Inside the Market’s roundup of some of today’s key analyst actions
RBC Capital Markets analyst Daniel Perlin expects Lightspeed Commerce Inc.’s (LSPD-N, LSPD-T) decision to reduce his 2025 revenue guidance to dominated discussion at its annual Capital Markets Day on Wednesday.
Shares of the Montreal-based software company fell 6.2 per cent on Monday after it lowered its revenue growth expectation to 18 per cent from 20 per cent, while it maintained its expectations for adjusted EBITDA more than $53-million. It blamed a deterioration in macroeconomic conditions since its third-quarter 2025 release on Feb. 6, “primarily due to heightened inflationary pressures, increased job insecurity, and weakened consumer confidence, impacting discretionary spending among consumers.”
“These factors, according to the company, led to a decline in same-store sales through February and March, as well as ‘significant’ pressure on transaction-based revenues and, to a lesser extent, subscription revenue,” said Mr. Perlin. ”The revised guidance implies FY25 revenue of $1.073-billion (at 18-per-cent year-over-year growth) and F4Q25 revenue of $249.5-million, compared to RBC estimates of $1.095-billlion/$272-million and the Street at $1.092-billlion/$269-million, respectively. Current RBC estimated is for FY25 adj. EBITDA of $53-million, while the Street is at $54-million.”
In a research report released Tuesday, Mr. Perlin said he also expects the event to cover Lightspeed’s recent pivot to focus on North American Retail and European Hospitality industries and associated go-to-market (GTM) investments; its product roadmap, emphasizing software; and the “mechanics to drive profitable growth, inclusive of adj. EBITDA & FCF profitability.”
“For the past year, Lightspeed management has made it clear that profitable growth is its highest priority, and it’s a reason for its pivot towards its highest ROI and highest growth verticals,” he said. “As the company has delivered on its adj. EBITDA profitability, which we estimate to ramp from $1.3-milllion in FY24 to $53-million in FY25, we expect further proof-points in its ability to drive margin expansion, which in previous commentary suggested incremental mix shift towards software, as well as continued cost optimizations, for which we expect some commentary on AI, particularly for internal operations and customer acquisition. Additionally, management has commented recently that it believes topline growth will be deemphasized relative to gross profit growth as the company drives Subscription revenue growth and benefits from scale. Importantly, management has recently discussed its trajectory in achieving its next leg of profitability in adj. free cash flow, which better positions the company to reinvest for growth, while showing a path to consistent return of capital to shareholders, and for which we could see management providing some framework around.”
In response to the guidance reduction, Mr. Perlin lowered his target for Lightspeed shares to US$15 from US$20, keeping an “outperform” rating. The average target on the Street is US$15.82, according to LSEG data.
“We believe that, ultimately, Lightspeed management is looking to reset the narrative surrounding the shares, which has been negatively impacted by a strategic review process that did not result in a sale, as well as a reorganization of the company and weakness in same-store sales,” he said. “Moving forward, we could see the company emphasizing a cleaner growth story predicated on 1) growth through its flagship Retail and Hospitality products, with a revamped GTM to drive growth with larger customers; 2) investing in innovation and selling more software to those larger clients, driving mix shift and margin expansion; and 3) tying it all together with an optimized cost base and operating leverage to drive profitable growth. We view the prospects of a clean growth story and path to profitable growth (adj. FCF and GAAP EBIT) as potential catalyst to investors engaging with the stock. On the other hand, the company has to convince investors of its ability to navigate a potentially challenging environment as SMB optimism sinks and the macroeconomic outlook dims.”
Elsewhere, others making changes include:
* Scotia’s Kevin Krishnaratne to $17 from $19 with a “sector outperform” rating.
“A challenging macro has led to weaker-than-expected results at LSPD during February and March, leading the company to lower its revenue outlook for FY25 (now calling for growth of 18 per cent vs. prior 20 per cent), with the majority of the pressure expected to be felt within the company’s transaction-based (i.e. Payments) business as a result of weaker SSS trends,” he said. “Positively, LSPD remains focused on profitability where it continues to expect Adj. EBITDA profits for FY25 to be $53-million. We’ve updated our model to reflect more conservative assumptions on location adds and SSS trends in Q4, with revenue growth in the quarter now forecast at 9.7 per cent (prior was 16.6 per cent).”
* Raymond James’ Steven Li to $25 (Canadian) from $29 with an “outperform” rating.
“While no guidance was provided for F2026 (starts on Apr-1), we are going to assume some of these trends will persist at least for the near quarters and lower our model and target accordingly,” he said.
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In a research note released before the bell titled Execution is the foundation of momentum, RBC Dominion Securities analyst Maurice Choy said the market is likely to welcome Brookfield Infrastructure Partners LP’s (BIP-N, BIP.UN-T) proposed sale of its remaining 25-per-cent stake in NGPL Holdings and its “first step in its stabilized data centre monetization strategy,” given “the relatively weak” unit price performance recently.
“These transactions indicating to investors that there continues to be solid momentum in BIP’s capital recycling program in spite of the broader macro uncertainty,” he said. “Further, there are more unit price catalysts which appear forthcoming in the near-term, with BIP experiencing strong activity levels and buyer interest across its other initiatives.”
Following Monday’s announcements, Mr. Choy thinks there is likely “more to come” from Brookfield Infrastructure as it “continues to see strong activity levels and buyer interest en route towards its $5-6 billion asset monetization target over the next two years.”
“With the proposed transactions and the $200-million of previously-secured asset sales (per BIP’s Q4/24 results disclosures), BIP has now locked in over $700-million in proceeds from asset sales, or nearly $900-million when including the sell down of an additional stake in the European data center portfolio,” he said.
“Cash flow frameworks provide strong protection. Amid the market uncertainty, we believe BIP remains positioned to deliver FFO/unit growth in 2025 that is within its 6–9-per-cent target range. Notably, inflation can be a key driver of organic growth, as 70 per cent of BIP’s FFO is indexed to inflation, and a further 15 per cent has inflation protection (i.e., margin neutral via fee-forservice models). Separately, while rate regulated (with GDP exposure) or market sensitive cash flows can offer upside to Transport and Midstream results, about 75 per cent of BIP’s FFO has no volume or price exposure, with above-average cash flow stability from the Utilities and Data segments.”
The analyst reaffirmed an “outperform” rating and US$40 target for Brookfield Infrastructure’s NYSE-listed shares. The current average is US$40.25.
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TD Cowen analysts Kasia Trzaski Kopytek and Sean Steuart sees Doman Building Materials Group Ltd. (DBM-T) “poised for re-rating”.
Touting an “attractive” valuation for its shares, they initiated coverage of the Vancouver-based company with a “buy” rating on Tuesday.
“DBM’s transformative growth into treated wood products has yielded mixed results, but there are budding signs of change,” they said. “The multiple should re-rate higher as DBM proves that its post-pandemic margin/EPS/FCF track record is sustainable, leverage declines, and recent acquisitions bear fruit. The integration of CM Tucker should be a catalyst.”
In a report released Tuesday, the analyst argued an extended trough for commodity lumber and panel markets has contributed to Doman’s negative valuation sentiment.
“The company’s smaller size and higher leverage versus larger U.S.-based peers and, we believe, entrenched investor perception as a Canadian company (despite 61 per cent of the company’s 2024 sales coming from the U.S.) are additional factors contributing to the depressed valuation. We note that Doman’s business model differs from those of the primary forest product manufacturers. The company’s focus on wholesale distribution, including its remanufactured/treated lumber products, yields lower earnings and margin volatility.
“We see two catalysts that could potentially kickstart the valuation: i) the integration of CM Tucker (acquisition closed October 1, 2024) will highlight the favourable qualities of Doman’s pressure treated wood business and ii) a cyclical recovery in the home improvement and new home construction end-markets could support improved investor sentiment. TD Cowen’s Hardlines analyst Max Rakhlenko notes that home improvement sentiment is modestly positive. Although investors monitor the intersection of declining mortgage rates with lower consumer confidence, he ultimately views the recovery as a matter of ‘when’ and not ‘if’.”
The analysts also see “a compelling FCF and deleveraging story is emerging,” estimating yields of 13.7 per cent in 2025 and 15.2 per cent in 2026. They called the 2021 Hixson acquisition “an inflection point,” leading to “a steadier trajectory for FCF generation.”
Also touting an “improving” return on capital employed and viewing U.S. tariffs as “manageable,” they set a target of $9.50 per share. The average is currently $10.75.
“DBM shares offer a compelling investment opportunity, given a low valuation, positive company fundamentals, and cyclical/structural industry tailwinds,” they concluded. “Doman’s growth over the past decade has doubled the company’s exposure to treated wood products to 50 per cent of sales today. We expect that the integration of CM Tucker will drive EPS/FCF growth and highlight the favourable attributes of the company’s repositioned earnings base. This should support deleveraging and drive a narrowing valuation gap versus peers and historical trading averages for the shares.
“We believe the timing in the cycle for Doman’s end-markets is favourable. Repair and remodel (approximately 45 per cent of sales) and new home construction (45 pef cent of sales) demand is near a cyclical low. Structural housing tailwinds — notably, favourable demographic trends and a U.S. housing shortage — offer long-term upside.”
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Stifel analyst Martin Landry thinks the Street’s expectations for Groupe Dynamite Inc.’s (GRGD-T) 2025 appear low, “setting up potential for upside surprise.”
Accordingly, ahead of the release of its fourth-quarter 2025 financial results, he thinks it is time for investors to “revisit” the Montreal-based clothing retailer.
“Along with our earnings preview we offer an interview with four customers and fans of the Garage brand,” said Mr. Landry. It is clear that Garage has created a strong brand affinity with these customers, which we believe explains in part the recent successes and brand momentum. Looking at the shares, GRGD ranks high in our pecking order, and we expect a strong performance in 2025 boosted by (1) FY2025 guidance coming ahead of consensus estimates, (2) track record building throughout the year should abate current investors’ skepticism on execution, (3) mitigating measures to offset tariff impacts should become clearer and reassure, (4) investors’ knowledge of the company should increase with time, leading to additional fresh eyes looking at the shares.”
On Feb. 4, the company pre-released several financial metrics for the fourth quarter, including comparable store sales growth of 9.5 per cent and a year-over-year gain in the adjusted EBITDA margin. Mr. Landry now expects it to lea to earnings per share of 31 cents, which would be a rise of 14 per cent from the same period a year ago and 2 cents higher than the Street’s estimate.
“FY2025 consensus appears low, setting up potential for upside surprise,” he added. “Our FY2025 forecasts call for EPS to come-in at $1.46, up 8 per cent year-over-year, higher than consensus expectations of 1.37. While it is not clear if the company may initiate a guidance which includes EPS, we believe that the overall guidance (revenue and margins) could translate into an EPS range of $1.40-1.50. Hence, we expect consensus EPS estimates for FY2025 to move higher post the Q4FY24 results and initiation of the 2025 guidance.
“Our FY2025 EPS drivers include: 1. 5.9-per-cent comp growth, a deceleration vs. 2024 to reflect the softer macro environment. 2. 3-per-cent store network growth with the opening of 9 net new stores, a similar pace as 2024. 3. 30-per-cent e-commerce growth to reach 19.5 per cent of total sales, up from 17.3 per cent in 2024. 4. Reduction of interest expenses as cash build-up on the balance sheet.”
The analyst also emphasized the retailer’s “strong” margins and “impressive” return on invested capital should attract interest from investors.
“Among a select group of seven peers, GRGD stands out with an LTM [last 12-month] EBITDA margin of 23.6 per cent, when excluding the IFRS 16 impact, almost 600 basis points above the group’s average and second only to Lululemon at 27.4 per cent,” said Mr. Landry. “This strong EBITDA margin level is impressive given that GRGD’s price points are 50 per cent lower than the average of select peers. It is also impressive given that GRGD is the smaller company of the group with less than $1 billion in revenues, hence having a lower fixed-cost absorption. GRGD’s 23.6-per-cent EBITDA margin stems from a high gross margin of 62.9 per cent, one of the highest levels among the group and 1,150bps above the group’s average.
“We forecast that Groupe Dynamite will finish 2024 with a return on invested capital of 33 per cent, the highest level amongst our companies under coverage. The company also ranks in the top quartile amongst a large group of publicly-traded apparel retailers. ROIC is one of our favorite metrics to assess management’s value creation and here, looking at GRGD, the company has certainly generated impressive returns with the capital employed. As the company maintains these levels, we believe investors will get more comfortable on the sustainability of this high ROIC and ascribe a higher valuation to the shares.”
Touting its “appealing” valuation, Mr. Landry reiterated a “buy” rating and $28.50 target for its shares. The current average on the Street is $26.05.
Elsewhere, National Bank’s Vishal Shreedhar said he expects Groupe Dynamite’s “strong” top-line revenue momentum to continue, but he warned macroeconomic uncertainty will weigh on the release.
“Investment in GRGD is differentiated by strong financial metrics, with an EBITDA margin and ROIC that is amongst the highest in our apparel group (F2023 EBITDA margin of 27.1 per cent and ROIC of 35.3 per cent),” he said.
“While not reflected, we wouldn’t be surprised if dividends/buybacks were introduced in the medium-term given cash generation exceeding requirements.”
Mr. Shreedhar kept an “outperform” rating and $26 target.
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Paradigm Capital analyst David Davidson thinks NorthIsle Copper and Gold Inc.’s (NCX-X) North Island Project is unique, standing out from other B.C. copper deposits given “the advantage of starting production with high-grade gold-copper, great infrastructure and significant exploration potential that can either enhance or extend the mine life.”
In a research report released Tuesday, he initiated coverage of Vancouver-based junior resources company, which was spun out of Western Copper in 2011 in order to undertake exploration and development and consolidate its land position on northern Vancouver Island, with a “speculative buy” rating, believing its 2021 preliminary economic assessment suggests “a very robust project.”
“Initial exploration on the northern part of Vancouver Island was undertaken by local prospector George Milbourne in the mid-1960s,” said Mr. Davidson. “His original discovery was subsequently optioned by Utah Mining who developed the Island Copper mine and operated it from 1970 to 1995. Utah Mining was acquired by BHP in 1984. While in the control of Utah, further exploration was undertaken resulting in the discovery of the key deposits of Hushamu and Red Dog which form the bulk of the now named North Island Project (NIP). The Hushamu deposit was spun out of Western Copper into NorthIsle Copper and Gold in 2011. Since then, exploration has extended the mineralization at known deposits and additional mineralization has been added including the high-grade gold mineralization at Northwest Expo. This has led to a situation where two-phased production is visualized beginning with gold-copper for Phase 1, transitioning to copper-gold in Phase 2.”
“NorthIsle Copper and Gold Inc. (NCX) has been systematically exploring a large cluster of porphyry-related mineralized deposits on northern Vancouver Island since 2011. To date, three mineralized systems — Hushamu, Red Dog and Northwest Expo — have been extensively explored resulting in an updated NI-43-101 Mineral Resource Estimate (MRE) announced in the fall. More recently, a Preliminary Economic Assessment (PEA) has been released indicating a staged project starting with the gold-rich Northwest Expo deposit and has superseded a 2021 PEA.”
Mr. Davidson said NorthIsle is planning to “continue aggressively exploring several other high-priority targets, including West Goodspeed (not currently in the MRE) and extensions to the Northwest Expo deposit which are intended to increase the resource base, add to the gold-rich mineralization and upgrade the resource while moving to the Pre-feasibility Study (PFS) stage in parallel.”
He set a target of $1.45 per share. The current average is $1.33.
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In other analyst actions:
* While he sees uranium market fundamentals “remain positive despite the weakness in spot prices,” Scotia Capital’s Orest Wowkodaw lowered his targets for Cameco Corp. (CCO-T) to $81 from $85, Denison Mines Corp. (DML-T) to $3.75 from $4.75 and NexGen Energy Ltd. (NXE-T) to $11.50 from $12 with “sector outperform” recommendations for all three. The averages on the Street are $80.95, $4.02 and $13.62, respectively.
“In the near term, we forecast the market to remain in a large structural deficit equal to 4.9 per cent of annual demand until 2030 (prolonged permitting for several new projects has extended this outlook by one year from our previous forecast),” said Mr. Wowkodaw. “Although material planned supply growth has the potential to push the market into modest oversupply starting in 2031, execution risks remain elevated. On the demand side, the growing agendas of decarbonization, energy independence, and power security are expected to drive meaningful long-term growth in nuclear despite the uncertain build pace of new energy-intensive AI/data centres. Led by China, global nuclear capacity is forecast to increase by 12 per cent by 2030, 30 per cent by 2035, and by 50 per cent by 2040.
“Although we have tempered our price expectations, we see no material changes to market fundamentals. In our view, current equity valuations represent an attractive entry point for investors. For the lowest-risk exposure, we recommend CCO-T. Alternatively, for investors that seek more torque and have a higher risk tolerance, we recommend DML-T and NXE-T.”
* CIBC’s Kevin Chiang lowered his targets for Canadian National Railway Co. (CNR-T) to $157 from $162 with a “neutral” rating and Canadian Pacific Kansas City Ltd. (CP-T) to $124 from $128 with an “outperformer” rating. The averages on the Street are $171.64 and $127.45, respectively.
“We have adjusted our model to reflect Q1/25 volume trends and to incorporate our revised FX forecast. On average, our Q1/25 EPS estimates for CN and CPKC decline by approximately 5 per cent to reflect the challenging February weather conditions,” he said. “That said, we expect both rails to maintain their 2025 outlooks when they report their first-quarter results.”
* Stifel’s Justin Keywood raised his Knight Therapeutics Inc. (GUD-T) target to $7.45 from $6.25 with a “buy” rating The average is $7.56.
“Knight is a specialty pharma company, started in 2014 after its predecessor company, Paladin was sold to Endo Pharma in a $3-billiom transaction and 100 times IPO return,” he said. “Knight is now buying back Paladin at a fraction of the value ($120-million). Paladin today, generates $70-million in sales with mostly mature assets but some new launches and to contribute steady revenue for 2-years, prior to inflection. We model in Paladin and current guidance, suggesting a two-year, 8-per-cent revenue CAGR and an embedded growth outlook beyond with 18 new products to be launched over five years. Knight has a 29-year streak of record revenues, going back to Paladin and history of meeting or exceeding guidance, see table below. Knight has also bought back 40 per cent of its float (5-years) near current prices. We see growth quarters ahead, selling from an activist abating and additional Canadian Pharma M&A as leading to a re-rating and suggest investors re-visit Knight.”
* CIBC’s Ty Collin raised his Diversified Royalty Corp. (DIV-T) target to $3.10 from $3, keeping a “neutral” rating. The average is $4.08.
“Solid Q4 results fell largely in line with our expectations, but a surprise re-acceleration of growth at Mr. Lube is a notable bright spot. The payout ratio is at a comfortable level, but future dividend increases are likely contingent on additional M&A,” said Mr. Collin.
* Ahead of the April 3 release of its fourth-quarter fiscal 2025 results, Canaccord Genuity’s Luke Hannan raised his Dollarama Inc. (DOL-T) target to $146 from $140 with a “hold” rating. The average is $149.31.
“Similar to recent quarters, we expect elevated demand for consumable products to offset softness in discretionary categories as consumers prioritize essential spending amidst growing economic uncertainty,” said Mr. Hannan. “While recent interest rate cuts presented a potential tailwind for discretionary spending, we have yet to see large retailers report a significant improvement within our coverage universe. To illustrate this point, we note that retail Canadian Tire Corp. (CTC.A-TSX: $149.97 | HOLD, $154.00 target price) reported declines in discretionary categories despite facing a soft comparable period, planning to prioritize value for the year ahead.”
“While we still believe in Dollarama’s long-term growth profile — a result of its lack of meaningful competition, industry-leading profitability and free cash flow generation, and healthy ROIC — we believe the shares are appropriately valued at current levels.”
* In response to Monday’s construction update on its Koné project Côte d’Ivoire, which broke ground in mid-December, Cormark Securities’ Nicolas Dion raised his target for shares of Montage Gold Corp. (MAU-X) to $4.50 from $3 with a “buy” rating. The average is $3.96.
“Montage appears to be off to a strong start, making the most of the dry season and tracking slightly ahead of schedule (though it is still early days),” he said. “Once built, Koné will be among the largest and lowest cost gold mines in West Africa. We model an 17-year mine life producing over 300,000 oz/yr in the first 8 years (MAU targeting over 300,000 oz/yr for 10+ years through exploration) at $1,250/oz AISC [all-in sustaining cost] (mine-level).”