Inside the Market’s roundup of some of today’s key analyst actions
Desjardins Securities analyst Chris MacCulloch thinks first-quarter 2025 earnings season in Canada’s energy sector will “likely result in the overshadowing of reporting season by heightened volatility in global financial markets,” pointing to the quick turnaround from the last earnings release period and “limited operational developments going into spring breakup.”
“We believe the recent meltdown in oil prices will put industry’s newfound resiliency to its first serious test since the COVID-19 pandemic, with investors remaining vigilant for potential signs of distress,” he said. “Meanwhile, market volatility presents an opportunity to accelerate industry M&A, particularly if the macro environment continues deteriorating over the coming weeks. With respect to 1Q25 financial results, we generally see producer cash flows as underwhelming vs current Street estimates and we are forecasting misses from TOU (8 per cent), SU (5 per cent) and VET (5 per cent) while beats are expected from HWX (11 per cent), AAV (3 per cent), CNQ (3 per cent) and MEG (3 per cent).”
In a research report released Tuesday titled In case of emergency break glass, Mr. MacCulloch reiterated his cautious view on global oil markets, and he said he was “doubling down” on his previously bearish outlook by trimming his 2025 WTI price deck to US$60 per barrel (from US$65) following the implementation of sweeping tariffs by the Trump administration and the surprise acceleration of May supply additions by OPEC+
“In the natural gas side, we have moderated our 2025 NYMEX forecast to US$4.00/mcf (from US$4.25/mcf) while increasing our 2026 NYMEX and AECO price deck to US$4.50/mcf (from US$4.00/mcf) and C$4.00/mcf (from C$3.75/mcf), respectively,” he added. “We are growing increasingly bullish on 2026 natural gas prices as we expect collapsing oil prices and US steel tariffs to materially weigh on drilling activity stateside, which would curtail associated gas production during a period of rising LNG feedgas demand as the next major wave of export projects comes online.
“Unfortunately, our relatively downbeat commodity price outlook has been compounded by US dollar weakness, which contributed to our revised 2025/26 loonie forecast of C$0.72/US$1 (from C$0.70/US $1) as global bond markets appear to be doling out their own unique brand of discipline to US Treasuries in response to the Trump administration’s erratic trade policies. On that note, we highlight that the adjustment in our Canadian dollar forecast was the primary driver of negative cash flow revisions for our coverage universe.”
Mr. MacCulloch now expects management teams and boards across the sector to “respond cautiously given improved balance sheet positioning and lingering optimism for a return to normalcy in U.S. trade policy,” and he predicts “adjustments in producer capital allocation as industry profitability becomes increasingly challenged moving to a US$60/bbl WTI environment from US$70/bbl in recent years, let alone the US$55/bbl bottom we saw at the height of last week’s market uncertainty.
“Bottom line, we believe the sector is entering a period of heightened uncertainty given commodity and equity market volatility, which will put industry’s newfound resilience to its first major test since the COVID-19 pandemic,” he said.
The analyst downgraded his recommendation for Freehold Royalties Ltd. (FRU-T) to a “hold” recommendation from “buy” previously, citing a limited return potential to his revised target. His target slid to $14.25 from $15, remaining below the average on the Street of $16.77, according to LSEG data.
“More importantly, we are extremely cautious on U.S. drilling activity following the collapse in oil prices and the Trump administration’s application of punitive tariffs on steel imports,” he added. “That combination is expected to materially erode development economics in oil-weighted basins, including the Permian, where the company has allocated considerable capital to expand its royalty footprint in recent years through strategic acquisitions. With 50 per cent of corporate revenue now derived south of the border, FRU would be disproportionately impacted by a slowdown in U.S. drilling activity relative to its Canadian royalty peers, which could negatively affect future production levels while spurring funds flow from the stock. Meanwhile, lower oil prices and softening activity will also put additional pressure on the monthly dividend, which currently provides a lofty 9.7-per-cent yield, as we expect the board to remain proactive in protecting the balance sheet following recent M&A activity that increased corporate debt levels.”
Mr. MacCulloch also adjusted his target prices across the sector. For large-cap stocks, his changes are:
- Canadian Natural Resources Ltd. (CNQ-T, “buy”) to $49 from $51. Average: $51.83.
- Cenovus Energy Inc. (CVE-T, “buy”) to $22.50 from $24.50. Average: $26.39.
- Imperial Oil Ltd. (IMO-T, “hold”) to $85 from $91. Average: $99.96.
- Suncor Energy Inc. (SU-T, “buy”) to $63 from $65. Average: $61.53.
- Tourmaline Oil Corp. (TOU-T, “hold”) to $76 from $74. Average: $77.36.
- Whitecap Resources Inc. (WCP-T, “buy”) to $11.50 from $12. Average: $13.38.
“Unsurprisingly, when evaluating our coverage under a lower-for-longer scenario at US$50/bbl WTI prices, we see large caps continuing to outperform, with ARX, CNQ, CVE, SU and TOU all suffering a muted FCF impact relative to peers,” he said. “Furthermore, as capital returns moderate across the board, ARX, CVE and SU are notable standouts to the extent that they can continue to deliver meaningful share buybacks without moderating capital spending. Conversely, HWX, ATH, SDE, WCP, TVE and VET would see capex-adjusted payout ratios stretch, resulting in D/CF increasing by nearly a full turn. However, we highlight that in a US$50/bbl scenario, roughly half of our universe would see capex-adjusted payout ratios surpassing 100 per cent.”
“We retain a clear bias toward large-cap equities, which offer superior downside protection and trading liquidity in a softer commodity price environment. We continue highlighting SU, WCP and TPZ as our top picks.”
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TD Cowen analyst Craig Hutchison lowered his base metals commodity deck and trimmed his target price multiples for stocks in his coverage universe on Tuesday to reflect expectations of weaker global growth amid fluctuating tariffs.
“The on again, off again nature of the tariffs are likely to lead to lower global growth, which in turn should weigh on base-metal prices and multiples for the group,” he said. “At the time of writing, reciprocal tariffs between the U.S. and China currently stand at 125 per cent, jeopardizing trade among the two largest economies and over 60 per cent of global refined copper demand. TD Securities strategy team noted that it expected the previous 76-per-cent tariff on China to impact GDP by 2.5 per cent. If the hit to copper demand falls in line with GDP, copper markets could shift from deficit to surplus. We have lowered our base-metal prices for 2025 closer to spot and trimmed our 2026 estimates. We have also raised our near-term and long-term gold price forecasts.
“We are not calling for a recession or doomsday scenario for the base-metal names at this stage, given the tight supply, which we believe will support prices in a weaker demand environment. Balance sheets are also in good shape for the most part, with low leverage and solid liquidity. Higher precious metal prices, lower energy costs, and weaker domestic currencies relative to the U.S. dollar should benefit companies.”
Mr. Hutchison warned he expects the first quarter of 2025 to be the weakest production-wise for the year “with several key assets still ramping up and lower grades.”
“This is not unlike last year, and we expect H2/25 production to be much stronger for the group. We also expect several companies to report positive provisional prices, given the increase in copper prices after 2024 year-end,” he said.
Seeing Lundin Mining Corp. (LUN-T) “well-positioned relative to the group,” he raised his rating for its shares to “buy” from “hold” with a $13 target, below the $14.95 average, and named it a top pick for the current environment.
“With the pending close of the European asset sale in the next couple of weeks, Lundin will be in a very strong position financially, and is expected to generate positive FCF even in a spot copper scenario,” he said.
He also named two other top picks
- Cameco Corp. (CCO-T, “buy”) with a $77 target, down from $90. Average: $80.01.
- Teck Resources Ltd. (TECK.B-T, “buy”) with a $62 target, down from $73. Average: $66.63.
“In our view, Cameco’s business model of long-term contracts (limited spot exposure) and reoccurring and growing service business with Westinghouse positions the company well,” he said.
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TD Cowen analyst Tim James thinks downside earnings and 12-month target risk related to tariffs/economy for 2025 and 2026 earnings are already discounted in the share prices of Canadian cargo transportation providers.
“Headline risk remains elevated and likely limits short-term upside until greater certainty exists, in our view,” he added.
In a research note previewing first-quarter earnings season for the industry, Mr. James projects consensus estimates on the Street for both year need to move 3-10 per cent lower to accurate reflect the current macroeconomic conditions as well as the impact of the global trade war, however he feels valuations already reflect such revisions, emphasizing his own lower estimates are based on updated the forecasts from the firm’s Economics team and industry-specific assumptions “reflecting weaker volumes due to trade uncertainty.”
“We have reduced our target multiples based on tariff uncertainty and a prolonged period of lower valuations/higher risk premiums,” he added. “We believe long-term fundamental value for these companies remains significantly above current levels and short-term downside risk.”
With that view, Mr. James made these target revisions:
* Andlauer Healthcare Group Inc. (AND-T, “buy”) to $51 from $53. Average: $48.50.
Analyst: “We forecast revenue of $162 million (flat year-over-year; cons: $167-million) and EBITDA of $39.5 million (flat year-over-year; cons: $42.2 million). Canadian ground transportation growth to offset decline in fuel surcharges and U.S. TL revenue (volume and pricing headwinds). Worst-case scenario indicates $39 should be bottom and $41 in 12 months, assuming worst-case 2025/2026 EBITDA declines (highly unlikely, in our view).
“For investors not prepared to stomach more volatility and potential short-term pressure, we believe AND should hold-up best.”
* Cargojet Inc. (CJT-T, “buy”) to $150 from $165. The average on the Street is $152.25.
Analyst: “We forecast 7-per-cent revenue growth year-over-year to $248 million (cons: $258 million) driven by Charter (up 139 per cent due to Great Vision), ACMI [Aircraft, Crew, Maintenance and Insurance] (up 4 per cent due to pricing) and Domestic network (up 2 per cent due to pricing). We forecast adj. EBITDA of $77.0-million (cons: $82.0-million), flat year-over-year, with revenue growth offset by 280 bps of margin compression (pilot overtime and training costs). Scenario analysis indicates share price has overshot the worst case, which we estimate at $94 currently, or $100 in 12 months.”
* Mullen Group Ltd. (MTL-T, “buy”) to $18 from $21. Average: $17.18.
Analyst: “We forecast 9-per-cent year-over-year revenue growth (nil organic) to $502 million (cons: $501-million) and 14-per-cent EBITDA growth to $75.5-million (cons: $73.4-million). EBITDA growth driven by L&W (up 42 per cent due to ContainerWorld acquisition, cost control and volume) and LTL [less-than truckload] (up 4 per cent due to PNW acquisition). Our 2025 EBITDA forecast is below guide due to organic growth and M&A (nil vs. $150-million M&A capital guide). Worst-case scenario indicates $10 share price if 2025 consensus EBITDA moves 18 per cent lower (unlikely, in our view) and implies flat stock over 12 months (6.8-per-cent div) assuming worst-case EBITDA declines for both 2025/2026.”
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Citi analyst Patrick Cunningham trimmed his lithium price assumptions and estimates for North American specialty chemicals companies ahead of first-quarter earnings reports, seeing global tariff disputes as “a potential incremental headwind to global auto sales” and predicting prices will remain “depressed” in the near term.
“Citi Commodities team’s 2Q25 lithium outlook presents limited opportunity for either the supply or demand side of the equation to materially improve in the near-term,” he said. “While 0-3-month pricing for carbonate, hydroxide, and spodumene was lifted by approximately 5 per cent, 11 per cent, and 6 per cent on the back of China-led restocking in EVs and cell outputs, the team cut FY25 and FY26 pricing for lithium salts by 7 per cent and 8 per cent on average. Any upward pricing movement will certainly be erased with supply responding quickly. Lithium supply/demand balances should continue at surplus in 2026, reversing the team’s previous forecast of a small deficit.”
In a note released before the bell, Mr. Cunningham said Lithium Royalty Corp. (LIRC-T) is currently his preferred stock in the space “given several producing assets hitting the market in the next 2 years and see upside on [his] discounted NAV.”
However, citing “growing uncertainty” with lithium markets, he cut his target for the Toronto-based company’s shares by $1 to $5.50, however he reiterated his “buy” recommendation. The average target is currently $8.13.
“We rate the shares of LIRC a Buy for the following reasons :1) Exposure to secular growth in lithium from EV & ESS applications. Supply of lithium is likely to struggle to keep up with demand implied by OEM’s penetration targets and could see prices move up significantly. 2) Diversified high-quality assets. LIRC has a portfolio of 35 royalties with no single asset making up more than 15 per cent of our NAV estimate. Management’s investment criteria have biased the portfolio to high-quality assets, which are likely to have lower technical risk. 3) Upside from the royalty model. The royalty model offers free upside via asset expansions and extensions. Precious metal royalty companies have been a success case, with a track record of execution, scale, and potential upside being rewarded with multiple expansion,” said Mr. Cunningham.
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RBC Dominion Securities analyst Darko Mihelic thinks the current environment is “clearly not ideal” for Canadian life insurance companies, and he expects “there will be some earnings and capital pressure for the remainder of 2025 especially if market volatility continues and if trade wars escalate.”
“In our coverage universe, we rank the lifecos in the order of most sensitive to least sensitive to equity market movements, based on the disclosed sensitivities: SFC, IAG, MFC, SLF, and GWO,” he said in a report released Tuesday.
While he thinks it is too early to make significant changes to his forward earnings estimates, Mr. Mihelic cut his first-quarter core earnings per share projections by an average of 2 per cent to reflect several factors, particularly weather and wildfire losses, reflecting an average 4-per-cent decline sequentially and 11-per-cent year-over-year increase for the group.
“Our tracked funds suggest that average retail AUM growth will be mixed for the group and we expect net retail outflows for all the lifecos in our coverage,” he said.
“We forecast macro factors to have negative impacts on the lifecos’ reported EPS in Q1/25, ranging from -$0.06 at GWO to -$0.25 at SLF. We expect real estate/ALDA impacts to have negative impacts on all the lifecos’ reported EPS. We expect movements in equity markets will have negative impacts of $0.02 on GWO, $0.05 on SLF, $0.08 on MFC, and $0.09 on IAG based on disclosed sensitivities. The S&P 500 Index decreased 4.6 per cent quarter-over-quarter while the S&P TSX Index increased 0.8 per cent quarter-over-quarter. In Asia, the TOPIX Index (Japan) decreased 4.5 per cent quarter-over-quarter while the HSI Index (Hong Kong) increased 15.3 per cent quarter-over-quarter.”
Mr. Mihelic maintained his targets and ratings for industry stocks in his coverage universe. They are:
- Great-West Lifeco Inc. (GWO-T) with a “sector perform” rating and $53 target. The average on the Street is $55.78.
- IA Financial Corp. Inc. (IAG-T) with a “sector perform” rating and $141 target. Average: $143.75.
- Manulife Financial Corp. (MFC-T) with an “outperform” rating and $51 target. Average: $49.54.
- Sagicor Financial Co. Ltd. (SFC-T) with an “outperform” rating and $9 target. Average: $10.56.
- Sun Life Financial Inc. (SLF-T) with an “outperform” rating and $82 target. Average: $88.50.
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While warning of a “tough” North American farm environment ahead of Ag Growth International Inc.’s (AFN-T) first-quarter earnings release on May 5, Desjardins Securities analyst Gary Ho sees a “positive readthrough from insider buying and board changes.”
“We view 2025 as a potential trough earnings year for NA Farm; however, while AFN products are USMCA-compliant, the tariff implications on U.S. farmers are an item to watch,” he said. “Recent insider buying and board changes should be viewed positively given the better alignment.”
Mr. Ho is currently projecting quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) of $28-million, down from $50-million in the same period a year ago but falling in line with the Street’s forecast.
“NA Farm activities will likely remain tepid through 1H25, but we expect modest sequential improvement in order intake for U.S. Farm permanent equipment,” he said. “While U.S. dealer inventory for farm portable remains elevated, we anticipate some levelling off and that this would be more aligned with market demand by 2H25. Tariff-wise, AFN equipment is USMCA-compliant — no material impact is expected. However, with ongoing tariff uncertainty around U.S. farmers (ag commodity being a key export to China), we will monitor this closely. AFN has been cautiously proactive in managing pricing actions, on par with competitors.
“Around the world update. NA Commercial remains steady, while Brazil Commercial and EMEA (mostly commercial) activity is tracking well. Offsetting this, India faces some macro headwinds in 1H25 but is expected to rebound in 2H25. We forecast the order book being up year-over-year. Management appears to be actively bidding on several larger commercial projects.”
Keeping a “buy” recommendation for the Winnipeg-based company’s shares, Mr. Ho reduced his target to $46 from $49. The average is $47.38.
“Our positive investment thesis is predicated on: (1) strong growth in the Commercial and International businesses; (2) margin resiliency through operational excellence; (3) deleveraging; and (4) organic growth through product transfers and other initiatives (offset by weakness in NA Farm),” he said.
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In other analyst actions:
* Canaccord Genuity’s Matthew Lee reduced his target for Air Canada (AC-T) shares to $24 from $29, maintaining a “buy” recommendation. The average target is $23.13.
“The potent combination of geopolitical uncertainty, a general flight to safety, and negative headlines have worked against AC (and the broader airline industry) over the last quarter, resulting in a 40-per-cent decline in share price year-to-date,” he said. “Based on our calculations, this returns the carrier to its mid-pandemic enterprise value—a period in which the firm was burning upwards of $15-million of cash per day. While market uncertainty is likely to persist, we believe the sell-off is significantly overdone at this point. We now expect that transborder travel will decrease substantially this year, but we believe that AC can mitigate some of the impact through shifting its routes to more constructive markets. As of now, we forecast a 20-per-cent reduction in CA-US travel, initially impacting load factors in Q1 but likely also stymieing capacity growth by H2. On the EBITDA front, we expect that easing WTI prices and relatively stable yield should provide some support to profitability. Nevertheless, we have brought our EBITDA forecast just below the low end of the $3.4-$3.8-billion guidance range.
“While we are not out of the woods yet, AC continues to trade at approximately 3 times NTM [next 12-month] EBITDA even on our reduced estimates. We have reduced are target price to $24.00 (from $29.00), reflecting lower estimates and a shift down of our target multiple (3.7 times NTM+1 EBITDA from 4 times) contemplating a cloudier macroeconomic environment.”
* CIBC World Markets’ Todd Coupland dropped his Celestica Inc. (CLS-N, CLS-T) target to US$120 from US$150 with an “outperformer” rating. The average is US$135.69.
“Celestica will report its Q1/25 results on April 24 after the market close,” he said. “Our view is Q1 results and the outlook for Q2 and 2025 will be equal to, or better than, FactSet expectations.
“While we are encouraged by Google and Amazon’s 2025 Gen-AI related capex plans for datacentre (DC) buildouts that should benefit hardware suppliers including Celestica, what is less clear is the impact from U.S. export tariffs of 36 per cent on Thailand, which is home to Celestica’s second-largest manufacturing location. This is important as 53 per cent of Celestica’s 2024 external revenue was from Thailand. A mitigation to this risk is recent developments that could lead to in-region tariff relief and resolution. ... We rate Celestica Outperformer and recommend investors buy its shares.”
* Jefferies’ Julien Dumoulin-Smith raised his Hydro One Ltd. (H-T) target to $49, exceeding the $46.38 average, from $45 with a “hold” rating.
* Berenberg’s Aron Ceccarelli increased his target for Nutrien Ltd. (NTR-N, NTR-T) to US$59 from US$54 with a “buy” rating. The average is US$60.95.
* JP Morgan’s Jeremy Tonet cut his Pembina Pipeline Corp. (PPL-T) target to $59 from $62 with a “neutral” rating. The average is $62.06.
* Stifel’s Suthan Sukumar, currently the lone analyst covering Tribe Property Technologies Inc. (TRBE-X), a Vancouver-based provider of technology-enabled property management solutions, trimmed his target to 75 cents from $2.25 with a “buy” rating.
“Tribe delivered on upside EBITDA for FQ4, reflecting the company’s growing discipline around driving both growth and EBITDA as they continue down the path of digitally transforming the legacy property management industry,” he said. “While the outlook for new construction remains murky amidst an evolving government policy/interest rate/tariff picture, growing costs and regulatory pressures continue to provide a favourable backdrop for competitive displacements and up/cross-sell as Tribe leverages its expanded capabilities from recent M&A across a national footprint, keeping us constructive on both growth and margin upside. We expect consistent execution on profitable growth with ongoing deleveraging to support a re-rating in valuation. We lower our target price to $0.75/share given recent peer multiple compression and a more conservative growth outlook as per the company’s focus on balancing growth and profitability.”