Inside the Market’s roundup of some of today’s key analyst actions
RBC Dominion Securities analyst Nelson Ng says he understands the strategic rationale for Boralex Inc. (BLX-T) to be acquired by Brookfield Asset Management Ltd. (BAM-T) and the Caisse de dépôt et placement du Québec for $3.8-billion, noting the Montreal-based renewable power producer would “eventually need to raise capital to fund its capital-intensive development pipeline, while Brookfield has access to scale capital and has a proven track record of leveraging its relationships with equipment suppliers, contractors and offtakers to deploy (and recycle) capital at attractive returns.”
“We also positively view La Caisse’s increased commitment as an existing Quebec-based shareholder that acquired Boralex’s peer (Innergex Renewable) in 2025,” he said in a client note.
Mr. Ng is now looking for further clarity on both the deal, which was announced in late March, and the approval process when Boralex reports its first-quarter results on May 14 ahead of a special shareholder meeting on June 4.
“The acquisition provides Boralex with access to Brookfield’s global renewables platform and capital to accelerate development of its development pipeline across Canada, the U.S., France, and the U.K. that totals over 8 GW,” he added. “Boralex previously planned to divest $900-million of assets and issue $500 million of equity over 2025-30 to partially fund growth. Due to Brookfield’s scale and network, we believe value creation opportunities can be realized through procurement optimization, enhanced energy marketing capabilities, transition to self-perform O&M, and establishing a disciplined asset recycling program.
“Strategic review process started in March 2025. Shortly after Boralex’s close peer, Innergex Renewable, agreed to be acquired by La Caisse in February 2025, Boralex commenced a strategic review process in March 2025 as highlighted in the Management Information Circular. Boralex received nine non-binding proposals in November 2025 and proceeded to second round bids with the four bidders with the highest proposed purchase prices.”
Reaffirming his “sector perform” rating for Boralex shares, Mr. Ng raised his target to $37.25 from $33 to reflect the sale price. The average is $37.
Following in-line first-quarter results and “a much improved activity outlook,” ATB Cormark Capital Markets analyst Tim Monachello raised his adjusted EBITDA estimates for Ensign Energy Services Inc. (ESI-T) by 14 per cent across his forecast horizon, leading him to upgrade its shares to an “outperform” rating from “sector perform” previously.
“ESI outlined a materially stronger H2/26 outlook for Canadian and U.S. activity, supported by contracted rig upgrades included in its $242-million capital program ($194-million previously),” he said. “Following 2025 market share losses, ESI is refocusing on Canada with five planned rig upgrades. ESI expects to run seven-to-eight more Canadian rigs year-over-year in H2/26, driving our forecast to 3,819 Q4/26 operating days (up 20 per cent year-over-year). In the U.S., ESI plans to upgrade five rigs in 2026 amid indications of increasing customer activity from both public and private E&Ps. This view is supported by ESI’s top U.S. customer, Diamondback Energy (FANG-N, not rated), which announced a 4-per-cent 2026 budget increase and plans to add two-to-three rigs in H2/26. Consequently, we forecast ESI’s U.S. activity to increase roughly 1 per cent year-over-year in H2/26. ESI is also rolling out 5-10-per-cent pricing increases on new contracts, supporting our estimate of 4-per-cent higher pricing by Q2/27e.
“Given this improved outlook, we increase our Canadian and U.S. revenue estimates by 18 per cent and 8 per cent, respectively, across our forecast horizon.”
In justifying his increasingly bullish view of the Calgary-based company, Mr. Monachello said he’s also forecasting “material” growth internationally through 2028.
“While ESI is seeing a more mixed outlook internationally, our analysis suggests that tailwinds in Australia (expecting to add two rigs in 2026), Venezuela (third rig being deployed in Q4/26), and Oman (added two rigs in 2026) are likely to more than offset headwinds in Kuwait (two rigs coming down) and Bahrain (one rig on standby) over the medium-term,” he said. “We forecast ESI will generate $312-million revenue from international operations in 2026e (up 8 per cent year-over-year, $321-million previously), $348-million in 2027e (up 12 per cent year-over-year, $341-million previously) based on a full year’s contribution of higher activity in Australia, Venezuela and Oman and modestly lower activity in Kuwait, and $388-million in 2028e (up 11 per cent year-over-year, $363-million previously) assuming ESI is able to reactivate its two rigs in Kuwait (one in H2/27e and one in H1/28e). ... We believe upside to our model exists in Venezuela, Australia, and Bahrain where Management is optimistic regarding potential additional rig deployments in late-2026 and/or 2027.”
With his new forecast, the analyst raised his target for Ensign shares to $5 from $4, which is the current average.
Seeing it “treading through an investment cycle,” TD Cowen analyst Wayne Lam lowered his rating for Artemis Gold (ARTG-X) to “hold” from “buy” previously.
“We view a more tempered near-term outlook for ARTG ahead as the company moves through an investment cycle with the concurrent Phase 1A and EP2 expansions,” he said. “While we remain confident in operational execution given strong performance on the Phase 1 construction and ramp up ahead of schedule, we view near-term growth being relatively priced in. We estimate relatively neutral free cash flow through 2027 driven by (1) capital outlay towards the expansions, (2) continued delivery on outstanding gold hedges through mid-2028, and (3) working capital needs via buildup of ongoing stockpile along with rising cost pressures on fuel/consumables. Additionally, we model modestly greater capital spend ahead with $200-million in additional growth capital guided this year related to items including water and tailings infrastructure projects to supplement the planned expansions and similar investment continuing through 2027-28 alongside the EP2 build.
“As such, we view a more tempered near-term outlook through this investment cycle with longer term fundamentals remaining intact in building towards increased production levels of 500 Koz/yr over the coming decade.”
Mr. Lam dropped his target for Artemis shares to $38 from $50. The average is $49.99.
“We continue to view the company constructively on a longer term basis given large-scale, low cost output in Canada given scarcity of producing assets in Tier I jurisdiction,” he concluded.
In a separate report, Mr. Lam upgraded Pan American Silver Corp. (PAAS-N, PAAS-T) to “buy” from “hold” previously, believing “recent updates have bolstered the outlook for the company ahead.”
“In our view, the updated PEA for the Skarn provides a refreshed look at the asset as a silver focused development project with lower technical risk given switch to longhole open stoping (vs sub-level caving previously) and reduced upfront capital of $1.9-billion (vs $2.8-billion),” he said. “We view this providing a pathway for PAAS to unlock value with visibility to 20 Moz Ag/yr from La Colorada. More importantly, the project also helps address prior concerns around shorter life reserve assets particularly around the Silver Segment while supporting the company’s silver revenue exposure.
“As such, we view a renewed outlook ahead for the asset portfolio; we model total upfront capex of $2.2-billion through 2032 and first production in early-2033, with the Skarn supplementing current mining of the high grade veins with output growing from 5.9 Moz Ag/yr from 2026-32 to 17.4 Moz Ag/yr at mine-site AISC of $17.70/oz AgEq from 2033-38.”
Mr. Lam also touted Pan American’s “enhanced” shareholder returns framework, which he sees “supported by strong FCF.”
“In our view, the recently announced Enhanced Shareholder Returns Framework reflects the robust free cash flow outlook, capable of simultaneously supporting phased growth spend on the Skarn project alongside the reinforced capital returns program,” he said. “Based on targeted returns of 35-40 per cent of annual attributable free cash flow with $101-million via dividend/buyback to date, we estimate total return of $638-million this year and $692--million in 2027 at spot prices. We view this as a signal of strength in the underlying business with a strong commitment to return of capital while maintaining the ability to concurrently fund growth initiatives.”
His target increased to US $72, exceeding the US$69.35 average, from US$67.
While he continues to slash debt, National Bank Financial analyst Travis Wood thinks Ovintiv Inc.’s (OVV-N, OVV-T) “hi-graded portfolio [is] starting to flex.”
After the bell on Monday, the Denver-based natural gas company, previously known as Encana and based in Canada, reported average production of 679,000 barrels of oil equivalent per day, up 9 per cent quarter-over-quarter and 15 per cent year-over-year and exceeding both Mr. Wood’s 670,000 barrel estimate and the Street’s expectation of 673,000 barrels. Cash flow per share of $4.62 (up 21 per cent and 20 per cent, respectively) was also ahead of projections ($3.93 and $4.24, respectively.)
“The delta to our estimates was driven by a combination of higher-than-expected volumes and realized prices, partially offset by higher-than-expected operating costs and royalties,” the analyst explained. “Total cash flow of $1.2-billion in the quarter was used to fund $605 million in capex and $85-million in base dividends, resulting in RFCF of $549 million (implying a payout ratio of 56 per cent). Production for the quarter trended near the high end of guidance across all products (Q1 guidance of 660-680 mboe/d), with the company providing Q2 guidance of 610-635 mboe/d (while reiterating its FY guidance of 620-645 mboe/d).”
In a client note released before the bell, Mr. Wood emphasized Ovintiv’s growing debt reduction initiative alongside its capital return commitment.
“With its Anadarko asset divested in early April (for proceeds of US$2.85-billion), OVV earmarked a significant portion of the funds towards the redemption of its US$700 million, 5.65-per-cent senior notes due in May 2028 (interest savings of $40-million annually on a go-forwardd basis),” he said. “The company exited the month of April with net debt of $3.3-billion, and we expect continuous focus on debt reduction moving forward. While we anticipate meaningful proportions of RFCF (incl. base dividend) returned to shareholders (largely via buybacks), the company has flagged that the proportion of shareholder returns likely trends closer to 50 per cent (range of 50-100 per cent) in this higher price environment.
“Despite the lower relative proportion, the company continues to make meaningful progress on buybacks, with 1.5 million shares ($84-million) bought back in Q1 and an incremental 1.7 million shares bought back in April ($96-million). Given the macro (and an improving egress picture for Waha over the next 12-24 months), we expect absolute returns will continue to ramp moving forward (April pace is a sign of things to come). On our estimates, we currently peg OVV to generate $1.3 billion of FCF over the balance of the year (likely some upside as it relates to U.S. natural gas realizations due to Waha basis improvements).”
After raising his 2026 and 2027 cash flow forecasts by 6 per cent and 3 per cent, respectively, “driven mainly by revised production mix,” Mr. Wood increased his target for Ovintiv shares to US$82 from US$80, reaffirming an “outperform” rating. The average is currently US$68.52.
Elsewhere, Scotia Capital’s Kevin Fisk raised his target to US$67 from US$65 with a “sector outperform” rating.
“OVV continues to be one of our top picks due to its 1) strong operational execution,including the realization of upside locations and capital synergies from recent Montneyacquisitions; 2) potential TSX composite inclusion; 3) a simplified portfolio; and 4)attractive valuation at strip with a 2026 DAFCF [debt-adjusted free cash flow]yield of 15 per cent the highest amongst ourcoverage. We believe OVV is a solid pick for investors looking for Montney exposure following ARX’s acquisition by SHEL. We have increased our target price to $67/sh toreflect the company’s strong performance,” said Mr. Fisk.
As Rogers Communications Inc. (RCI.B-T) prepares to begin the process to buy Kilmer Sports Inc.’s 25-per-cent stake in Maple Leaf Sports & Entertainment, National Bank Financial analyst Adam Shine see the potential for “material windfalls” as major North American sports league set the stage for future expansion.
“NBA recently voted to examine addition of two teams ahead of 2028-2029 season at a per team expansion fee of US$7-billion-US$10-billion,” he said. “MLB could add two teams at an expansion fee of US$2-billion in 2028, subject to how labour relations evolve in 2027. NHL hasn’t launched a process, but could add two to four teams over next several years at an expansion fee near or above US$2-billion.”
Rogers Communications offering buyouts to half its work force
In a report released Tuesday, Mr. Shine examined the “key next steps” over next 12 months for Rogers’ sports and media assets, including the acquisition from Kilmer. That process involves the appointment of three evaluators and two closest valuations from that group are averaged to determine what Rogers pays. The purchase is expected to close in the fourth quarter following by the combination of MLSE with the Blue Jays and Sportsnet ahead of a planned sale of a minority stake of the recapitalized platform, which is expected in the first half of 2027.
“Rogers recently said recapitalized S&M could be worth $25-billion-plus ... We use Forbes and Sportico estimates to get a range of value for related sports teams of $17-$18-billion to which we add $0.7-$1-billion for concerts business, $1-$2-billion for Sportsnet, and $1B-$2B for real estate development optionality. That gets us to roughly $20-$23-billion to which we could possibly apply a premium for platform bundling. We prefer this to a mark-up of team values when, for example, we consider San Diego Padres just getting sold for US$3.9-billion (up 26 per cent to last Forbes/Sportico estimate of US$3.1-billion).”
“Madison Square Garden Sports Corp. [MSGS:NYSE, not rated] includes teams but not venues and trades at 40-per-cent discount to NAV. While Rogers isn’t looking to spin out S&M or have a tracking stock, we don’t believe a similarly sized discount is warranted given there will have been 3 monetization events 3Q24-1H27 related to the sports assets which enjoy full vertical integration and will be leveraged by the telecom businesses. We’re using 25 per cent.”
Maintaining his “outperform” rating for Rogers shares, Mr. Shine raised his target by $1 to $63. The average on the Street is $59.52.
“Target moves up as we now include in our forecast 4Q outflow of $3.75-billion and 1H27 inflow of $5-billion related to key next steps over next 12 months for sports & media assets,” he explained.
Desjardins Securities analyst Frederic Tremblay says he views the first-quarter earnings report from Doman Building Materials Group Ltd. (DBM-T) “positively” on the Vancouver based company “delivering gross margin strength, operating expense control and strategic investments that reinforce its strong positioning in a dynamic demand and pricing environment for construction materials.”
Doman shares closed up 1.1 per cent on Monday after it reported revenue of $762.0-million, down 3.9 per cent due largely to lower pricing of certain construction materials but up 18.3 per cent sequentially and above Mr. Tremblay’s $754.6-million estimate. Adjusted earnings per share grew 1.1 per cent from the same period a year ago to 27 cents, blowing past the analyst’s 17-cent projection.
“We were pleased by the margin performance as strong procurement execution contributed to gross margin expansion to 17.0 per cent, exceeding our 16.3-per-cent forecast and marking its highest level in nearly three years,” he added. “Combined with disciplined operating expense management, this translated into a beat on adjusted EBITDA.
“As is typical ahead of the busy construction season, 1Q26 was a period of significant working capital investment. In addition, capex was higher than usual in 1Q, as DBM made a strategic property purchase and invested in equipment to support a near-term increase in US-based fencing capacity to capture a growth opportunity at attractive margins. With this, leverage was 4.6 times adjusted EBITDA (in line with our forecast). We forecast a return to less than 4 times in 2H26 and view this as aligned with management’s leverage comfort zone and supportive of its ongoing M&A strategy (with a view that post-acquisition peaks are followed by debt repayments supported by DBM’s healthy annual cash flow profile).”
Emphasizing its “margin resilience in a dynamic environment,” Mr. Tremblay raised his target for Doman shares to $12.50 from $12, which is the average, keeping a “buy” rating.
“North American construction markets are showing potential pricing upside later in 2026. However, visibility on a near-term volume recovery remains limited due to housing affordability pressures and macro uncertainty, though longer-term demand drivers remain intact. DBM’s margin outlook appears resilient, supported by pricing flexibility, value-add products and operational execution,” he said.
Elsewhere, other analysts making revisions include:
* National Bank’s Zachary Evershed to $13.50 from $12.50 with an “outperform” rating.
“We rate DBM Outperform as it continues to improve underlying profitability despite a difficult near-term environment, setting up for a bullish long-term outlook when housing markets bounce back, driven by strong demographics and under-building over the last decade,” said Mr. Evershed.
* Stifel’s Ian Gillies to $12.25 from $12 with a “buy” rating.
“. We do not believe this level of gross margins is sustainable, but a strong 1Q26 should position DBM to meet the high end of its gross margin guidance of 16.0 per cent (2025: 16.2 per cent; 2026E: 16.2 per cent). This is supported by SYP pricing continue to inch higher, 6.1 per cent in 2Q26E. Our estimates are modestly increased with 2026E/2027E EBITDA up 2.7 per cent/0.7 per cent, respectively,” said Mr. Gillies.
Stifel analyst Daryl Young thinks “the worst is behind” NFI Group Inc. (NFI-T) and predicts “valuation expansion across the year as it regains its execution track record.”
“Q1/26 was a solid start to the year, reflecting continued momentum in the manufacturing division, with profitability improving significantly (EBITDA margins of 8.5 per cent increased 370 basis points year-over-year),” he said. “Bus deliveries were slower than expected, primarily related to weak U.K. sales combined with production staging. However, management noted that April was very strong and that volumes should increase across the year, including with the ramp up of the All-Canadian build facility.
“Given the strong EBITDA/EU of $59.5k in Q1/26 despite the low deliveries, we think that NFI could surprise to the upside on margins across the back half of the year. Additionally, key issues around tariffs, seat supply, and battery recall all remain in check.”
In a client note released Tuesday, Mr. Young updated his estimates for the Winnipeg-based company to reflect the quarterly results and management’s commentary.
“Full-year revenue and EBITDA guidance remains unchanged (adjusted EBITDA of $370-million-$410-million),” he said. “Management acknowledged that deliveries were lower to start the year, but emphasized that production is ramping up nicely and that the supply chain and broader operational challenges have significantly improved (with the seat supplier challenges expected to be fully resolved during Q2/26). Moreover, Q1/26 did see modest disruption as the team refocused for smoother future production at higher volumes, including minimizing “out of station” work. Layer on the ongoing ramp up of the new All-Canadian build facility and there should be significant production and operating leverage/margin momentum across the year. In terms of tariffs, management reaffirmed that there will not be material new impacts from Section 232 changes (with the inflationary costs a pass-through), and that guidance already incorporates assumptions for higher freight and shipping costs."
Reaffirming his “buy” rating for NFI shares, Mr. Young raised his target to $26 from $25.50. The average is $25.58.
“From a macro perspective, we believe the outlook for NFI is extremely encouraging, given record levels of government funding available for North American transit agencies to support fleet replacement and conversion to zero emission buses (’ZEBs’). Additionally, the competitive environment has markedly improved from 2019, when there was a looming fear of industry overcapacity with several new North American entrants, versus today where the U.S. market has effectively been rationalized to a duopoly (and a monopoly in several major markets). In our view, NFI has industry-leading products and is best positioned to capitalize on the recovery of the North American transit market as the supply chain challenges ease, clearing the way for strong earnings growth and valuation expansion,” he concluded.
In other analyst actions:
* In a client report released Tuesday titled Going to the Sidelines as We Await Growth Signs, TD Cowen’s Vince Valentini downgraded illumin Holdings Inc. (ILLM-T) to “hold” from “buy” with a 90-cent target, down from $1.05. The average on the Street is $1.15.
“Following the return of CEO Tal Hayek, we are cautiously optimistic about a turnaround at ILLM. However, we believe a turnaround may take time given the reorganizing of the sales structure before we see results. ILLM maintains $37-million in cash, which we believe helps protect against any future downside risk,” he said.
“We believe that growth at illumin can be unlocked over time and that they maintain the right assets to drive organic growth with the potential to layer in inorganic growth on top. However, ILLM requires an update to its sales structure as it attempts to bring on larger accounts that can make a spending difference. The restructuring of the sales function has started following some layoffs in Q1, and we believe that a few quarters are needed to build the pipeline. We would need to see a couple of quarters of good growth before we can become more optimistic on ILLM shares. In particular, we would be looking to see progress in Self-service illumin and Managed services (the DSP assets) before reassessing. With that being said, we believe that the downside risk remains contained with the $37-million in cash representing almost 80% of the current market capitalization.”
* Seeing “Middle East dynamics in focus” ahead of the release of its first-quarter results after the bell on Tuesday, RBC’s Ryland Conrad trimmed his AGT Food and Ingredients Inc. (AGTF-T) to $24 from $25 with an “outperform” rating.
“Following estimate revisions mainly to reflect lower revenue growth assumptions given prolonged conflict in the Middle East, and rolling forward the basis of our valuation, our price target decreases,” he said.
“Following its 2019 take-private and subsequent IPO in March 2026, we believe AGT has repositioned the business with the right recipe to deliver steady value creation, supported by: (i) a lower risk profile and a growth outlook increasingly driven by less cyclical, higher-margin revenue streams; (ii) a strong balance sheet (0.2 times pro forma net debt/adjusted EBITDA) combined with annual FCF of more than $100-million; and (iii) favourable structural tailwinds for affordable, nutrient-dense food. At a FTM [forward 12-month] EV/EBITDA of 5.7 times versus Canadian SMID-cap packaged food peers at 9.0 times, we believe the shares are mispriced and the valuation discount should narrow over time as AGT executes on its growth strategy.”
* After incorporating a “strong start” to the year into his forecast, National Bank’s Shane Nagle raised his target for Barrick Mining Corp. (ABX-T) to $75 from $72.50 with an “outperform” rating. The average is $81.60.
“We have incorporated strong Q1/26 financial results, and increased cost assumptions to account for ongoing inflationary pressures on consumable. We maintain our Outperform rating based on a discounted valuation, improving operational outlook and our expectation that ABX will be successful in surfacing value from the planned IPO of its North American portfolio,” said Mr. Nagle.
* National Bank’s Jaeme Gloyn lowered his target Brookfield Business Corp. (BBUC-N, BBUC-T) target to US$42 from US$44 with an “outperform” rating. The average target on the Street is US$43.
“Despite tariff risks and potential secondary impacts, we expect BBU’s diversified portfolio of companies across sectors/geographies will continue to deliver solid results,” said Mr. Gloyn. “Additionally, the proceeds from the Clarios dividend recapitalization and the secondary sale of three assets provide optionality for capital allocation and ultimately value creation as BBU repurchases shares and reinvests in new businesses (e.g., Chemelex, Antylia Scientific, First National, Fosber). Moreover, we continue to believe BBU will ultimately benefit from a more active M&A backdrop that will drive increased monetizations in the future. Lastly, we believe the conversion to a single corporate structure will improve liquidity, index inclusion, and ultimately support a higher share price.”
* Mr. Gloyn reduced his Fiera Capital Corp. (FSZ-T) target by $1 to $6, below the $6.34 average, with a “sector perform” rating.
“ Adj. EBITDA of $43-million missed Street $4-million,” said Mr. Gloyn. “Given the EBITDA miss and ongoing net outflows, we do not expect Q1 results will shift the still tepid sentiment toward the stock. While Private Markets continues its positive trajectory, and overall costs appear well contained, we need to see the Public Markets business show consistent inflows to become more bullish.”
* National Bank’s Don DeMarco raised his B2Gold Corp. (BTO-T) target to $10.70 from $10 with an “outperform” rating. The average is $9.79.
“Q1/26 operational and financial results [featured] a quality financial beat as Fekola, Goose, Masbate and Otjikoto mines all delivered better-than-expected production and costs, driving higher quarter-over-quarter FCF,” said Mr. DeMarco.
* TD Cowen’s Tim James moved his Chorus Aviation Inc. (CHR-T) to $32 from $31 with a “buy” rating. The average is $30.67.
“Continue to expect forward EBITDA multiple expansion over 12 months to 5.5 times (from 4.7 times currently) as investors appreciate capital return program, asset monetization opportunities and growth in non-CPA revenue (parts sales, MRO & contract flying),” said Mr. James. “We forecast 2026-29 cumulative FCF (CHR def’n + asset sale proceeds) in line with market cap, and expect 30-per-cent returned to shareholders. No change to thesis.”
* Mr. James also raised his target for Magellan Aerospace Corp. (MAL-T) to $30, exceeding the $28 average, from $27 with a “buy” rating.
“We view the difference in Q1/26 EBITDA/FCF vs forecast as immaterial and not altering our bullish investment thesis. Stronger-than-forecast revenue and Magellan’s civil and defence exposure provides a backdrop for strong earnings growth and higher multiples than recent years. Outlook for commercial and defence markets remain strong,” he said.
* National Bank’s Adam Shine trimmed his Cineplex Inc. (CGX-T) target to $13.50 from $14, keeping an “outperform” rating, while Canaccord Genuity’s Aravinda Galappatthige bumped his target to $11.50 from $10.50 with a “hold” rating. The average is $13.13.
“Cineplex reported its Q1/26 results [Monday] morning, with revenue and adj EBITDAal lower than expected due to a variance in the high margin Cinema Media segment. We continue to expect double-digit box office growth through the remainder of F2026 led by one of the stronger film slates in recent years. The 2027 slate is still forming, but we already see highly prospective titles from the Avengers and Star Wars franchises.
“Despite the positive box office trends expected for the rest of the year, and renewed speculation in the financial press around the possible sale of the company, we have opted to maintain our HOLD rating. This is due to the evident inconsistency in FCF generation (which makes it difficult to assign a reliable FCF yield to the stock), which in turn is on account of uneven box office conditions over the years, and the levered balance sheet,” said Mr. Galappatthige.
* In a note titled Another beat, same structural story, National Bank’s Giuliano Thornhill raised his Extendicare Inc. (EXE-T) target to $34 from $32 with an “outperform” rating. The average is $35.75.
“EXE trounced expectations through a seasonally slow period (Q2 and Q3 have been historically stronger), reinforcing our previous research suggesting hospital capacity constraints are structurally changing the business,” said Mr. Thornhill “This dynamic has more than doubled HHC [Home Health Care] organic growth relative to historical demographic and LTC [Long-Term Care] drivers (7-9 per cent). Importantly, recent growth has coincided with a 14-per-cent year-over-year reduction in ALC [Alternate Level of Care] volumes. A sequential decline in this ADV [average daily volume] growth rate, whenever it may occur, is most likely to be realized from entirely addressing these volumes as opposed to funding or labour availability. We now forecast Existing CTG growth of 16 per cent in 2027. Sustaining recent 18-20-per-cent volume growth would imply $0.10/sh of incremental NOI upside to current forecasts. Further multiple expansion would also take shape under this outcome.”