Inside the Market’s roundup of some of today’s key analyst actions
Citi analyst Ariel Rosa thinks North American transportation stocks look “attractive” after their recent tariff-drive sell-off, even though he’s expecting a “weak” first-quarter earnings season alongside a “cloudy” outlook that led to reductions to his forecast.
“Transports were already setting up for a difficult 1Q earnings season, even before the worse-than-expected tariffs on Wednesday,” he said. “Companies we spoke with over the last several weeks had almost invariably expressed caution on the macro, talking down 1Q prospects. Adding tariffs to the mix now guarantees a more bearish and uncertain future through the remainder of 2025 and beyond, rendering prior outlooks largely irrelevant. Even as this remains one of the most difficult environments we can recall in which to forecast, we are cutting estimates and price targets across our coverage. Despite uncertainty, the sharp sell-off has made transport stocks more attractive on both an absolute and relative basis – particularly as we expect a downturn in freight demand will catalyze carrier exits and rationalize excess capacity.”
In a research note released Tuesday, Mr. Rosa said investors should prepare for lingering uncertainty, emphasizing: “The reality is, there is a great deal we do not know – and corporates don’t know either.”
“Unlike the ‘vibecession’ of the past several years, however, the economy now looks vulnerable to a generational shift, with substantial downward pressure across low-end consumer spending (which was already soft), industrial activity (which was already weak), and high-end consumer spending (which had been supporting the economy but now looks vulnerable to a sharp pull-back).,” he added. “This, in turn, poses significant risk to freight volumes. We see transports as more durable over the long run, but see substantial earnings pressure in the near- to medium-term, as we sharply cut EPS estimates and target prices across our coverage.
“Fundamentals into 1Q25 earnings — Two notable comments from our pre-quiet period calls stand out. First, a global carrier noted a meaningful drop-off in volume starting in early- to mid-Feb. as tariff discussions accelerated. Second, a different national carrier observed, “we might as well have a recession since our stock seems to be pricing it in already”. Notably, this second comment was made before the recent sell-off, which has taken the stock down another 20 per cent. Whereas 1Q results largely reflect weather challenges, seasonal weakness and slow business activity, 2Q and beyond will reflect the more serious and enduring damage from tariffs.”
With the significant reduction to his earnings projections, Mr. Rosa’s target price adjustments included:
* Canadian National Railway Co. (CNI-N, CNR-T) to US$114 from US$122 with a “buy” rating. The average on the Street is US$117.21, according to LSEG data.
* Canadian Pacific Kansas City Ltd. (CP-N, CP-T) to US$84 from US$91 with a “buy” rating. Average: US$89.99.
“For the Canadian rails, cold weather will likely pose an outsized challenge, with CNI noting 18 consecutive days of tier restrictions in February from the winter (compared to none in 2024), likely weighing on margins. CP has said that its full-year outlook for 12-18-per-cent year-over-year EPS growth incorporates tariff risk, but we have turned skeptical that this level of earnings growth can be achieved given the broader macro risk,” he said. “With the sell-off in Canadian rails, we have seen increasing inbound interest on these high-quality names, although we worry that investors may be under-appreciating the risk posed by tariffs. CNI and CP were among the best-performing stocks in our coverage following the April 2nd announcement given no incremental tariffs were announced on Canada or Mexico. Nevertheless, the auto tariffs and a broader slow-down in U.S. and Canadian consumer spending could drive downside to earnings. We still see the rails as defensive given the high quality of their businesses, but we recognize that these names might have more downside macro risk than investors are currently acknowledging.”
* TFI International Inc. (TFII-N, TFII-T) to US$95 from US$130 with a “buy” rating. Average: US$126.89.
“TFII has been the worst performing stock in transports year-to-date (down 43 per cent) as the company continues to struggle with its U.S. LTL [less-than truckload] operations,” said Mr. Rosa. “While management has already warned that 1Q results would be weak, the extreme caution embedded in the stock feels overdone, in our view.”
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Scotia Capital analyst Himanshu Gupta now expects industrial real estate fundamentals to take longer to recover, estimating the availability rate will inflect in the first or second quarter of 2026 rather than his previous assumption of the third or fourth quarter of this year.
“As such, timeline to go Overweight Industrial has pushed out until end of 2025,” he said in a note released Tuesday. “We will remain on the sidelines for another 6 to 8 months (vs 3 to 4 months wait mentioned previously), but will recommend Underweight position on Industrial REITs if the house view is a global recession (20-per-cent to 25-per-cent price downside). We reiterate our Overweight position on Seniors Housings names with or without a recession.
“We have reduced our FFOPU [funds from operations per unit] estimates in 2025 and 2026 by 2 per cent and 4 per cent respectively, and reduced our current NAVs by 7-14 per cent.”
With those changes, Mr. Gupta downgraded Nexus Industrial REIT (NXR.UN-T) to “sector perform” from “sector outperform” previously, saying, “We think AFFO payout ratio normalization for NXR has further pushed out in current environment + NXR has higher leverage relative to peers.”
“We think AFFO payout ratio will remain elevated in 2025 and 2026 (previously we thought payout ratio will normalize in 2026),” he added. “In a recession scenario, NXR is vulnerable to distribution cuts. We forecast 2025E AFFO payout ratio will remain elevated at 105 per cent, which might cause concerns regarding the sustainability of the monthly distributions in a weak macro environment. Also, High leverage (D/GBV) makes balance sheet vulnerable: NXR’s leverage of 49 per cent is significantly above peers (avg.=34 per cent) – we think a strong balance sheet is crucial to absorb losses in the event of an economic downturn.”
His target for NXR units slid to $7 from $8.50. The average on the Street is $8.47.
The analyst’s other target adjustments are:
- Dream Industrial REIT (DIR.UN-T, “sector outperform”) to $14 from $16. Average: $14.93.
- Granite REIT (GRT.UN-T, “sector outperform”) to $75 from $85. Average: $87.38.
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Following Largo Inc.’s (LGO-T) “sub-optimal (but anticipated) Q4 results marked by continuing operational challenges,” RBC Dominion Securities analyst Andrew Wong thinks there is a “possibility” for value creation if vanadium prices improve and operations show additional improvement, but he cautioned the company “may continue generating negative free cash flow and need to raise more capital if vanadium prices remain depressed.”
In a research report released Tuesday, he assigned a new “speculative risk” qualifier to his “outperform” recommendation for the Toronto-based company, pointing to lower vanadium prices and delayed construction of vanadium-titanium Maracás Menchen operation in Brazil.
“Vanadium pricing remains suppressed, but potentially hovering near bottom: Largo reiterated continued headwinds in the European and Chinese markets, driven by reduced steel and infrastructure demand as well as an oversupply from producers in both China and Russia,” said Mr. Wong. “Given potential global macro headwinds driven by a broadening trade war, we see significant uncertainty in a near-term vanadium price recovery. We flag that although the vanadium market remains opaque, prices have historically bottomed near Chinese steel rebar break-even.
“Potential upside for LGO shares under (the right) vanadium prices: We assume benchmark vanadium prices of $7.00/lb in 2026 with an average realized price to Largo of $7.53/lb in 2025 due to the benefit of high-purity vanadium sales (40 per cent of volume). Our base case has Largo generating $57-million of EBITDA in 2026. An incremental $0.50/lb (7-per-cent) increase in the vanadium benchmark results in $67-million EBITDA (18-per-cent increase).”
The analyst warned liquidity could become a concern if vanadium prices don’t improve through 2025, seeing potential balance sheet issues as Largo continues to generate negative cash flows.
“At our $6.00/lb vanadium price forecast through 2025, we estimate the company enters a negative cash balance in H2/25 and would require additional capital,” he said.
Mr. Wong trimmed his target for its shares by $1 to $4. The average is $4.63.
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Citing the “sudden change in macro expectations,” TD Cowen analyst Vince Valentini reduced his advertising revenue growth projections for both Illumin Holdings Inc. (ILLM-T) and VerticalScope Holdings Inc. (FORA-T) by 3-4 per cent through his forecast horizon, leading to a drop in earnings expectations.
“Our colleague who covers the mega cap digital advertising names, META and GOOG, lowered ad revenue growth estimates by 1-2 per cent for the balance of 2025 (no change to Q1/25), and 2-3 per cent longer term,” he said. “We have no new guidance or commentary from our smaller digital advertising names under coverage (in fact, we hosted ILLM for an investor meeting on April 3 and the tone remained upbeat regarding demand from advertisers), but the macro and consumer confidence environment is changing rapidly. We believe it is prudent at this time to lower our estimates for ILLM and FORA, which translates into target price reductions but no changes to the Buy ratings. Both stocks have already sold off enough to incorporate the risk, in our view, albeit this is a highly volatile environment, especially for less liquid small cap names.”
“Note that we already had arguably conservative expectations for both companies in Q1/25 (more of a seasonal lull subsequent to strong Q4/24 results for both, as opposed to the more recent macro fears), and for ILLM we are highly confident that revenue growth remained positive on a year-over-year basis in Q1 (better traction in March has been cited by management, subsequent to sluggish order flow in February).”
With the uncertain macro environment and weakness in both the digital media space and broader technology sector, Mr. Valentini also lowered his targets for both stocks with Illumin sliding to $3 from $4 and Verticalscope to $15 from $18 with “buy” ratings for both. The average targets on the Street are $3.28 and $16.75, respectively.
“As a reminder, both of these digital media companies have strong balance sheets (especially ILLM with about $1/share in net cash), which should allow them to ride out a near-to-medium term storm, and perhaps even capitalize via share buybacks or less expensive M&A opportunities,” he conclude. “We hope that the macro environment impact on advertising demand is short-lived, so that our estimate changes today can be somewhat reversed, but we believe it is prudent to embed more caution into our forecasts until we get more visibility.”
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Citi analyst Bryan Burgmeier reduced his 2025 earnings expectations for North American waste services companies by an average of 3 per cent to reflect lower volume assumptions in both the second and third quarters due to potential softness in special waste streams following U.S. tariff announcements.
“Given a high level of uncertainty throughout the economy, special waste projects (mostly soil from construction/real-estate activity) could be delayed or cancelled. Across our coverage, we assume volumes could be down low single digits year-over-year in 2Q & 3Q with a double-digit decline in special waste but resilient MSW volumes,” he said. “Despite trimming estimates, we maintain a positive view on the group as Waste is (of course) a good place to ride out a recession or macro instability.”
While touting “significant” outperformance across the industry thus far in 2025, Mr. Burgmeier warned full-year guidance could be threatened.
“We expect poor April volumes in special waste streams with significant economic uncertainty, and already accounted for a potentially weak March volumes in our 1Q Preview,” he said. “If these conditions continue into May or longer, FY guides could be at-risk. We are now forecasting ‘25 EBITDA for the group to be slightly below the low-end of guidance ranges.”
“We generically trim disposal volume by 3 per cent in 2Q to reflect a double-digits decline in special waste with gradual recovery through year-end, mirroring the post-pandemic recovery. We forecast a 2-per-cent decline in 3Q volume and leave 4Q mostly unchanged. We assume 40-per-cent EBITDA margin contribution on lost volume. Our average ‘25 estimates decline is 3 per cent and we are now slightly below the lower-end of EBITDA guidance ranges. Our ‘26/’27 est. tick down 1-2 per cent as future flattish volume assumptions now come off a lower base.”
With those changes, the analyst reduced his targets for stocks in his coverage universe, including:
* GFL Environmental Inc. (GFL-N, GFL-T) to US$53 from US$56 with a “buy” rating. The average is US$51.39.
* Waste Connections Inc. (WCN-N, WCN-T) to US$209 from US$218 with a “neutral” rating. Average: US$199.48.
“Waste stocks have outperformed month-to-date (down 6.5 per cent vs. S&P 500 down 9.8 per cent) given a broader shift towards defensives,” the analyst said. “While the entire group is well positioned for a potential recession, we prefer RSG as minimal exposure to natural gas & recycled commodities (estimated 3 per cent of run-rate EBITDA) is favorable in a bear market. Further, given the level of macro uncertainty, we like RSG’s reliable track-record having beaten or met consensus EBITDA estimates 12 quarters in a row and RSG is now positioned to lead the sector in FCF conversion percentage for the 2nd straight year. WM & GFL are forecasted to have outsized exposure to recycling (est. 5 per cent & 9 per cent, respectively) after internal investments ramp-up, although earnings sensitivity to commodities is expected to be largely unchanged from ‘25 levels due to fee-for-service contracts. While WCN has exposure to E&P (est. high single-digits), earnings have been somewhat derisked after acquiring assets from Secure in Feb ‘24; we estimate 50 per cent of E&P earnings are from production and 50 per cent from drilling, up from 20/80 production/drilling prior to the deal. The group has healthy balance sheets; WM leads net leverage after the SRCL acquisition (estimate 3.1 times at YE’25) although liquidity is not a concern. If tariffs are delayed or cancelled, GFL could bounce back from recent underperformance (down 11.1 per cent month-to-date) with growth potential and M&A opportunities potentially coming back into focus.”
Elsewhere, Scotia’s Konark Gupta raised his targets for GFL to US$54 from US$52 with a “sector outperform” rating and Waste Connections to US$207 from US$192 with a “sector perform” rating.
He also lowered his Secure Waste Infrastructure Corp. (SES-T) target to $19.50 from $22 with a “sector outperform” rating. The average is $18.25.
“The North American solid waste sector remains attractive due to the various factors we have discussed before (see our initiation and 2025 outlook), namely pricing power, M&A (accelerating in some cases), solid FCF with upside from sustainability, and shareholder-friendly actions,” said Mr. Gupta. “The recent stock market volatility, triggered by U.S. tariff actions, could further attract investors given the sector’s defensive attributes, essential nature of services, and low sensitivity to macro (volumes play a minor role). Thus, we are expanding EV/EBITDA multiples for the Big 4 (WM, RSG, WCN, and GFL) by 0.5-1.0 times, along with minor to no earnings changes, which drive our target prices higher by 5 per cent on average. At the same time, we have trimmed our expectations, multiple and target price for SES due to its material exposure to the energy industry in Western Canada and North Dakota as crude oil prices have come down. Overall, we continue to see better risk/reward in GFL, SES and WM, based on their relative valuations as well as company-specific catalysts, namely M&A acceleration / investment grade rating (with buybacks recently completed), further diversification into metals recycling, and Stericycle synergies, respectively.”
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Raymond James analyst Luke Davis initiated coverage of eight natural gas-weighted producers operating in Western Canada, primarily targeting the prolific Montney and Deep Basin resource plays, on Tuesday.
“We continue to see significant latent value across the space though we believe producers within this cohort are unique given each has outlined decades of well delineated drilling inventory,” he said. “That said, we think consolidation is logical, and likely necessary in several cases, with historical friction stemming from some degree of internal entrenchment. In our view, producers with significant scale, diversified market access, and solid financial positioning will outperform peers given the western Canadian natural gas market remains fragmented with AECO at the ‘end of the pipe’, but we do see a clear path to sustained structural improvements into the end of the decade that we expect should drive broad multiple expansion.”
Mr. Davis added: “Our top ideas include companies we believe are best positioned in the context of the current macro environment - in our view, the risk/reward profile has skewed in favour of gas names and while the energy complex has traded off sharply, the broad and reactionary move likely presents opportunity. We believe a general ‘high grading’ as likely near-term with a bias to larger cap producers, though we see opportunities at the smaller end of the spectrum as well. Our favoured stocks are ARC Resources (ARX-TSX), Kelt Exploration (KEL-TSX), NuVista Energy (NVA-TSX), Peyto Exploration & Development (PEY-TSX), and Tourmaline Oil (TOU-TSX).”
His ratings and targets are:
* Advantage Energy Ltd. (AAV-T) with a “market perform” rating and $12 target. The average on the Street is $13.95.
Analyst: “Advantage continues to navigate a recent strategic shift that resulted in a reconstituted portfolio with higher exposure to oil and liquids. In our view, this ultimately improved the sustainability of the business, diversifying the asset mix while bulking up in a familiar zip code. That said, elevated financial leverage, strategic positioning, and ongoing Board shuffle remain key headwinds that we expect will pass in due course. We initiate coverage on Advantage Energy Ltd. with a Market Perform rating given we believe some of the ‘noise’ around the stock is likely to increase uncertainty near-term”
* ARC Resources Ltd. (ARX-T) with an “outperform” rating and $33 target. Average: $33.19.
Analyst: “We view ARC’s asset suite as among the best in the industry, which combined with a strong focus on creating shareholder value, should continue to drive outsized relative returns. Given the ‘right’ mix of high productivity Montney wells straddling both sides of the AB/BC border, proximity to LNG offtake, and decades of liquids rich inventory, we believe the company is highly resilient and positioned to outperform peers across cycles. While there are many solid businesses within the Canadian oil patch, we believe ARC is among a short list that filters to the top.”
* Birchcliff Energy Ltd. (BIR-T) with a “market perform” rating an $7.50 target. Average: $7.68.
Analyst: “Following a recent shift in capital allocation, including a right-sized base dividend, the company is focused on optimizing plant throughput, improving the overall cost structure, and enhancing longer-term optionality. In our view, this has the potential to drive an inflection, opening the door to accelerated growth across the portfolio and/or incremental shareholder returns, and while we think relative outperformance is justified, we believe the valuation appropriately captures recent improvements and currently see better opportunities among gas-weighted peers.”
* Kelt Exploration Ltd. (KEL-T) with an “outperform” rating and $9.50 target. Average: $9.33.
Analyst: “Kelt offers a differentiated growth model with management hyper focused on creating value through organic asset development. While we acknowledge the lack of a defined shareholder return program and intentional reallocation of free cash to drill new wells does not check the boxes for all investors, we believe management’s proven track record and technical expertise will ultimately drive competitive returns. In any case, we would advocate for a portfolio weighting on option value and view Kelt as a likely candidate for asset monetization and/or an outright sale.”
* NuVista Energy Ltd. (NVA-T) with an “outperform” rating and $18 target. Average: $17.43.
Analyst: “Despite a relatively small land footprint, NuVista Energy has outlined a solid runway of drilling inventory to backstop near-term growth plans and harvest cash for more than two decades at an optimized level of production. We view the company’s asset base as top decile within the liquidsrich portion of the Montney, driving peer-leading netbacks and free cash generation at our current outlook. Given a strong balance sheet, plenty of capacity for share buybacks, and reasonable valuation, we believe NuVista filters to the top of the peer group, and while not part of our current thesis, we view the company as a strong candidate for consolidation.”
* Peyto Exploration & Development Corp. (PEY-T) with an “outperform” rating and $22 target. Average: $18.90.
Analyst: “Peyto has long been among the most efficient and lowest cost natural gas producers in Canada with a strong foothold in the Deep Basin. While not historically a consolidator, the 2023 acquisition of Repsol Canada’s complementary asset suite provided a solid platform for organic growth and optimization on a base that was well undercapitalized. Despite higher leverage metrics relative to peers, we see a clear path to debt repayment, supported by a strong hedge book and top-quartile FCF profile, with plenty of development upside given idle processing capacity available within the company’s owned network of gas processing facilities.”
* Paramount Resources Ltd. (POU-T) with a “market perform” rating and $20 target. Average: $25.50.
Analyst: “Paramount’s recent asset sale culminated in a portfolio reset and repositioning with a nearterm focus on the liquids-rich Duvernay play in Alberta. The company also retains significant optionality in its Sinclair, Liard/Horn River, and heavy oil portfolios, all prospects we believe will come to the fore closer to the end of the decade. While we see significant latent value across the portfolio and believe management is well suited to delineate high impact prospects, we remain on the sidelines during the execution phase at Willisden Green and see a likely inflection as the company moves to a position of sustainable free cash generation.”
* Tourmaline Oil Corp. (TOU-T) with an “outperform” rating and $78 target. Average: $78.84.
Analyst: “Tourmaline has earned its status as the bellwether natural gas producer in Canada with management widely regarded as among the best in the industry, and for good reason. We believe investors will position for quality given ongoing macro uncertainty and likely shift toward gas-weighted names with Tourmaline a clear beneficiary. The company boasts a deep drilling inventory, diverse market access, and robust return of capital program that we believe will drive outsized long-term relative returns. Strategic consolidation has been a key facet of the story and while we expect this to continue, we have not incorporated incremental upside into our estimates.”
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In other analyst actions:
* Jefferies’ Daniel Fannon cut his Brookfield Asset Management Ltd. (BAM-N, BAM-T) target to US$46 from US$52 with a “hold” rating. The average is US$57.82.
* Ahead of its April 15 earnings release, TD Cowen’s Brian Morrison lowered his Groupe Dynamite Inc. (GRGD-T) target to $20 from $28 with a “buy” rating to reflect near-term tariff headwinds. The average is $25.25.
“With current economic uncertainty, the Q4/F24 results will not be the focal point of the release, especially having disclosed preliminary key metrics on February 4,” he said. “We forecast its revenue should increase 13.2 per cent year-over-year on strong SSSG [same-store sales growth], new store openings, and heightened eCommerce penetration. This should drive operating leverage from scale that along with an increased AUR, heightened proportion of U.S. sales, and lower markdowns should drive EBITDA margin expansion. Our Q4/F24 adjusted EPS forecast of $0.30 is in line with consensus.”
“We remain positive upon its strategic initiatives to support future growth, however, current economic uncertainty from tariffs admittedly limits our forecasting ability. Balance sheet strength provides comfort for it to endure near-term pressures, and maintain/resume its attractive growth strategy as consumer confidence stabilizes/improves.”