Inside the Market’s roundup of some of today’s key analyst actions
TD Cowen analyst Mario Mendonca thinks Bank of Nova Scotia (BNS-T) has made “significant strides” in improving its return on equity, however he’s “increasingly concerned” it will “lag its peers as investor focus shifts toward balance sheet growth.”
That prompted him to downgrade his rating to “hold” from “buy” previously, believing its current valuation “adequately reflects the bank’s improving ROE profile after recent re-rating.”
“Although we understand management’s emphasis on value over volume (client primacy), loan and deposit growth remain soft, particularly in Canadian commercial & personal lending, and international banking,” said Mr. Mendonca. “We had expected a faster, clearer inflection following optimization efforts, but recent trends suggest progress is slower than anticipated. And, importantly, we believe investors are increasingly more focused on balance sheet growth. As a result, we believe current valuation appropriately reflects BNS’s growth outlook.
“Recent earnings beats continue to be driven disproportionately by markets-related fee income and capital markets revenue. While supportive near term, these revenues are inherently more volatile and do not address the underlying concern around core banking momentum. As these tailwinds normalize, we expect the lack of B/S growth to become more visible.”
The analyst emphasized the “meaningful improvement” in Scotia’s ROE trajectory recently, “supported by better NIM, expense discipline, and capital markets contribution, with ROE tracking toward management’s 14-per-cent target by 2027.” However, he thinks those gains are now properly reflected in the stock’s recent performance and feels further incremental gains will “be harder to achieve” without a “clearer path to balance sheet growth.”
“While Mexico has been a long-term growth engine for the bank, we see potential for near-term weakness, particularly given macro uncertainty and evolving trade dynamics,” he added in a client note. “With investors turning their attention to B/S growth, and the bank speaking to a cautious approach to lending in LatAm given macro risks, this exposure may act as an additional overhang on sentiment given the group’s current valuation levels.”
Mr. Mendonca trimmed his target for Scotia shares by $1 to $111. The average target on the Street is $112.63, according to LSEG data.
“Scotia’s weak performance over the past 3-5 years, in our view, reflects the bank’s weak ROE performance, lagging balance sheet growth, weaker capital levels, and more recently,
the threat of tariffs on Canada and Mexico," he concluded. “We believe that the current discount sufficiently captures Scotia’s greater downside risk. Our HOLD rating reflects the bank’s weaker-than-expected balance sheet growth and greater exposure to macro uncertainty.”
In a concurrent report reviewing first-quarter 2026 earnings season in the Canadian bank sector, Mr. Mendonca said: “While PTPP growth should slow in ’26 (trading revenue, moderating NIM expansion), credit conditions and loan growth should improve later in the year. We believe fundamentals could support current multiples, but we are not calling for P/E expansion. Our key company calls coming out of Q1/26: a) buy RY at a modest premium and b) we are downgrading BNS to HOLD as investors prioritize B/S growth.”
His other ratings and unchanged targets are:
- Bank of Montreal (BM0-T) with a “buy” rating and $219 target. The average is $209.64.
- Canadian Imperial Bank of Commerce (CM-T) with a “buy” rating and $153 target. Average: $150.76.
- EQB Inc. (EQB-T) with a “buy” rating and $132 target. Average: $124.14.
- National Bank of Canada (NA-T) with a “hold” rating and $182 target. Average: $191.08.
- Royal Bank of Canada (RY-T) with a “buy” rating and $259 target. Average: $253.
Emphasized its “margin step-up continues” following stronger-than-anticipated fourth-quarter 2025 results, National Bank Financial analyst Maxim Sytchev raised his rating for Wajax Corp. (WJX-T) to “outperform” from “sector perform” previously, seeing the gap to is peers being “too wide.”
After the bell on Monday, the Mississauga-based industrial products and services provider reported revenue of $560-million and adjusted EBITDA of $44-million, exceeding both Mr. Sytchev’s estimates ($548-million and $39.3-million) and the Street’s expectations ($553-million and $42.5-million). Adjusted earnings per share of 69 cents topped the analyst’s projection by 9 cents and the consensus by a penny.
“Some numbers first; for 2027 we are projecting WJX ROIC [return on invested capital] to be at 12.8 per cent,” he said. “This compares to [Toromont and Finning] at 22.9 per cent/16.2 per cent, respectively; on a rolling NTM [next 12-month] basis (using street estimates), WJX P/E is now at 9.8 times vs. TIH/FTT at 29.4 times and 20.3 times. Growth – also part of the P/E valuation equation - is actually higher according to street estimates for NTM EPS growth with WJX at up 13 per cent year-over-year vs. FTT/TIH at up 11 per cent/up 10 per cent, respectively. This means that WJX generates half of TIH’s ROIC and 75 per cent of FTT’s, is growing faster than them on an EPS basis due to BS deleveraging, while valuation is imputing 1/3 and half of TIH/FTT’s P/E.
“The tricky thing about investing is that the reference group, of course, could be overvalued, making the WJX readthrough a moot point. One also needs to take into account that WJX brands (except for shovels) are not dominant brands outright and the lack of revenue growth in a relatively buoyant backdrop does raise some questions. At the same time, Hitachi is known to play a long game and the Deere production separation (bound to lead to a better product support tail in 15 to 24 months time) and the potential off-road truck opportunity could yield some better results down the road. In a nutshell, no, WJX does not neatly fit into a ‘copper play’ or ‘AI beta’ box, but with a low-teens FCF yield and still below 10 times P/E, perhaps the latter is sufficient to continue pushing the shares upwards. As a result, we are upgrading the shares.”
After raising his top-line forecast to account for a “slightly” higher revenue forecast for its Product Support segment, Mr. Sytchev hiked his target by $10 to a Street high of $37. The average is $29.
After gold and silver producers ended 2025 “on a strong note with record FCF supported by record metal prices and continued discipline,” precious metals equity analysts at TD Cowen are expecting margin expansion in the first quarter “despite some industry cost inflation creeping in” with gold now trading over US$1,200 per ounce higher than the $4,153 average in the fourth quarter.
In a client report released before the bell reviewing earnings season titled 2025 Was Only the Warm-up, the group, led by Steven Green, Wayne Lam and Derick Ma, predicted growing capital returns and consolidation should support improving valuation multiples in the year ahead.
“Q4 marked a strong close to the year for the sector, with 17 of 24 reporting companies exceeding EPS expectations. Production and costs were broadly in line with forecasts,” they said. “While several producers lifted 2026 cost guidance by 10–15 per cent year-over-year, roughly half of these revisions were the result of gold-linked royalty increases (and profit sharing agreements). Sustaining capital spending was also higher as companies try to take advantage of the significantly higher metals prices."
The analysts emphasized “elevated” gold prices continue to translate into record profitability, while free cash reached another record high.
“Gold averaged $4,153/oz in Q4, up 20 per cent quarter-over-quarter, while Q1-to-date pricing of $4,950/oz sits 19 per cent above the Q3 average,” they said. “AISC [all-in sustaining cost] margins expanded further to a record 58% in Q4, versus 54 per cent in Q3, and remain well above the five-year average of 37 per cent. Producers remain focused on balance sheet strength and shareholder returns, with a growing shift toward funding high-return organic growth projects.
“Reported FCF across our coverage totaled $8.6-billion in Q4, representing a 56 per cent quarter-over-quarter increase from $6.4-billion in Q3. Strong realized prices and capital discipline drove the step-up in cash generation, we expect this to continue to grow in 2026.”
The analysts have made a series of target price adjustments to stocks in their coverage universe. For senior producers, their changes are:
- Agnico Eagle Mines Ltd. (AEM-N/AEM-T, “buy”) to US$251 from US$241. The average is US$245.67.
- Kinross Gold Corp. (KGC-N/K-T, “buy”) to US$42 from US$43. Average: US$42.24.
- Newmont Corp. (NEM-N, “hold”) to US$118 from US$120. Average: US$145.59.
“Our top picks are Agnico-Eagle and Barrick among the large caps; IAMGOLD, Equinox, and K92 among the SMID caps,” they said. “Among the royalties our top pick is Royal Gold, and Coeur among the silvers.”
While attributing its recent underperformance to headline non-cash impairments, particularly at EnPower, TD Cowen analyst John Mould thinks Canadian Utilities Ltd.’s (CU-T) five-year capital plan “increases transparency” for investors.
“The $12-billion plan is set to drive a 5-year mid-year rate case CAGR [compound annual growth rate] of 6.9 per cent,” he said. “We note CU’s disclosure of a five-year rate base CAGR reflects a meaningful uplift from the company’s previous three-year 5.4-per-cent CAGR. CU does not provide EPS guidance, we believe the company aspires to deliver an EPS CAGR that is similar to its updated rate base growth rate.
“Annual allowed ROE updates, the potential for outperformance in the regulated segments, and equity needs would all factor into maintaining similar growth rates. CU’s equity
portion of the Yellowhead pipeline is fully funded; equity could be required in the outer years of CU’s capital plan but the company could utilize measures such as asset recycling to meet any funding gap."
The Calgary-based company reported adjusted earnings per share of 72 cents, which topped Mr. Mould’s projection by 1 cent but fell narrowly below the Street’s expectation by 1 cent. He attributed the 3-per-cent year-over-year decline to “anticipated headwinds previously identified by management (taxes, lower allowed ROE and ECM expiry).”
https://www.newswire.ca/news-releases/canadian-utilities-reports-2025-earnings-898635805.html
“Higher year-over-year results in Natural Gas Distribution due to growth in rate base and cost efficiencies mitigated softer overall Energy Systems results,” he noted.
Calling the release “positive” due to the outlook for the future and emphasizing its $255-million Central East Transfer-Out project (CETO) remains on time and on budget, Mr. Mould raised his target for its shares to $47 from $41, maintaining a “hold” rating. The average is $47.40.
“Our HOLD recommendation reflects what we view to be a fair trading valuation for Canadian
Utilities given its attributes and growth outlook," he said. “This is driven by CU’s regulated utility asset base mix (46-per-cent natural gas) and CU’s more muted growth outlook relative to peers. This is somewhat offset by a solid balance sheet and substantial exposure to Alberta (the centre of oil & gas production in Canada). Canadian Utilities trades at a discount to both the large-cap Canadian average and U.S. multi & electric utilities, and at a modest discount to its long-term average. We believe that Canadian Utilities’ valuation discount appropriately reflects its growth outlook, asset base (46-per-cent natural gas & single market concentration) and the company’s dual-class share structure (unique in the North American utility sector and a relative headwind on governance.”
In a separate client report, Mr. Mould raised his target for Atco Ltd. (ACO.X-T), which is Canadian Utilities’ parent, to $67 from $57 with a “hold” rating. The average is $68.50.
“ATCO’s largest investment is its 53-per-cent interest in Canadian Utilities (CU, Hold),” he explained. “Canadian Utilities has a regulated utility asset base that is 46-per-cent natural gas (lower scorecard ranking vs. electric utilities), and a more muted growth outlook relative to utility peers. This is somewhat offset by CU’s solid balance sheet and substantial exposure to Alberta (the centre of oil and gas production in Canada). ATCO’s other businesses are focused on essential services; Structures’ focus on workforce housing, residential housing, and space rental products (through manufacturing, sales, and leasing) offers investors diverse exposure to broader economic activity levels. ATCO trades at a discount to its historical average; we believe its current valuation appropriately reflects its utility asset base, growth outlook for its non-utility businesses, and holding company structure.”
With shares of Evertz Technologies Ltd. (ET-T) having rallied 30 per cent since it reported its quarterly results on Dec. 10 “on investor enthusiasm regarding the company’s emerging traction in the defence market,” RBC Dominion Securities analyst Paul Treiber thinks the market will need to see signs of stronger organic growth for the valuation re-rating to be sustained.
“On January 15, Evertz presented at the 2026 RBC Capital Markets Canadian Aerospace & Defence Symposium,” he said. “Evertz is benefitting from the growing need for real-time video and high-bandwidth data management within defence agencies. We believe increased sales of Evertz’s video broadcast equipment is a long-term tailwind to Evertz’s organic growth and may help offset lower sales at Evertz’s traditional broadcast customers.”
Ahead of the release of its third-quarter results on Wednesday, Mr. Treiber is projecting revenue for the Toronto-based company, which develops software and hardware products and services for the broadcast industry, of $142-million, up 4 per cent year-over-year and above the Street’s projection of $139-million. Pointing to increased investments, he estimates adjusted EBITDA will fall 6 per cent year-over-year to $28-million, matching the consensus, while adjusted earnings per share will slid 10 per cent to 23 cents, a penny under his peers.
“Our model calls for Q3 gross margin of 59.0 per cent, which is at the upper end of the company’s targeted 56-60-per-cent gross margin range,” said Mr. Treiber. “Evertz is benefitting from an increasing mix of higher-margin software/services revenue. Even so, last quarter, gross margins compressed 65 basis points year-over-year due to a higher mix of International revenue and increased discounting. If discounting and international mix remains elevated, gross margins may fall slightly short of our estimate.”
Noting its peers have reported “solid” results and “the broader ecosystem appears stable,” he raised his target for Evertz shares to $15 from $13, keeping a “sector perform” rating. The average is $14.
“Evertz’s valuation is re-rating upwards. Evertz is trading at 18 times NTM [next 12-month] P/E, which is 8 per cent above peers (excluding outlier Haivision) and 32 per cent above Evertz’s 10-year historical average (14 times),” he said. “We believe Evertz’s valuation re-rating reflects increasing investor visibility to the company’s emerging defence business.”
Stifel analyst Cole McGill is “constructive” on Hudbay Minerals Inc.’s (HBM-T) US$1.48-billion deal to buy the remaining shares in Arizona Sonoran Copper Co. (ASCU-T), pointing to the “combined potential between Cactus and Copper World (Phase I) to create a leading Arizona based platform with potential for more than 190 ktpa [thousand tonnes per annum] copper.”
Accordingly, he moved Arizona Sonoran to “hold” from “buy” in a client note titled Porphyries are in Vogue, Who’s Next?
“We see the acquisition implying 0.79 times P/NAV (0.84 times consensus), and recommend Koryx Copper (KRY-X) for similar, cycled development exposure (PEA stage, Namibia, updated MRE imminent, trading at 0.57 times [fully funded, risked] or 0.29 times [unfunded, risked ‘takeout’ NAVPS of $12.73), alongside ATEX Resources (ATX-T) for exploration exposure (MRE downside protection @ $3.78/sh + seasonal best time for exploration exposure given breccia [B3B?] accretion amidst +25km drill program).
He raised his target for Arizona Sonoran shares to $9.35 from $4 to reflect the offer. The average on the Street is $7.92.
Elsewhere, Canaccord Genuity’s Dalton Baretto lowered Arizona Sonoran to “hold” from “buy” with a $8.75 target, down from $8, while he raised his Hudbay target to $41 from $39 with a “buy” rating.
“We like this deal for HBM. We see a number of synergies between Copper World and Cactus, including: Deploying the engineering and construction teams from Copper World to Cactus; Regional synergies, including logistics, procurement, government relations, community relations, taxes, etc.; Using H2SO4 produced by the Copper World Albion leach facility at Cactus, thereby subsidizing one of the most important cost inputs to operations,” he said.
“In addition, as mentioned above, we see this transaction as highly accretive to HBM.”
Ventum Financial analyst Adam Gill expects Saturn Oil & Gas Inc. (SOIL-T) to “deliver a very decent quarter, coming in at the high end of the Q4/25 production guidance range, and also provide a funds flow beat.”
“That said, we believe the real upside in the stock will come from the continued positive re-rating we are seeing in the sector, which would be compounded by continued oil price momentum,” he added.
“We believe the team has been executing well, and our biggest focus is on the stock’s potential to continue to re-rate, which is enhanced if oil prices continue to improve (sustainable improvements post the Iran issues).”
For the Calgary-based light oil-weighted producer’s fourth-quarter 2025 results, which will be released on March 11 after the bell, Mr. Gill is forecasting production of 43,000 barrels of oil equivalent per day, narrowly above the consensus of 42,800 boe/d and at the high end of its guidance range (42,000-43,000 boe/d). He sees funds per share of 57 cents, exceed the Street’s projection by 4 cents due to strong volumes.
Maintaining his “buy” rating for Saturn shares, Mr. Gill bumped his target to $4.50 from $4.25. The average is $5.50.
“We are seeing solid improvement in valuations in the E&P space, given the balance sheet and FCF distribution improvements achieved over the past few years,” he said.
“With debt decreasing and leverage improving, we believe that Saturn will continue to see multiple expansion. If the multiple increases to 3.5 times or 4.0 times, still behind peers at ~6.0 times, this would drive substantial upside in the stock. At 3.5 times and a US$70/Bbl WTI assumption, it would imply a $6.42 share price for 85-per-cent upside, and at 4.0 times, it would imply a $7.81 share price for 124-per-cent upside. We believe an 0.5-1.0 point multiple expansion is easily achievable with an improving balance sheet. In addition, if oil prices have a sustained move higher as the OPEC+ group drains spare capacity and U.S. production continues to roll over, Saturn would have ample torque to move substantially higher.”
In other analyst actions:
* Following Monday’s announcement that its Diablillos silver-gold project has been approved for inclusion under Argentina’s Large Investment Incentive Regime, National Bank’s Don DeMarco raised his target for Toronto-based AbraSilver Resource Corp. (ABRA-X) target to $20 from $16.75 with an “outperform” rating, while Scotia’s Eric Winmill hiked his target to $18 from $13.50 with a “sector outperform rating. The average is $13.52.
“Diablillos fully funded through the Definitive Feasibility Study, 2026 exploration and early development activities, from liquidity of $76-million as at Q3/25,“ Mr. DeMarco said. ”The DFS to provide an updated development capex estimate versus the $544-million in the Pre-Feasibility Study (Dec. 2024). Company messaging is for overall capex to remain unchanged vs. PFS as cost savings from optimizations offset inflation. 60 per cent costs local, with local inflation stabilizing to 3 per cent per month. Also working on securing a power purchase agreement with Central Puerto at $0.06-0.10/kwh with readthrough to savings of $20-million/yr vs. using diesel generation. Capex required to build substation offsets solar plant proposed in PFS. Considering contractor mining potential for waste movement, which can reduce fleet size and upfront capex $56-million, although similar on a net present cost basis.”
* Canaccord Genuity’s Matthew Lee raised his target for shares of Black Diamond Group Ltd. (BDI-T) to $20 from $17 with a “buy” rating. The average is $21.
“Black Diamond reported a solid Q4 last week with EBITDA and rental revenues above consensus as the firm benefited from the mid-quarter closing of its Royal Camp acquisition,” said Mr. Lee. “Our key takeaway from the quarter was the firm’s update on its nation-building bidding activity, which appears to have ramped up throughout the quarter. In our view, BDI’s WFS [Workforce Solution] business is well-positioned to support Canada-wide projects with the addition of Royal Camp’s catering and the combined fleet (BDI owns 20 per cent of Canadian units), strengthening the firm’s standing. On the MSS side, management noted that rental rate growth would likely settle into inflation-like levels, which indicates to us that the fleet has largely caught up with market rates. As such, we expect that MSS [Modular Space Solution] is stepping into a phase of fleet expansion driven growth, which reduces our revenue growth estimates in the segment from 6 per cent to 5 per cent year-over-year in F26. Given the potential tailwinds from infrastructure projects and relatively low current utilization, we have opted to increase our WFS multiple from 7.5 times to 9 times, reflecting our view that the segment has shifted from a source of funds to a legitimate growth engine.”
* In response to its long-term agreement to supply uranium to the Government of India’s Department of Atomic Energy, Raymond James’ Brian MacArthur increased his Cameco Corp. (CCO-T) target to $180 from $175 with an “outperform” rating. The average is $167.13.
“CCO provides investors with lower-risk exposure to the uranium market given its diversification of sources,” said Mr. MacArthur. “These sources are supported by a portfolio of long-term contracts that provide some downside protection in periods of depressed spot uranium prices, while maintaining optionality to higher uranium prices. In addition, CCO has multiple operations curtailed that could be brought back should uranium prices increase. CCO is also vertically integrated with Fuel Services, GLE, and Westinghouse. Although the 2021 tax court decision applies only to the 2003, 2005, and 2006 tax years, we view it as a positive for CCO given we believe it could be relevant in determining the outcome for other years and reduces risk related to the CRA dispute.”
* Seeing its “growth thesis intact” following the release of its fourth-quarter 2025 results, Desjardins Securities’ Bryce Adams raised his target for shares of K92 Mining Inc. (KNT-T) to $38.50 from $35 with a “buy” rating. The average is $32.86.
* BofA Securities’ Lorraine Hutchinson lowered her Lululemon Athletica Inc. (LULU-Q) target to US$200 from US$220 with a “neutral” rating. The average is US$210.53.
* Barclays’ Benjamin Theurer increased his Nutrien Ltd. (NTR-N, NTR-T) target to US$80 from US$70, keeping an “equal-weight” rating. The average is US$73.08.
“The U.S./Israel strikes on Iran have potential to bolster nitrogen pricing for at least 1H26, providing further upside for North American producers, given the strain on LNG in the EU. Potash should be fairly stable while Phosphate will face higher ammonia input costs. We stay OW [overweight] CF and downgrade MOS to EW,” he said.
* Desjardins Securities’ Doug Young moved his Power Corp. of Canada (POW-T) to $79 from $78 with a “buy” rating to “reflect a higher consensus target price for IGM.” The average is $73.50.