Inside the Market’s roundup of some of today’s key analyst actions
Energy analysts at National Bank Financial have updated their commodity price deck “materially” in response “to the continuation of conflicts in the Middle East (as well as Russia’s invasion of Ukraine) and what feels like a higher for longer price environment as it relates to crude and refined products.”
In a client report released Thursday, they said global energy markets have been “structurally altered for the foreseeable future, which is likely to drive some resemblance of protectionism going forward.”
“Despite daily headlines whipsawing energy prices, it feels as though the optimism for the Canadian energy sector has been as positive as ever, helped by Federal support out of the September 14-15 Investment Summit in Toronto,” they added.
“For more than a decade, the sector was forced into internal optimism, with a resilient focus on controllable items through continuous improvement, capital discipline and persistence. Today, the paradigm shift into a resilient return of capital sector, from what was historically considered a cyclical cash burn sector, presents investors with a sector that we describe as: value meets return. We expect this will become a theme for the next several years as relative low-risk growth meets infrastructure expansion in large part due to the deregulation narrative from the Federal Government, further supported by Provincial leaders with a goal to attract capital back to Canada.”
The firm raised its WTI projections for for 2026 by 11 per cent to US$86.50 per barrel (from US$78) and 2028 by 10 per cent to US$82.50 per barrel (from US$82.50). Their Brent estimates rose by 9 per cent each year to US$91.25 and US$87.50, respectively, from US$83.75 and US$80.
At the same time, the analysts are continuing to emphasize “the attractiveness” of the Canadian energy sector, seeing many stocks in their coverage universe “well positioned for upside versus U.S. peers.”
“Relative valuation discounts (despite recent gap closure), abundant resources (rich inventories supporting long-term brownfield and greenfield expansion), low breakevens, pristine balance sheets, shareholder and management alignment around long-term value creation, and a favourable domestic policy shift have all contributed to this fundamental shift,” he said.
“While the re-rating takes place and Canadian names have outperformed U.S. peers year-to-date (approximately 30-per-cent appreciation delta year-to-date), narrowing the valuation gap, we believe the current environment calls for selective investment to capture the meaningful remaining risk-adjusted upside opportunity in names that continue to screen positively due to a favourable setup or an imminent/unfolding catalyst that should support further re-rating.”
The analysts’ “highest conviction ideas” are:
- Baytex Energy Corp. (BTE-T, “outperform”) with a $9.50 target, up from $8.50. The average on the Street is $7.70.
- Cenovus Energy Inc. (CVE-T, “outperform”) with a $60 target (unchanged). Average: $52.44.
- Kelt Exploration Ltd. (KEL-T, “outperform”) with a $13.25 target (unchanged). Average: $11.42.
- Logan Energy Corp. (LGN-X, “outperform”) with a $1.75 target (unchanged). Average: $1.40.
- Ovintiv Inc. (OVV-N/OVV-T, “outperform”) with a US$91 target, up from US$83. Average: US$73.83.
- Strathcona Resources Ltd. (SCR-T, “outperform”) with a $63 target, down from $67. Average: $50.70.
- Suncor Energy Inc. (SU-T, “outperform”) with a $146 target, up from $118. Average: $102.78.
- Tenaz Energy Corp. (TNZ-T, “outperform”) with a $100 target, up from $91. Average: $79.
- Whitecap Resources Inc. (WCP-T, “outperform”) with a $27 target, up from $26. Average: $21.56.
“Against this backdrop, and given the commodity price and macroeconomic developments discussed elsewhere in this report, we continue to favour liquids-oriented names (in addition to TNZ, given its high exposure to premium markets and relatively attractive valuation; not to mention continued margin expansion driven by operating leverage and increasing production),” the analyst said. “Overall, we highlight BTE, CVE, SCR, SDE, SU, OVV, TNZ and WCP as screening positively, with most names presenting high torque to liquids prices and meaningful upside potential given our current commodity outlook (with embedded upside for selective names should gas price environment improve), but also robust growth programs under development and continuous operational momentum. In addition, among our top-pick integrated names, SU and CVE are well positioned to benefit from tight refined product markets (SU’s global trading capabilities and lack of exposure to WCS differentials through its SCO volumes, which are favoured due to higher diesel yields, should continue to position the company to exploit arbitrage opportunities and generate sizable cash flow during sustained pricing dislocations).”
Investors’ response to Artizia Inc.’s (ATZ-T) second-quarter fiscal 2027 on Oct. 8 will revolve almost solely around the retailer’s same-store sales growth trajectory, according Ventum Capital analyst George Doumet.
In a client report titled Looking Past the Print, he emphasized the Vancouver-based company’s shares are down almost 20 per cent since its last quarterly report on July 9 “despite a clean beat and raise, with the debate now focused on the comp trajectory.”
“Q2/F27 is less of a concern, with management noting a slight acceleration from Q1; we forecast $1.128-billion of revenue and 30-per-cent comps, at the high end of guidance,” he added. “The bigger question is Q3/F27, which laps last year’s 34-per-cent comp, boosted by the app launch and related promotions. While H2 deceleration is well telegraphed (we are at 11 per cent), the magnitude will drive sentiment: low-to-mid double-digit comps would likely be supportive, while high teens could drive a more positive reaction.”
“Multiple compression has run well ahead of any evidence of a slowdown, with alternative data through the first three weeks of Q3/F27 still tracking a healthy 58 per cent (vs consensus estimate looking for 30-per-cent year-over-year growth in the U.S.). Admittedly, some of the compression reflects higher interest rates and growing evidence of softer consumer spending, particularly in Canada. Still, the forward multiple has fallen 30 per cent since our July initiation to approximately 19 times fiscal 2028 estimated EPS, leaving expectations considerably lower.”
Mr. Doumet thinks Aritzia’s full-year fiscal 2027 guidance has “some stretch,” seeing upside to its full-year forecast of revenue of $4.55–$4.75-billion in revenue and 19.5-per-cent adjusted EBITDA margin. He attributed that potential largely to foreign exchange gains.
He’s projecting revenue of $4.7-billion, a gain of 27 per cent year-over-year, and adjusted EBITDA of $933-million and earnings per share of $4.94, which are broadly in line with consensus estimates on the Street.
“As comps normalize, the debate shifts to gross margin, with markdowns the key watchpoint,” he added. “Guidance calls for 150 basis points of H2/F27 expansion versus 250–300 basis points in Q2, partly reflecting markdown normalization from an unusually clean base. Q3/F26 benefited from record Black Friday full-price sell-through and lower discounting, creating a difficult lap. We expect markdowns to rise but remain below historical levels; importantly, the magnitude should help distinguish between a calendar-driven comp slowdown and genuine consumer softness.
“Beyond the print, at Investor Day (late October), we expect a five-year framework extending the existing playbook: $8.0-billion of revenue by F2031, 12–14 annual U.S. openings toward 210 boutiques, 8–10-per-cent comps, adjusted EBITDA margins approaching 20 per cent, and a measured, flagship-led international rollout. Execution credibility is high, with ATZ surpassing its 2022 Investor Day revenue target of $3.5–3.8-billion a full year early. Capital allocation is the biggest remaining question, particularly as cash generation builds; based on the latest filing, ATZ repurchased 0.9 million shares for 125 million in Q2/F27.”
While he raised his forecasts “largely on margin,” leading to higher EPS estimates by 8 per cent and 9 per cent, respectively, for 2027 and 2028, Mr. Doumet cut his target for Aritzia shares to $146 from $186 to “reflect broad-based sector pressure from weak consumer sentiment and economic uncertainty.” The average on the Street is $182.63.
He kept a “neutral” rating.
TD Cowen analyst David Kwan sees the valuation of Sangoma Technologies Corp.’s (STC-T) definitive agreement to be acquired by BRC Holdings Group Inc. (RILY-Q) properly reflecting the company’s “struggles.”
Accordingly, he lowered his rating for the Toronto-based business communications platform provider to “sell” from “buy” in response to late Monday announcement of the deal, which values it at $289-million.
“We think the probability of a superior bid is relatively low given the ‘comprehensive strategic review process’, continued growth challenges, and shareholder support, among other things, and thus believe investors should tender to the offer,” said Mr. Kwan.
“We believe the relatively modest valuation reflects STC’s ongoing struggles, as it has undergone a longer-than-expected multi-year transition period that resulted in continued growth challenges (in part due to macroeconomic headwinds and competitive pressures), a significant decline in margins over the past year, the sale/exit of non-core assets, ongoing restructuring activity that will continue into F2027, and a $68-million goodwill writedown this quarter. That said, FCF has remained solid, which helped attract buyer interest (including BRC), and the balance sheet has continued to deleverage.”
Mr. Kwan moved his target to $7.35 from $8 to reflect the offer. The average is $9.73.
“We believe the $7.35/share cash/stock offer from BRC Holdings likely receives shareholder support and regulatory approval. Given the premium offered and our view that the potential for a superior bid is low, we believe investors should tender to the offer,” he concluded.
Elsewhere, Acumen Capital’s Jim Byrne moved Sangoma to “tender” from “buy” with a $7.40 target, down from $11.
Stifel analyst Ian Gillies initiated coverage of a trio of Canadian equipment dealer stocks with “buy” ratings, believing ”offers a unique, positive investment case."
“In our view at least one equipment dealer should be owned in every portfolio,” he said in a client report focused on Finning International Inc. (FTT-T), Toromont Industries Ltd. (TIH-T) and Wajax Corp. (WJX-T)..
“Our favourite is Finning as we think it is uniquely exposed to benefit from natural resource development in Canada, Chile and Argentina, and large infrastructure projects in Western Canada. Meanwhile, its ROIC is recovering to the midteens, which is attractive. Toromont has a long track record of being a highly proficient capital allocator, which makes its net cash position a very attractive point of optionality for risk-averse investors. Wajax is a small cap value story with the potential for a turnaround with new management in place. Our current pecking order is Finning, Toromont then Wajax. Toromont could move up this list if there are signs it begins to allocate its cash position and Wajax could move up post the release of its updated business plan later this year, in our view.”
In justifying his bullish stance, Mr. Gillies declared “Canada is cool again, which means Finning, Toromont and Wajax are part of the cool crowd.”
“The businesses we are launching on stand to benefit from Canadian infrastructure spending and a renaissance in natural resources spending across mining, oil and gas and other energy forms,” he explained. “We believe investment dollars are beginning to flow back to Canada and any reduction in regulatory red tape for project permitting could accelerate a new wave of project development. The Alberta Energy Regulator (AER) anticipates oilsands spending to be up 4 per cent in 2027E, and we think that could accelerate in 2028E. Meanwhile, mining spending is expected to increase 2 per cent in 2027E and we believe there is room for a larger increase. We anticipate this will benefit FTT, TIH and WJX new equipment sales with follow-on benefits from product support.
“The competitive moat gets better as these businesses mature, in our view: In its most simple form, the equipment dealers business model can be boiled down to new equipment sales growth eventually leading to product support. Product Support and Rental revenue is highly durable and defensible, making it a valuable cash flow stream that supports valuations. Each of FTT, TIH and WJX have idiosyncrasies but recurring cash flow stream is the common theme, which allows them to pursue their capital allocation initiatives without the need for discrete equity. From a capital allocation perspective: (1) Finning is focused on share buybacks, dividend bumps and reinvesting in its rental fleet to accelerate high margin Rental revenue; (2) Toromont is focused on dividend growth, rental fleet growth and strategic acquisitions; (3) Wajax is focused on maintaining its current dividend (yield: 4.1 per cent) and bolt-on acquisitions.”
Mr. Gillies set a target of $127 for Finning International. The average is $121.67.
Analyst: “[Finning] is the play on natural resources: We believe the macro backdrop is going to provide Finning an opportunity to deliver better estimates than what our model (and consensus) currently holds. We think there are positive catalysts to come in Canada, Chile and Argentina. We currently forecast a 26-28E revenue/EBITDA/EPS CAGR of 6.8 per cent/9.8 per cent/12.4 per cent, and ROIC reaching a 20 year-high in 2028E.
He gave Toromont Industries a target of $250, which is under the $253.89 average.
Analyst: “[Toromont] is a best in class capital allocator with a rapidly expanding manufacturing business tied to data centres: We think the company is impressive, but the entry point at the current valuation leaves little opportunity for significant multiple expansion. We will be closely watching for pullbacks or new catalysts because we want to be positive on the stock. We currently forecast a 26-28E revenue/EBITDA/ EPS CAGR of 11.0 per cent/14.3 per cent/18.1 per cent.”
Mr. Gillies’s target for Wajax is $45. The average is $34.
Analyst: “[Wajax] is the small cap turnaround story with potential to yield significant returns: The company’s valuation is still in the penalty box for past sins. The company has a record backlog and a debt position should allow for M&A. Our sum-of-the-parts analysis generates a value of $46.31/sh compared to the current share price of $34.31. A new CEO is slated to roll out an updated business plan in the near-term, which could be a key driver for the stock. The two primary issues are: (1) weak organic growth and (2) stock market liquidity. With that said, the valuation disparity is too wide to ignore compared to larger peers (2027E P/E: 9.8 times, comp group: 18.6 times). We currently forecast a 26-28E revenue/EBITDA/EPS CAGR of 2.3 per cent/3.8 per cent/9.0 per cent.”
National Bank Financial analyst Maxim Sytchev sees electricity as a growth market with demand having “reached a structural inflection point globally” and now sees WSP Global Inc. (WSP-T) poised to capture “a bigger share of wallet.”
“WSP hosted a virtual investor event [Monday] morning focused on the P&E [Power & Energy] vertical, with senior leaders outlining how rising electricity demand, record utility CapEx plans, and increasing project complexity are expanding its addressable market across the generation, transmission, distribution, and end-market usage space (with WSP scale/expertise culminating in “one-stop shop” go-to-market strategy)."
Mr. Sytchev said Montreal-based engineering and professional services consulting firm is projecting global electricity demand growth of more than 3.5 per cent per year through 2030, “equivalent to adding roughly ’100 New York Cities of demand’.”
“The U.S. is at the centre of the inflection; AI and data centres are the most visible drivers, but semiconductors, advanced manufacturing, reshoring, transport and building electrification, energy security, coal retirements, and the replacement of aging infrastructure are all incremental drivers,” he added.
“POWER [Engineers] and TRC have helped build up a world-leading, integrated P&E platform. WSP has scaled its P&E vertical rapidly in recent years. While the segment represented only 4 per cent of consolidated gross revenue in 2019 to 2021, organic growth and the acquisitions of POWER and TRC have grown that contribution to close to 20 per cent on a pro-forma basis.”
Mr. Sytchev said WSP reiterated its target for its 2027 strategic cycle with “margin progression running ahead of expectations (but there are some timing caveats).”
“Management reiterated that it remains on track for its 2027E Investor Day objectives: more than $17-billion of net revenue, or a 40-per-cent increase versus 2024; a 50-per-cent increase in adjusted EBITDA; 60-per-cent higher adjusted net earnings per share; and 70-per-cent higher free cash flow, alongside a 19-20-per-cent adjusted EBITDA margin and more than 100-per-cent net income to FCF conversion,” he explained.
Maintaining his “outperform” rating on WSP shares, Mr. Sytchev reduced his target to $216 from $219 on “slightly lower H2/26E earnings/FCF projections” The average on the Street is $275.13.
“The presentation provided incrementality around the pace of growth in transmission & distribution, the nuclear space, etc.; estimates for CapEx programs for the company’s clients on a cumulative basis (between 2026E to 2030E) have moved up by 11 per cent since 2025 year-end to US$1.3-trillion,“ he concluded. ”Higher discount rates and political pushback have not dented prospects so far, but we are tracking these factors very closely. Management believes that further in-fill M&A is possible for the Power business while the right opportunity in the nuclear space (the company’s capabilities focus on balance of plant, permitting, etc.) could also be under consideration. The CFO’s portion highlighted WSP’s diversified platform, on-track strategic cycle financial metrics (and of course achieving the 19 to 20-per-cent adjusted EBITDA margin target one year ahead of schedule) while also ensuring investors to not get over their expectation skis as there are some slower ramps on environmental and U.S. transportation funding while disruption (i.e. revenue generation) from hurricane activity has been tracking at a lower intensity. Overall, WSP continues to demonstrate its forward-thinking capital allocation (as the Power & Energy build out took place over multiple years), exposing the company to faster-growing verticals. We do not believe, however, that investors will be shifting their earnings expectations for WSP, for the time being.”
Elsewhere, other analysts making target revisions include:
* RBC’s Sabahat Khan to $303 from $304 with an “outperform” rating.
“Overall, the demand appears to be sustainable with increasing scale/complexity of project aligning with WSP’s deep expertise in this space (as reflected in strong growth reported in recent periods),” said Mr. Khan.
* BMO’s Devin Dodge to $275 from $280 with an “outperform” rating.
“In our view, WSP is well-positioned to capitalize on a multiyear investment cycle in the Power & Energy sector that should augment growth across several of its other end-markets. Despite some near-term, transient headwinds, WSP remains on track to meet its F2027 targets, and there is improving visibility into strong demand, margin expansion, and mid-teens+ EPS growth. With the stock trading at sub-14x our 2027 EPS estimate, we believe there is an asymmetric risk/reward, and the potential upside could be significant. We rate WSP Outperform,” said Mr. Dodge.
* Stifel’s Ian Gillies to $230 from $280 with a “buy” rating.
“On September 28, 2026, WSP hosted a teach-in for its Power and Energy segment, which we believe was an effort to re-focus the view on the company as an AI beneficiary rather than a potential risk stock. The event provided an in-depth overview of a segment that is growing double-digits organically while generating margins that are accretive to the corporate consolidated average. However, other parts of the business are suffering from timing related issues. We have moved our 2026E and 2027E forecasts lower with 26E EBITDA down 1.0 per cent to $3.144-billion and 2027E EBITDA lower by 2.6 per cent to $3.445-billion,” said Mr. Gillies.
RBC Dominion Securities analyst Paul Treiber thinks Xanadu Quantum Technologies (XNDU-Q, XNDU-T) “provides investors with exposure to quantum computing, a generational opportunity, and photonics, a unique modality.”
“While meaningful commercialization remains several years away, we believe the shares of Xanadu offer compelling long-term capital appreciation potential as the company progresses toward key technical and funding milestones,” he said. “The title of our report [A superposition of an investment] is a play on words. Superposition describes the quantum property of occupying two states at once. Similarly, an investment in Xanadu’s shares exists in two states simultaneously: it offers the potential for significant capital appreciation if fault tolerance is achieved on schedule, but also carries downside risk if technical or funding milestones are delayed or unmet. Investor sentiment may vary widely between these two states; we believe current valuation offers an attractive entry point and risk-reward in light of the likely volatility in the stock.”
In a client report released Tuesday, he initiated coverage of the Toronto-based company, which went public in late March following a merger with Nasdaq-listed special purpose acquisition company (SPAC) Crane Harbor Acquisition Corp., with an “outperform” recommendation.
“Xanadu is the only publicly traded pureplay stock developing a photonics-based quantum computer,” said Mr. Treiber. “While multiple modalities may coexist, photonics offers several advantages including scalable networking, leverage of existing silicon manufacturing, and room temperature operations. The company is now focused on scaling/performance improvements (i.e., loss reduction) ahead of building a quantum data center in 2029/2030.
“The quantum opportunity. McKinsey estimates quantum to generate between $1.3-2.7-trillion in annual economic value by 2035. Quantum is likely to revolutionize drug discovery, materials design, portfolio optimization, and cryptography. Providers of quantum computers may capture up to 20 per cent of the value creation, implying quantum industry revenue may expand from $1-billion currently to up to $170-billion by 2040.”
Mr. Treiber sees multiple paths to monetization. They include: “1) quantum computing as a service; 2) sales of quantum hardware; 3) sales of PennyLane software; and 4) sales of photonic devices and IP licensing. Paths are independent, reducing risks for investors.”
“While we assume no meaningful commercial revenue until mid 2029, we see several potential near-term catalysts for the stock including updates on error correction progress, partnerships, and government funding (i.e., DARPA C, Ontario portion of OPTIMISM),” he added. “A multi-year investment. Xanadu is prioritizing its path to a quantum data center over near-term monetization. Xanadu and most quantum computing peers have nominal near-term revenue, which makes benchmarking valuation difficult. The industry generally estimates quantum monetization ramping in 2030; on CY30e, Xanadu is trading at 2.6 times EV/S, below peers at 8.2 times.”
Mr. Treiber set a target of US$16 per share. The average is US$33.
“While multiple years remain before commercialization, Xanadu has achieved key development milestones to date and has a path towards a fault-tolerant quantum data center. We anticipate that the stock will rally as Xanadu achieves more milestones and visibility improves to monetization,” he concluded.
In other analyst actions:
* In response to Slate Grocery REIT (SGR.UN-T) announcement of its sale to Brixmor Property Group Inc. and Everview Partners, L.P., TD Cowen’s Sam Damiani moved his rating to “sell” from “hold” with a $13 target, up from $12 and above the $10.50 average.
“The $13.00/unit pricing reflects an 11-per-cent premium to consensus NAV, highlighting strong demand for grocery-anchored retail assets. We believe the $13.00/unit cash offer to privatize SGR is fair and do not expect any higher bids,” he said.
Elsewhere, ATB Cormark’s Sairam Srinivas moved Slate Grocery to “tender” from “underperform” with a US$13 target, up from US$8.
* ATB Comark’s Stefan Ioannou moved Barksdale Resources Corp. (BRO-X) to “speculative buy” from “sector perform” with a 30-cent target, up from 25 cents, which was the average.
“Barksdale recently announced a multifaceted ‘corporate’ overhaul, headlined by new board (including George Ogilvie as Chair) and senior management appointments, a (up to) $14.0 MM equity raise, shares-for-debt settlement (addressing one of our [the] concerns pertaining to the company’s outlook), a 10 for 1 share rollback, and proposed name change to Arizona Standard Copper Inc.,” he said.
“Barksdale’s flagship Sunnyside project in southern Arizona is located adjacent to (down-plunge extension of) South32’s world-class Taylor zinc-lead-silver deposit (US$3.3-billion Hermosa project under construction) acquired via the $2.1-billion friendly premium takeover of Arizona Mining in 2018. We believe ‘tangible’ exploration upside, coupled with well-advanced Taylor ‘mine’ development next door, sets the stage for a significant market rerating — and potential company takeover interest, also cognizant Barksdale’s successfully permitted unpatented land position could also benefit South32’s exploration efforts in the area.”
* Following an update on its Belly River project at its Chambers development in Alberta and initial 2027 outlook, ATB Cormark’s Amir Arif upgraded Yangarra Resources Ltd. (YGR-T) to “outperform” from “sector perform” with a $2.20 target, up from $1.80 and above the $1.83 average.
“On September 28, 2026, before market open, YGR provided a positive operational update for its Belly River assets with key takeaways being current corporate Belly River production, Belly River inventory, and new well design continuing to outperform type curves after 90 days,” said Mr. Arif. “In addition, the company provided an initial 2027 outlook in its updated corporate presentation. The outlook reflects a further shift to Belly River drilling which results in better than previously expected oil cuts and cash flows for 2027 relative to similar spending levels. Based on our updated estimates, YGR trades at 1.7 times 2027 strip EV/DACF and as the oil mix and cash flows begin increasing starting in Q4/26, we believe the stock will follow.”
* Coming off research restriction following the closing of $115-million bought-deal offering and US$95-million acquisition of U.S.-based Nexus Enterprises LLC, National Bank’s Nathan Po increased his target for Alaris Equity Partners Income Trust (AD.UN-T) to $31.50 from $30.50 with an “outperform” rating. Others making changes include: Desjardins Securities’ Gary Ho to $28 from $27.50 with a “buy” rating, Canaccord Genuity’s Matthew Lee to $30.25 from $30 with a “buy” rating and Stifel’s Justin Keywood to $27 from $26 with a “buy” rating. The average target is $27.53.
“With minimal exposure to geopolitical headwinds, inflation-protected revenue, and robust execution continually growing and diversifying the partner portfolio, we rate AD Outperform,” said Mr. Po.
* Following a visit to its Porcupine Complex in Timmins, Ont., Raymond James’ Craig Stanley raised his target for Discovery Mining Ltd. (DSV-T) to $15, matching the average, from $11.50 with an “outperform” rating.
* Ahead of its third-quarter results, Barclays’ Michael Lonegan reduced his Fortis Inc. (FTS-T) to $76 from $82 with an “overweight” rating. The average is $81.62.
“Consensus EPS is biased downward. Focus is on the upcoming IRP filing, TEP rate case outcome, Arizona commission election, Project Blue, and MISO competitive bidding results. Capital program and financing outlook will be updated on the earnings call,” said Mr. Lonegan.