Inside the Market’s roundup of some of today’s key analyst actions
After “significantly” reducing his 2026 estimates to reflect fuel headwinds, Scotia Capital analyst Konark Gupta downgraded Air Canada (AC-T) to a “sector perform” rating from “sector outperform” on Tuesday.
“Although valuation remains attractive, in our view, we have grown more cautious due to the recent surge in fuel price, which could negatively impact margins and maintain pressure on the stock at least in the short term,” he said in a client report released before the bell. “There is potential for management to reduce or even suspend guidance, depending on the oil price trajectory from here. AC, like most airlines, is quite sensitive to fuel price, although the math for earnings sensitivity is not as simple as that for cost sensitivity.
“We have updated our 2026 estimates based on our deep-dive analysis of historical correlations between AC’s realized fuel prices and yields. Further adjustments, up or down, could be required in due course as oil prices and cracks are witnessing significant day-to-day volatility. If fuel price remains higher for longer, there could be potential demand destruction on top of cost headwinds, given the discretionary nature of air travel in most cases. We see $13/sh (our bear case) or lower as a defensive entry point, assuming fuel price retreats over time.”
Leaning on “learnings from the past,” Mr. Gupta now has an all-in fuel price assumption of $1.16 per litre for 2026, a rise of 24 per cent year-over-year. That led him to reduce his 2026 EBITDA estimate by 22 per cent to $2.7-billion, which sits 24 per cent below guidance.
“Our updated assumptions result in a similar outcome for 2026 as historical periods , especially 2008, when AC’s realized jet fuel prices shot up 20-40 per cent year-over-year,” he explained. “In those years (2008, 2011, and 2018), EBITDA margin compressed by 260 basis points on average as higher fuel costs were partially offset by higher yields, which, in our estimation, mitigated the fuel price impact by 50 per cent (we refer to this 50 per cent as ‘fuel cost pass-through’). Without yield or non-fuel cost mitigation, the financial impact of higher fuel prices would be detrimental given AC consumes 5.0 billion litres of fuel annually, which means every US$1/bbl increase drives fuel costs higher by $45-million (1.4 per cent of 2025 EBITDA).
“Fuel prices also increased more than 20 per cent in 2021 and 2022, but those periods are irrelevant due to the effects of post-pandemic recovery. If fuel price remains higher for longer, which is our base case for 2026, we would expect AC to raise fares and/or ancillary fees, realize voluntary or automatic surcharges, reduce capacity (especially on lower-margin routes), and face reduced competition as weaker/smaller players either reign in capacity or cease operations.”
With his lower earnings expectations, Mr. Gupta dropped his target for Air Canada shares to a low on the Street of $21 from $27. The average target is $25.20, according to LSEG data.
Ventum Capital Markets analyst Rob Goff hiked his valuation for Calian Group Ltd. (CGY-T), citing the expectation for “a further, positive sector-driven re-rating as defence spending tailwinds improve long-term demand visibility and financial momentum builds” and seeing forecasts “leave upside to organic outperformance.”
“We view Calian as a high-quality company, exceptionally well-positioned to leverage the paradigm shift in the Canadian Government’s commitment to building a vibrant self-contained defence supply ecosystem,” he said. “We have been bullish as the shares have regained 38 per cent over the past three months with investors adopting an increasingly bullish outlook on defence spending and two consecutive quarterly beats.”
In a client note, Mr. Goff said investors are likely to revalue shares of the Ottawa-based company “by building organic momentum where inorganic growth offers supplementary returns.”
“The recently announced Defence Industrial Strategy (DIS) established a build-partner-buy framework and an aggressive $82-billion defence reinvestment budget with a build-partner-buy mandate that targets Canadian fulfillment at 70 per cent of purchases,” he said. The target growth of 50 per cent for military exports leverages the growth potential for Canadian firms.
“Calian’s longstanding contracts with the Canadian and NATO governments, coupled with its full domestic manufacturing and software capabilities underpinning comprehensive solutions, support its strong candidacy to be nominated a Canadian Defense Champion (government framework expected to be released by Summer 2026). As such, it would receive additional government contracts, access to funding, and support for domestic and NATO contracts. We see the Government’s aggressive export targets leveraging Canada’s strong standing within NATO, where the middle-power theme represents a prospective tailwind for Canadian military exports.”
Mr. Goff also thinks Calian is now “directly aligned with core sovereign capability priorities, including digital systems, in-service support, space, specialized manufacturing, as well as training & simulation.”
Believing current analysts’ forecasts, including his own, “leave upside as the year progresses” and touting “the potential for more significant F2027 outperformance,” Mr. Goff hiked his target by $10 to a high on Street of $94, keeping a “buy” rating. The average is $82.24.
“We feel comfortable with our move given the potential upside in our current forecasts and the sustainability of longer term growth supported by the defense budget commitments,” he noted.
National Bank Financial analyst Richard Tse is "encouraged" by Constellation Software Inc.’s (CSU-T) in-line fourth-quarter 2025 financial results, particularly on capital deployment, however, pointing to the “volatile software environment,” he thinks the current risk-to-reward for its shares “looks balanced at the moment.”
Constellation ‘well-positioned’ to tackle AI disruption in software industry, company president says
On Monday, the Toronto-based company reported revenue of $3.17-billion for the quarter, representing 18-per-cent year-over-year growth and an organic gain of 2 per cent while meeting the expectations of Mr. Tse ($3.13-billion) and the Street ($3.14-billion). Adjusted earnings per share of $25.01 fell short of estimates ($29.99 and $28.02, respectively) due to a IRGA/TSS membership liability revaluation charge
“The most notable variable to valuing Constellation in the short term ... is the pace of capital deployment,” the analyst said in a note titled Berkshire-Like Move. “While the pace of capital deployment has slowed in recent years following an outsized FY23 ($2.6-billion), deploying $1.8-billion and $1.6-billion in FY24 and FY25, respectively, there are some signs of an inflection higher with a solid Q4’25 and Q1’26 year-to-date on capital deployment.
“For FY26, we estimate a target of $2.4-billion in capital deployment for Constellation will be required to continue a 15-per-cent-plus growth rate; we’d note that we’ve made some subtle adjustments to our assumptions to better account for FY25 capital deployed and its impact on future revenue. We employ relatively conservative assumptions around organic growth (2 per cent) and an acquisition multiple of $1.7 times. Given Constellation’s commitments announced subsequent to Q4’25, the Company has already achieved 33 per cent of our FY26 capital deployment target pending those commitments closing.”
Mr. Tse emphasized the potential gains from Constellation’s new Permanent Engaged Minority Shareholder (PEMS) strategy, which involves capital deployment through investments in businesses as long-term partners , believing it will expand is opportunities moving forward.
“With the help of former President Mark Leonard, Constellation is introducing an incremental driver of value - its Permanent Engaged Minority Shareholder (PEMS) strategy, where the Company will look to take ‘active’ stakes in public investments,” he noted. “A recent example of this would be Constellation’s 13-per-cent stake in travel technology company Sabre Corporation (SABR-NASDAQ, Not Rated), its first meaningful expression of this strategy. Constellation communicated that it views itself as a long-term shareholder (i.e., not a trader) while leaning in on its respect for governance while hoping to have an influence in value creation.
“On that, Sabre appointed Constellation’s Vela Software CEO Damian McKay to its Board last week. Constellation views these minority (public) stakes as a more meaningful capital deployment path going forward. That said, the move does change the growth profile of the Company and with a limited track record around the Company’s ability to ‘pick stocks’, we think it’s too early to give full valuation credit for that potential. Further, these investments will not be consolidated into the Company’s core financials and instead contribute to Other Comprehensive Income, which means we may need to take a different approach to valuing this new growth vector.”
Seeing “considerable dry powder to deploy capital,” Mr. Tse raised his target for the company’s shares to $3,400 from $3,200 to “reflect a pickup in capital deployment” with an unchanged “sector perform” rating. The average on the Street is $4,053.60.
Elsewhere, other analysts making revisions include:
* TD Cowen’s David Kwan to $4,100 from $4,000 with a “buy” rating.
“We think M&A activity could materially increase (more than $800-million in closed/pending deals Q1-todate), aided by the decline in public valuations, with possible further strength should private valuations also decline,” said Mr. Kwan. “With more than $4-billion in cash/credit and strong FCF (more than $2-billion), we expect CSU to continue compounding capital at high rates while remaining relatively well-positioned to address AI risks and opportunities.”
* Raymond James’ Steven Li to $3,700 from $4,300 with a “market perform” rating.
“Ended the year well with 2-per-cent organic growth in 4Q25 (F2025: 2.8 per cent, consistent with prior years). M&A is off to a strong start in Q1. Subsequent to quarter end, CSU has already completed or has open commitments to acquire $707-million (LY: $94-million),” said Mr. Li.
* CIBC’s Stephanie Price to $4,610 from $4,668 with an “outperformer” rating.
“Constellation hosted its first earnings call in several years with Q4 results. The focus of the call was AI risks and opportunities, along with the capital deployment environment. To date, CSU has seen no impact from AI disruption, with the company noting several AI use cases that are improving internal efficiency. CSU is working with customers to build out external AI use cases, noting its differentiator is its deep understanding of vertical market software and customer workflows. The company has made slight modifications to its M&A model, weighting AI risks/opportunities and focusing on public company investments given the recent downturn in those markets. While we acknowledge the potential for AI impacts, we view the depth of the sell-off as overdone. We see Constellation as attractively valued, trading at a 2-times discount to the S&P Software Index despite historically trading roughly in line,” said Ms. Price.
After Aecon Group Inc. (ARE-T) ended fiscal 2025 “on a high note” with stronger-than-anticipated fourth-quarter results, driven by the performance of its nuclear segment, RBC Dominion Securities analyst Sabahat Khan thinks its “near-record $10.7-billion backlog (with additional awards following quarter-end) provides a strong outlook for top line growth in 2026 and beyond.”
“Q4 Adj. EBITDA was well ahead of RBC/consensus forecasts (6.3-per-cent margin, or 7.1 per cent excluding the legacy projects), with Aecon recognizing an operating loss of $6.1-million from the remaining legacy fixedprice projects (5.3 per cent of consolidated revenue) vs. negative $35.8-million recognized in Q4/24,” he added. “The remaining backlog associated with these projects is $61-million (vs. $53-million in Q3/25), with Aecon reaching substantial completion on 2 projects during the quarter (final project expected to reach substantial completion in H1/26). Aecon has now recognized cumulative losses of $130-million from these projects, and final recoveries vs. provision assumptions could impact accounting results in the future, in our view.
“The standout this quarter was again nuclear (revenue up $142-million year-over-year), which continues to grow as a proportion of Aecon’s business (now the largest business line at 29 per cent of TTM [trailing 12-month] revenue; discussed further below). Looking ahead, we believe Aecon remains well-positioned to participate in the supportive tailwinds across its various end-markets (particularly nuclear and utilities, though the infrastructure spending backdrop in Canada appears to be improving as well).”
Mr. Khan noted the Toronto-based construction company’s participation in the revival of nuclear power already spans refurbishment, including four reactors and turbine replacements at Pickering, the Darlington Small Modular Reactor (SMR) project in Ontario and various projects south of the border.
“Looking ahead, we believe Aecon is also well-positioned for potential new-build announcements in Canada (and beyond) over the coming quarters given that the company’s nuclear expertise spans various technologies,” he said.
Keeping a “sector perform” rating for its shares, he raised his target to $41 from $30 based on a revised sum-of-the-parts valuation. The average target is $39.95.
“We believe our target valuation multiples fairly reflect Aecon’s earnings growth outlook, the scale and composition of its current backlog, and its current balance sheet,” he noted.
“We expect the meaningful budget commitments from the various levels of government across Canada to continue to benefit the E&C industry. This strong public sector demand, however, could be somewhat offset by a moderation in private sector demand, as rising interest rates and inflation have resulted in significant uncertainty for companies over the near-to-medium term.”
Elsewhere, others making revisions include:
* TD Cowen’s Michael Tupholme to $47 from $39 with a “buy” rating.
“Ex-legacy projects impact, Q4/25 adj. EBITDA was 5 per cent above consensus, while revenue growth was robust (up 20 per cent year-over-year),” said Mr. Tupholme. “Legacy project risk continues to fade, with ARE’s final legacy project expected to reach substantial completion in H1/26. We continue to like ARE’s positioning and growth outlook, supported by a near-record backlog and exposure to strong end-markets, including nuclear and power.”
* Raymond James’ Frederic Bastien to $41 from $33 with a “market perform” rating.
“There were many positives from Aecon’s 4Q25 release pushing the share price 8 per cent higher in an otherwise ugly tape (the TSX lost 2 per cent on Friday). Core results came in modestly ahead of the Street’s estimate on explosive top-line growth, losses from legacy fixed-price jobs were kept to a minimum, and management’s outlook for 2026 called for ongoing revenue growth and gradually improving margins. Also helping in a big way is positive sentiment around the buildout of AI, trade and defence infrastructure, which promises to keep ARE’s army of skilled trades busy well into the future. That said, we feel much of this momentum is appropriately reflected in the stock’s valuation,” said Mr. Bastien.
While its fourth-quarter 2025 fell in line with expectations, Desjardins Securities analyst Kyle Stanley made a “small reset” to his expectations for Nexus Industrial REIT (NXR.UN-T), reducing his earnings outlook for 2026 by 5 per cent based on’ “small setbacks on the re-leasing and disposition/deleveraging front.”
“That said, we believe NXR continues to offer attractive relative value (9.2 times 2027 estimated FFO vs long-term average at 11.0 times),” he added. “Should additional disposition activity and portfolio stabilization materialize ahead of expectations, we see incremental upside.”
On March 5, the Toronto-based REIT reported quarterly normalized funds from operations per unit of 19 cents, a decline of 2.8 per cent year-over-year while matching the estimates of both Mr. Stanley and the Street. Modestly lower-than-expected net operating income and higher interest expenses offset better-than-expected expense control and tenant improvement amortization.
“After losing the prospective tenant at the 29,000-square foot Calgary asset, we’ve pushed out our lease-up assumption for that space into 2H26,” the analyst said. “Additionally, after early leasing success at NXR’s recently developed industrial condo project in Calgary, we’ve extended our stabilization assumptions for the remaining space into 2H26. Lastly, we had previously assumed NXR’s 80-per-cent interest in the vacant Hamilton development asset would be sold in 1H26, with the proceeds being allocated to debt reduction. With the potential buyer backing away from the deal, we now assume a disposition in late 2026, which pushes the deleveraging event (less than 10 times D/ EBITDA) into early 2027.
“Although our SP NOI growth outlook for 2026 is largely unchanged at 5.5–6.0 per cent (consistent with mid-single-digit growth guidance), we’ve trimmed our 2026–27 estimated FFOPU by 4–5 per cent."
Maintaining his “buy” rating for Nexus units, Mr. Stanley reduced his target to $8.50, matching the average, from $9.
Acumen Capital analyst Jim Byrne is applauding ACT Energy Technologies Ltd.’s (ACX-T) US$47-million acquisition of the directional drilling services business of Oklahoma City-based SB Directional Services, seeing it continuing to add market share in the United States and “well positioned to deliver strong financial results and free cash flow in the coming quarters and years.”
“The acquisition adds scale to ACX’s U.S. operations and is expected to enhance margins through improved equipment utilization and technology deployment,” he said. “We view the transaction as positive for ACX, given the complementary operating footprint, added scale, and the opportunity to deploy its RSS fleet to drive synergies.
“As a reminder, ACX recently announced the acquisition of Stryker Directional Services.”
Maintaining his “buy” rating for Calgary-based ACT’s shares, Mr. Byrne raised his target to $9 from $7.50. The average is $7.25.
“ACX’s shares currently trade at 3.3 times on a 2026 EV/EBITDAS (current debt levels) which is below the peer group average,” he said. “At current levels the company’s shares are trading at a free cash flow yield of roughly 21 per cent on 2026 free cash flow.”
Elsewhere, others making changes include:
* Raymond James’ Michael Barth to $10.50 from $9.50 with an “outperform” rating.
“Our estimate of ACX market share in the U.S. has gone from 7 per cent in 1Q25 to 14 per cent following the acquisitions of both SB and Stryker,” said Mr. Barth. “We previously wrote ... that we wouldn’t be surprised if more deals like this continue to get done over the next few years, and that was just two months ago. With ACX’s market share somewhere in the 14-per-cent range, we believe there remains plenty of bite-sized directional drillers left in the U.S. to consolidate; for comparison the big 3 CAD directional drillers own 70-80 per cent of the market. For now, we continue to model no additional value for M&A.”
* ATB Cormark Capital Markets’ Tim Monachello to $8 from $7.25 with an “outperform” rating.
“ACX has materially bolstered its relatively sluggish U.S. market share with two accretive, scale enhancing acquisitions in the U.S. in 2026. Amid sharply higher crude prices, we believe downside risk to 2026 U.S. activity is significantly reduced, and upside potential could emerge if commodity price strength is sustained. ACX screens as among the highest growth (33-per-cent EBITDAS/share in 2026) companies in our coverage, and trades attractively at 3.1 times|2.3 times EV/EBITDAS with 13-per-cent|32-per-cent FCF yields,” said Mr. Monachello.
In other analyst actions:
* Citing its deleveraging efforts, BofA Securities’ Matthew Griffiths upgraded Telus Corp. (TU-N, T-T) to “buy” from “neutral” with a US$22 target, up from US$20. The average is US$15.12.
* With methanol prices surging with the conflict in Iran, Raymond James’ Steve Hansen raised his Methanex Corp. (MEOH-Q, MX-T) target to US$52 from US$45, reaffirming a “market perform” rating. The average is US$56.17.
“While we continue to admire Methanex’s attractive long-term fundamentals and solid FCF profile, we remain on the sidelines until greater geopolitical & macroeconomic clarity emerges,” Mr. Hansen said. “Despite this view, we have elected to bump our target to US$52.00 (vs. US$45.00 prior) in response to rolling our valuation forward to our 2027 estimate.”
* Ahead of Thursday’s post-market release of its fourth-quarter 2025 results, ATB Cormark Capital Markets’ Gavin Fairweather reduced his Vitalhub Corp. (VHI-T) target to $15 from $16.50 with an “outperform” rating. The average is $12.50.
“We think investors can look forward to another solid quarter of organic growth and a sequential margin improvement on the back of recent integration efforts. With the recent pullback in the stock, VHI is now trading at 12.0 times calendar 26 EBITDA/9.8 times C27 EBITDA (organic only), which we think is highly attractive given the long runway for above average compounding,” he said.