Inside the Market’s roundup of some of today’s key analyst actions
While she continues to see long-term value in Lululemon Athletica Inc. (LULU-Q) following a “mixed” second-quarter that saw U.S. growth turn negative for the first time in several years, KeyBanc analyst Ashley Owens downgraded her recommendation to “sector weight” from “overweight” previously, citing “the lack of positive catalysts over the coming quarters, execution concerns in the U.S., and a highly competitive athleticwear marketplace ultimately outweigh it.”
“While bottom line came in better than expectations, results are likely to remain challenged near-term as LULU undertakes corrective initiatives to rebuild momentum,” she said in a client note. “We believe that actions to course correct are appropriate at this time, but the benefits will take time to materialize. Additionally, the competitive landscape remains intense, and macro pressure adds in another layer of uncertainty, in our view. All things considered, we see limited NT catalysts and believe shares are fairly valued; we are downgrading LULU to Sector Weight and await improved visibility into execution as LULU works to reposition its business.”
She lowered her forecast for the Vancouver-based company through fiscal 2026 in response to the company’s updated guidance.
Ms. Owens does not have a specified target for Lululemon shares. The average on the Street is US$218.63, according to LSEG data.
=====
Desjardins Securities analyst Benoit Poirier does not see MDA Space Ltd.’s (MDA-T) loss of a $1.8-billion satellite contract with U.S. telecommunications company EchoStar Corp. as a reflection of the company’s performance, the potential of its Aurora product or as “a signal of reduced global competitiveness.”
“The decision appears politically driven, with EchoStar now being viewed as a public proxy for SpaceX,” he said in a client note. “The satellite market is large and diverse and will not be ‘winner takes all’, making a Starlink monopoly unlikely. Many investors regret missing MDA’s rally. We see [Monday’s] pullback as a compelling entry point, with long-term industry tailwinds intact.”
Shares of the Brampton, Ont.-based fell over 25 per cent following the premarket announcement, which follows a “sudden change” to EchoStar’s business strategy and a U.S. regulatory spat involving Elon Musk’s SpaceX.
“Management reiterated on the call that the constellation pipeline remains steady at $13-bilion, with expectations for another award within the next 12 months (potentially D2D or broadband),” said Mr. Poirier. “It is actively quoting with prospective customers, and the EchoStar work has not gone to waste. It helped MDA accelerate development of a 5G-compliant satellite design that enhances its original Aurora D2D offering.”
“MDA confirmed it will be fully compensated for all costs, fees and liabilities incurred under the contract to date. The termination is expected to be financially neutral, with a small margin mentioned on the call, though likely immaterial given the contract was signed only weeks ago. A prolonged legal dispute is not anticipated and funds are expected by year-end.”
After removing the EchoStar contribution from his financial forecast and lowering his valuation multiples to account for “the now increased uncertainty on outer-year estimates,” Mr. Poirier dropped his target for MDA shares to $43 from $56, reiterating a “buy” recommendation. The average target on the Street is $43.86.
Other analysts making target revisions include:
* RBC Capital Markets’ Ken Herbert to $45 from $53 with an “outperform” rating.
“We can appreciate the additional concern that investors now have on out year backlog and growth (stock down 24 per cent Monday),” he said. “However, we continue to believe that MDA is well-positioned to convert some of its $13-billion pipeline. We believe incremental satellite awards represents the largest potential catalyst for the stock, and we continue to view MDA as a core holding for space exposure.”
* Scotia Capital’s Konark Gupta to $43 from $55 with a “sector outperform” rating.
“We are more surprised by the cancellation than we were by the contract award, but we think, in a way, it is better that EchoStar pulled the plug at early stages rather than midway because MDA had not deployed too many resources for this contract and the company can now better focus on other growth opportunities in the pipeline to utilize its growing satellite making capacity,” said Mr. Gupta. “Until the next major win (or a speculation), we believe the stock could remain in the penalty box as the market assesses the risk profile of the existing backlog, particularly U.S. contracts such as Globalstar, and management’s growth ambitions. Investors are growing concerned about MDA’s opportunity set in the U.S. in light of the current geopolitical environment and space infrastructure spending by SpaceX and Amazon, but we note the adjusted $17-billion-plus pipeline is spread across hundreds of programs and well diversified by region. Thus, we still remain optimistic that MDA can win at least one more large constellation order within the next 12 months to materially replace EchoStar over 2026-2029.”
* BMO’s Thanos Moschopoulos to $40 from $53 with an “outperform” rating.
“We view this as a highly unusual event and don’t see cancelation risk associated with the other large contracts in MDA’s backlog,” he said.
“We believe that MDA continues to have a strong pipeline of commercial and government opportunities, and that potential contract awards over the next twelve months should drive meaningful upside to the share price.”
=====
Scotia Capital analyst Jonathan Goldman thinks Dexterra Group Inc. (DXT-T) is “a much cleaner story with a more consistent EBITDA and FCF profile” following last year’s divestiture of its Modular Solutions (MS) business, while it “also pivots the narrative back to capital allocation.”
“While the dividend consumes a large portion of FCF (more than 40 per cent), we see room for consistent allocation to M&A,” he said. “That said, with shares up nearly 50 per cent in the LTM [last 12 months] and trading at 6.1 times EV/EBITDA on our 2026E versus our valuation multiple of 6.75 times, we think a good portion of that optionality is already priced in. With leverage near the high end of the comfort range following a recent flurry of larger deals, we think the near-term focus will be on integration and de-leveraging.”
While his third-quarter projections sit ahead of the Street’s expectations, Mr. Goldman resumed coverage of the Toronto-based company with a “sector perform” recommendation, emphasizing its organic growth target of 5-7 per cent per year is “a show-me story given actual results of 1.3 per cent in 2024 and 1.6 per cent year-to-date.”
“MS divestiture supports more consistent EBITDA/FCF and allocation to M&A,” he added. “MS was loss making in 2022 and 2023 due to cost inflation on fixed-price contracts and delays on affordable housing projects. It was also more capital intensive relative to Dexterra’s SS business. The company redeployed future proceeds from the divestiture to acquire CMI Management Inc. (1Q24), Right Choice (3Q25), and a 40-per-cent interest in Pleasant Valley Corporation (PVC; 3Q25), a large distributed-service platform, as it doubles down on its efforts to expand Integrated Facilities Management (IFM) in the United States. The company expects normalized FCF conversion to exceed 50 per cent annually.”
Mr. Goldman set a target of $11.50 per share. The current average target on the Street is $12.48.
“We value DXT at 6.75 times EV/EBITDA on our 2026E using an SoTP and a premium for M&A,“ he said. ”The company realigned its segments last year into SS and ABS. While the re-segmentation highlighted the capital-light nature of SS, the business still has a significant cyclical component in the form of its legacy workforce-accommodations business, which serves mining, oil and gas, and infrastructure. We estimate the ‘Camps’ business accounted for 40 per cent of EBITDA in 2024. The company expects leverage to be less than 1.75 times exiting 2025, well below the comfort range of 2 times to 2.5 times. But, as with the acquisition of PVC for 10.4 times, the company would likely have to pay up for IFM businesses, which limits value accretion. Dexterra is well positioned to capitalize on nation-building projects, which could support higher growth and valuation. However, we think it’s too early to underwrite that possibility.”
=====
National Bank Financial analyst Mohamed Sidibé raised his valuation for New Gold Inc. (NGD-T) to reflect increasingly bullish gold price conditions and upside from K-Zone at its New Afton mine, which the company said has more than double in size.
“We have updated our model to reflect the positive exploration update provided by New Gold [Monday] morning , as well as the $5-million increase in exploration budget in 2025,” he explained.
“The extension of mine life at New Afton is a key catalyst for New Gold that will derisk the growth profile and further strengthen its position as a Canadian focused gold producer with an attractive FCF profile. In our view, the early maiden resource at the K-Zone in 2026 could highlight an attractive resource profile with approximately 650koz at 0.70g/t Au and 482 mln lbs Cu at 0.75-per-cent Cu based on our early stage assessment based on provided drill results.”
Shares of the Toronto-based miner rose 3 per cent in response to the premarket update, including new underground drilling at New Afton that confirms “the width and continuity of previously reported mineralization at K-Zone and discovered additional copper-gold porphyry mineralization emanating from the roots of the zone, which have more than doubled the known extent of the system.”
That led Mr. Sidibé to emphasize his view that the Street is currently undervaluing New Afton’s potential (US$2.1-billion versus his US$2.5-billion estimate). He added “both currently do not strongly reflect upside value for the K-Zone.”
“We continue to view New Gold as well-positioned to benefit from a higher gold price environment, with near-term catalysts including the maiden K-Zone resource and Rainy River reserve conversion progress expected in early 2026,” he said. “The updated exploration results at New Afton, which more than doubled the known extent of the K-Zone system, reinforce our view that the asset has meaningful upside not yet reflected in current valuations.”
Reiterating his “outperform” rating, the analyst increased his target for New Gold shares to $9.50 from $8. The average is $7.94.
“We note that, while we model in gold prices of $3,500/oz until the end of 2026, our long-term gold price is still at $2,600/oz. Assuming current spot prices our NAV increases from $8.59 per share to $11.06 per share and our FCF over H2/25-2027 increases from $2,346-million to $2,583-million,” he added.
=====
Saturn Oil & Gas Inc. (SOIL-T) is “proactively advancing value,” according to National Bank Financial analyst Dan Payne.
“High efficiency development and a proactive focus on levering the impact of capital being deployed (pivoting to consolidation from development), continues to prioritize long-term shareholder value creation; SOIL is poised for 15-per-cent return profile (vs. peers 14 per cent), on a leverage of 1.4 times (vs. peers 0.7 times), while trading at a 2026 estimated EV/DACF of 2.2 times (vs. peers 2.7 times),” he said.
Shares of the Calgary-based company rose 3.6 per cent on Monday in response to the release of a corporate update before the bell, which Mr. Payne said highlighted “continued advancement of value throughout its asset base.” He said it displayed both “strength of organic development” and accretive consolidation.
“Owing to the success of its first half program, and with high-efficiency contributions across its asset base (spanning Bakken OHML, Spearfish, Cardium and Montney asset highlights), its organic development program outperformed expectations by approximately 20 per cent (or 1,000 boe/d),” he said. “That profile of performance supports its ability to high-grade its E&D program by almost that same factor, reducing budgeted spending by $50-60-million (now set at a mid-point of $255-million from prior $310-million).
“With that, and as it prioritizes the overall efficiency of capital being deployed, the company has reallocated those funds towards accretive acquisitions & tuck-ins, with $102.5-million recently being invested in the acquisition of 5.4 mboe/d (65-per-cent liquids) in SE Saskatchewan and Central Alberta. These assets were acquired at a superior capital efficiency than its outperforming base development budget (i.e., less than $16,000/boed), the value of which should be augmented through their synergistic nature with its existing core, and other complements including acquired infrastructure & augmented inventory (350 total locations up 15 per cent, and extending duration to over 20 years).”
Seeing Saturn continuing “to positively lever the impact of its capital being deployed by targeting highest accretion opportunities,” Mr. Payne raised his target for its shares to $4 from $3.50, keeping a “sector perform” rating. The average is $4.43.
Elsewhere, Ventum Financial’s Adam Gill raised his target to $4.25 from $4 with a “buy” rating.
=====
Reiterating its place on TD Cowen’s “Canada Best Ideas” list, analyst Michael Van Aelst sees Maple Leaf Foods Inc.’s (MFI-T) valuation rising with “solid” revenue growth and EBITDA expansion.
“An on-trend focus on protein coupled with industry-leading brands is driving above-average rev growth (relative to peers) for the CPG business,“ he said. ”Combined with substantial investments in scale and automated processing, this is expected to deliver higher margins, significant FCF generation, B/S deleveraging, and return of capital to shareholders...all while returning valuation to historical averages.“
In a note released Tuesday, Mr. Van Aelst acknowledged consumer health remains “challenged,” however he thinks Maple Leaf’s “true earnings power is now shining through following large investments in automation/efficiencies.”
“Combination of volume growth, pricing, improving consumer health and strengthening export markets seen providing incremental upside to EBITDA-percentage in the coming years (hit record in H1), resulting in much higher earnings, significant FCF generation and balance-sheet deleveraging,” he added. “MFI trades below historical averages and most peers despite stronger rev growth and second-lowest margin volatility among pork processors.
“What Is Underappreciated Or Misunderstood? 1) The fact that it was three “once in a century” events — COVID, ASF, Ukraine War — in a 5 year period that led to investors’ frustration and these issues are now largely behind it. 2) The strength of MFI’s brands and innovation pipeline. MFI has the #1 or #2 brands (e.g., the long-standing Schneider’s and Maple Leaf brands) in many of the categories in which it competes. The company has also been successful in taking leading positions with relatively newer brands (e.g., Mina Halal, Greenfield) in their respective categories in recent years, and we expect additional launches (targeting changing consumer preferences and demographics) to be a material contributor to revenue growth in the coming years."
Maintaining a “buy” rating for Maple Leaf shares, he raised his target to a high on the Street $47 from $42. The average is $39.64.
=====
In other analyst actions:
* Wells Fargo’s Jason Haas upgraded Thomson Reuters Corp. (TRI-N, TRI-T) to “overweight” from “equal weight” with a US$212 target, rising from US$187 and above the US$196.77 average on the Street.
* Following Monday’s announcement that it will sell its 50-per-cent stake in Argentina-based nitrogen producer Profertil for US$600-million, Jefferies’ Laurence Alexander cut his Nutrien Ltd. (NTR-N, NTR-T) target to US$60 from US$61 with a “hold” rating. The average is US$65.86.
* In reaction to its merger with London’s Anglo American PLC, Jefferies’ Christopher LaFemina hiked his target for Teck Resources Ltd. (TECK.B-T) to $74, exceeding the $58.93 average, from $60 with a “buy” rating.
See also: BMO analyst’s new top picks in the yield-heavy energy infrastructure sector