results (sales growth ranged between 11-39 per cent year-over-year across the segments ex. Transportation), with strong bookings growth (near-record backlog) and the EV customer settlement being notable highlights,” said Mr. Khan. “Overall, we believe ATS is well-positioned for revenue growth
and margin expansion in F26.”
* BMO’s Devin Dodge increased his target for Finning International Inc. (FTT-T) to $57 from $52 with an “outperform” rating.
“Though there continues to be elevated near-term economic uncertainty, FTT is capitalizing on available opportunities, earnings have held up well, ROIC is shifting higher and share repurchase activity is accelerating. To the extent financial performance continues to progress towards the framework from the 2023 Investor Day, we believe there is upside risk to earnings and valuation. We rate FTT Outperform, and it remains the preferred idea within our equipment dealer coverage,” said Mr. Dodge.
* Jefferies’ Fahad Tariq raised his Franco-Nevada Corp. (FNV-N, FNV-T) target to US$171 from US$169 with a “hold” rating. The average is US$173.55.
* RBC’s Andrew Wong cut his Largo Inc. (LGO-T) target to $3 from $4 with an “outperform” rating. The average is $4.23.
“We think Q1 results demonstrated continued operational challenges, resulting in lower production and sales guidance, while vanadium prices remain under pressure from a weak macro backdrop,” he said. “Additionally, the company’s balance sheet is challenged and may need to be re-capitalized by mid-year. However, we see potential upside if operations can turn around and vanadium prices recover from the lows. We reiterate our Outperform, Speculative Risk rating, but lower our PT to $3 (from $4) to reflect ongoing weakness in vanadium prices and recent operational challenges.”
* National Bank’s Mohamed Sidibé raised his Montage Gold Corp. (MAU-T) target to $5.25, exceeding the $5.13 average, from $4.15 with an “outperform” rating.
“We have notably updated our resource estimate to reflect the higher grade satellite deposits delineated and increased our EV/oz attributable for the unmodelled ounces from US$75/oz to US$200/oz to reflect a more appropriate exploration upside as MAU delivers positive results and advances towards production,” he said. “Our model now reflects value for the equity interest taken in Aurum Resources, Sanu Gold and African Gold. Finally, we have rolled forward our NAV to the Q2/25 quarter and fine-tuned our capex estimate to reflect the spend to date of US$84.6-million incurred at the project (US$750-million left).”
“Given the company’s recent graduation from the TSXV to the TSX, which will boost future odds of index inclusion, strong institutional and financial backing and construction remaining on track, we have increased our NAV target multiple to 0.70 times from 0.60 times.”
* Canaccord Genuity’s Aravinda Galappatthige raised his NTG Clarity Networks Inc. (NCI-X) target to $3.30 from $3 with a “buy” rating. The average is $3.73.
"NTG Clarity Networks reported its Q1/25 results [Wednesday], which we characterize as net positive due to the 68-per-cent topline growth and the magnitude of the revenue beat,“ he said. ”Adj EBITDA was a touch lighter due to the company expanding capacity. However, we see this as a sign of the business setting itself up for increased engagement in Saudi Arabia (under Vision 2030). The stock still trades at compelling valuations – 7.9 times EV/EBITDA 2025 estimates and 5.7 times on F2026, with a near net cash balance sheet."
* Pointing to its “impressive diversification over the past five years,” Raymond James’ Stephen Boland initiated coverage of TMX Group Ltd. (X-T) with an “outperform” rating and $59 target. The average on the Street is $56.
“The company has clear financial and operational goals at a consolidated level and at the operating segment level,” he said. “At the revenue level, the objective is to generate strong growth which implies a growth rate of 5 per cent plus revenue CAGR [compound annual growth rate]. Over the past eight years, revenue has recorded a 12-per-cent CAGR. Each of the operating segments has generated a revenue CAGR of between 4.9 per cent and 18.0 per cent. This has been achieved through a combination of organic and acquisitive growth. ... Besides the growth strategy, TMX has several objectives it believes could be transformational. These objectives have timelines beyond 10 years. These include growing recurring revenue to account for more than two-thirds of total revenue, and growing both revenue outside of Canada and revenue from the Global Insights operating segment to more than half of total revenue.”
“One of our main reasons for our Outperform recommendation, is the execution of a strategy that has diversified the operations, maintained a high operating margin, and generated over $1 billion of free cash flow (pre-dividend) over the past two years. This free cash flow generation allowed a for a steady increase in the dividend while maintaining a conservative payout ratio.”