Inside the Market’s roundup of some of today’s key analyst actions
RBC Dominion Securities analyst Bart Dziarski added five stocks to his diversified financials coverage universe on Wednesday.
In a research report released before the bell titled The Mighty X, he initiated coverage of TMX Group Ltd. (X-T) with an “outperform” rating, believing “a continued favourable mix shift towards recurring, high growth revenue will drive a higher multiple over time.”
“Over the past ten years, TMX’s multiple has expanded by approximately 10 turns, while Global Solutions, Insights & Analytics (GSIA) revenue as percentage of total has expanded from 30 per cent to 40 per cent driving recurring revenue increasing from 40 per cent to 50 per cent today,” he said. “In our view, this has been the single biggest driver of TMX multiple expansion given it represents a higher growth and recurring earnings stream and diversifies TMX away from transactional revenue. We model GSIA increasing from 41 per cent to 45 per cent of total revenues by 2027, driving a higher percentage of recurring revenue from 50 per cent today to 53 per cent by 2027.
“TMX rate-based revenues have risen following higher interest rates and we expect the trend to continue. Post GFC, interest rates steadily decreased to near-zero levels with TMX rate-based revenues generating benign growth. With interest rates increasing from near-zero levels post COVID, we believe we are in a structurally improved rate environment where rates have normalized. Based on RBC Economics rate forecasts, we have modelled rate-based revenues to remain elevated near-term.”
Mr. Dziarski also touted the Toronto-based company’s a “fundamentally strong business model characterized by a dominant Canadian market share and high barriers to entry.”
“With a dominant 62-per-cent market share in equities trading for TSX and TSXV, high barriers to entry, countercyclical revenues and enduring moats around its business, we view TMX’s business model favourably,” he explained. “The company has a proven track record of disciplined capital allocation, including M&A driving new growth avenues (e.g. Trayport, VettaFi). Relative to global peers, TMX has a higher percentage of recurring revenue, lower CAPEX spend and a more favourable growth outlook, warranting a premium multiple, in our view.”
He set a $66 target for TMX shares. The average target on the Street is $62.31, according to LSEG data.
“Our 27 times P/E multiple is above the long-term average and above-peer average driven by a continued shift towards higher data/analytics revenue, higher recurring revenue and supported by a normalized interest rate environment,” said Mr. Dziarski. “With a higher EPS growth outlook, higher recurring revenue and lower CAPEX requirements vs. peers, we believe TMX should trade at a premium multiple relative to peers.”
In separate research reports, he initiated coverage of these equities with “sector perform” recommendations:
* Alaris Equity Partners Income Trust (AD.UN-T) with a $20 target. The average is $24.29.
Mr. Dziarski: “We rate Alaris Sector Perform given limited visibility on upside catalysts in the near-term. Alaris currently trades at 0.8 times current P/B [price to book] which we believe appropriately reflects the company’s BVPS [book value per share] growth outlook (inline with historical averages) relative to ROIC [return on invested capital], and overall portfolio health. Alaris is an income trust yielding 7 per cent and we believe ample buffer exists before the distribution is at risk.”
* ECN Capital Corp. (ECN-T) with a $3.25 target. Average: $3.60.
Mr. Dziarski: “We rate ECN Sector Perform as we believe current valuation appropriately reflects the company’s growth outlook. ECN has largely completed its simplification efforts which began in 2017 and now has two operating verticals: i) Manufactured Housing (85 per cent of 2025 estimated pre-tax income) and ii) RV/Marine (15 per cent of 2025E pre-tax income). Despite strong origination growth in both verticals in 2025, we are cautious around consumer demand in 2026 and beyond.”
* Onex Corp. (ONEX-T) with a $141 target. Average: $143.
Mr. Dziarski: “We rate Onex Sector Perform given limited visibility on upside catalysts in the near term. Onex trades at a 30-per-cent discount to NAV [net asset value] and we apply a 25-per-cent discount, following Gerry Schwartz’s shares sunsetting in May 2026, which removes voting control and ability to elect 60 per cent of the board. Overall, we believe our 25-per-cent discount appropriately reflects the company’s investment performance, fundraising challenges and NAV growth outlook.”
* Goeasy Ltd. (GSY-T) with a $194 target. Average: $234.70.
Mr. Dziarski: “We rate goeasy Sector Perform as we believe the current valuation reflects the company’s growth outlook. Despite goeasy’s 2-per-cent market share in an attractive TAM [total addressable market] implying a long runway of growth ahead, we believe we are past peak ROAs for the business with goeasy increasingly relying on leverage to maintain ROEs in the mid-20s. While we are not concerned about credit, we believe goeasy is both adequately reserved and should outperform when the next credit cycle occurs given a structural shift towards secured loans.”
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Seeing a recent surge in recreational vehicle sales and a series of positive catalysts ahead, Citi analyst James Hardiman upgraded his recommendation for BRP Inc. (DOO-T) to “buy” from “neutral” as well as its rival Polaris Inc. (PII-N) to “neutral” from “sell” previously.
“Based on our most recent round of ORV dealer checks, we estimate that ORV retail was up low-doubles for PII and up mid-singles for BRP over the past three months,” he said. “In both cases, aggressive promotions stimulated demand, while year-over-year comparisons meaningfully helped September (but will likely hurt October).”
While acknowledging the retail inflection for Valcourt, Que.-base BRP “maybe not as dramatic as what we have seen from PII,” Mr. Hardiman called the rebound “meaningful” and it “has appeared to require a bit less promotional support, and is perhaps more durable.”
He now expects next week’s analyst day at its headquarters to provide “at least a directional update of retail demand trends and a heavy dose of excitement around new products.”
“The juxtaposition of the two would seem well timed, and although we would not expect to hear explicit long-term earnings targets (as the company has yet to announce who will succeed outgoing CEO Jose Boisjoli) there will likely be enough breadcrumbs in the form of market share and margin opportunities for investors to stitch together a compelling valuation outlook,” the analyst said.
“Beyond the analyst day, similar to PII, BRP shares will likely follow the path of retail sales from here. However, we have a higher degree of confidence that BRP retail will remain strong from here given easier comparisons and arguably a bigger lift from new products. BRP has been seeing accelerating retail growth and market share on current product for some time, whereas earlier in the summer this was more than offset by declines in non-current units/share as the company lapped its 2024 inventory overhang. To the extent that the last couple of months has helped to bring industry inventory back in-line with historical levels, this would seem to be a favorable demand and share environment for BRP. This is before we factor in DOO’s new Can-Am Defender HD11, which features a complete redesign of the decade-old platform, and has gotten positive (though early) reviews from dealers. The new Defender will clearly be a focus of the upcoming analyst day, and could prove to be the tip of the spear with respect to BRP clawing back market share over the next 12+ months.”
With his upgrade, Mr. Hardiman added an “upside 90-day catalyst watch” for BRP.
“September retail data/checks could prove to be a positive indicator for the stock, while the upcoming analyst day could allow the company to connect the dots between recent green shoots and the long-term opportunity for the company,” he explained. “Finally, given a lean channel going into Q3 and a higher mix of MY26 models being sold in their Q3, we would expect the strength at retail to pull through meaningful shipments, which could bode well for the company’s near-term earnings power.”
After raising his third-quarter fiscal 2026 and full-year 2026 earnings per share expectations, Mr. Hardiman increased his target for BRP shares to $102 from $93. The average is $100.60.
For Polaris, his target rose to US$60 from US$35, exceeding the US$49.67 average.
“We are upgrading PII from Sell to Neutral, as the company’s strong 3Q retail performance (even if promotionally aided) is likely to outweigh any ongoing tariff concerns in the near term and in the lead up to earnings season,” he said. “We are raising our price target to $60,even as we will be closely watching October and beyond to get a better read on underlying demand trends in a more normal promotional environment for signs that the company’s longer-term earnings opportunity can support the current valuation.”
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Desjardins Securities analyst Brent Stadler raised his recommendation for Algonquin Power & Utilities Corp. (AQN-N, AQN-T) to “buy” from “hold” previously, citing a “compelling” valuation following recent share price weakness, a “strong” management team and greater confidence it can achieve guidance.
“Over the past month, AQN has underperformed Canadian peers by 6.7 per cent and is now trading at an attractive 14.4 times 2027 estimated P/E multiple vs selected Canadian peers at 18.3 times,“ he said. ”We also note that Missouri peer Ameren (AEE, NYSE, not rated) trades at 18.2 times, and we believe AEE is an example of where a utility with a larger exposure to Missouri could trade, giving us further confidence in our upgrade. We expect to see signs of execution on pending rate cases and O&M efficiencies in the coming months, which should drive a multiple re-rate, in our view.
“We believe AQN has a top-notch management team, which is a key ingredient to success. Recall, CEO Rod West has significant utility experience (~26 years at Entergy) and strong regulatory relationships, and Interim CFO Brian Chin has over two decades of utility experience. AQN has also attracted other industry heavy hitters, including Noel Black, Chief Regulatory and External Affairs Officer (30+ years of utility experience) and Amy Walt, Chief Customer Officer (25 years of utility experience), likely as they also see upside in AQN. In our view, these recent hires should further position AQN for success.”
In a report released Wednesday titled Full circle, Mr. Stadler reexamined the Oakville, Ont.-based company’s pending rate cases.
“These sensitivities give us further comfort in AQN’s ability to hit its guidance ranges through a combination of rate cases with reasonable outcomes and O&M efficiencies,” he said.
“Therefore, we have moved to the midpoint of AQN’s 2027 guidance range, which increased our target to US$6.25 (from US$6.00), implying an attractive 21-per-cent total return.”
His new US$6.25 target is 7 US cents under the current average on the Street.
“We believe investors should be buying the dip,” he concluded.
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In a client report titled “Hold On, We’re Going [Higher]“, Desjardins Securities analyst Benoit Poirier initiated coverage of Cargojet Inc. (CJT-T) with a “buy” recommendation, believing “the market is underestimating the incremental earnings potential that can be unlocked from sweating the existing fleet.”
“Given CJT’s long tenure as a well-covered public company, we took a different approach with this initiation,“ he said. ”Going old school in our due diligence, we conducted a site visit to CJT’s Hamilton facilities and structured our report around key investor questions/concerns we believe have weighed on the stock [Will growth require investments in new aircraft? Is there risk of another capex hike/777 episode? Why have returns on capital been so volatile? What is the right multiple for this business? How will margins look after pilot contract renegotiations? What is the upside vs downside at current levels?].”
“Overall, we came away with a constructive view of CJT’s ‘mousetrap’ business model and structural tailwinds, seeing potential upside over the next 2–3 years outweighing the downside.”
Mr. Poirier noted Cargojet is currently trading below historical valuation levels, which he thinks reflects “investor caution amid a weak freight market, tariff risks, pilot contract renegotiations and potential international capex.”
“Post-pandemic utilization has dropped notably, suggesting CJT can grow volumes without adding aircraft,” he said. “If utilization rebounds, CJT could unlock up to $300-million in revenue (via 20 per cent more block hours) at what we calculate to be 40–50-per-cent incremental EBITDA margins—challenging the notion that CJT’s long-dated contracts eliminate torque. "
“We analyze three potential outcomes. (1) Takeout bull case in which the company is acquired by PE ($186/share); (2) bull case where CJT maximizes the capacity of its fleet ($202/share); and (3) a bear case where the company initiates a growth capex program ($67/share). Importantly, none of these scenarios factor in the upside that could come from buybacks or more aggressive domestic pricing (two meaningful sweeteners).”
The analyst set a target of $149 per share. The current average on the Street is $144.21.
“CJT dominates Canadian air freight with a 90-per-cent share and more than 95-per-cent on-time performance,” said Mr. Poirier. “With growth capex set for a pause and an FCF yield of 9–10 per cent, we believe the stage is set for a sentiment shift as latent fleet capacity drives upside."
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National Bank Financial analyst Rabi Nizami sees NGEx Minerals Ltd.’s (NGEX-T) $175-million non-brokered private placement of shares further reaffirming an acceleration in the development of its Lunahuasi copper-gold-silver deposit in Argentina.
Before the bell on Tuesday, the Vancouver-based company announced it elected to increase the placement to an aggregate of 7 million shares with the Lundin Family Trusts poised to participate by subscribing for up to $100.0-million.
“Net proceeds are expected to add to Q2/25 reported cash and ST investments of $144-million, with funds earmarked for advancing another 25,000-metre exploration campaign at Lunahuasi, set to begin in October; permitting and development of a potential underground exploration adit; possible application to be included in Argentina’s RIGI large investment regime, which we see as a positive for accelerating the timeline to development; as well as ongoing work at Los Helados and general corporate purposes,” said Mr. Nizami.
“We previously speculated on the possibility of ramp development and this was confirmed at last week’s Investor Day and is further supported by today’s financing top-up. A key exploration target of interest to us in upcoming drilling is the use of horizontal drilling to test near-surface extensions of high-grade structures that have so far only been intersected deeper due to constrained drill angles, while deep rigs will probe into porphyry mineralization discovered in Hole 27 (1,619 metres at 0.87-per-cent CuEq)."
Mr. Nizami reaffirmed his “outperform” rating for NGex shares with a target of $34, rising from $28, “in anticipation of the expansive exploration campaign ahead and an improved outlook for the development of an exploration adit to accelerate de-risking of the project.” The average on the Street is $26.17.
“We assumed the close of the proposed financing arrangement and expect to revise our preliminary estimates for the high-grade structures as new drill results are added,” he added. “We ascribe a Speculative risk rating as a significant portion of our thesis is contingent on exploration success, possible M&A and several de-risking initiatives which remain ahead.”
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In other analyst actions:
* Ahead of its quarterly release on Oct. 9, CIBC’s Mark Petrie increased his target for Aritzia Inc. (ATZ-T) to $94 from $87 with an “outperformer” rating. The average on the Street is $95.27.
“Alt-data suggests sales trends were strong, though our estimates are unchanged and sit at the upper-bounds of management’s guidance,” he said.
“We expect continued sales momentum in FQ2, supported by new U.S. stores, favourable weather and early back-to-school (BTS) strength. Bloomberg Alt-data indicates strong growth, up 41.8 per cent year-over-year. Looking into the Alt-data trends for FQ3, momentum remains strong but modestly slower – up 23.7 per cent through three weeks. We highlight that ATZ launched its Fall collection a week early compared to last year to leverage BTS traffic, and the International site launched at the end of August. We expect the Aritzia app to launch, and Flat Iron NYC flagship to open later in FQ3."
* CIBC’s Cosmos Chiu hiked his DPM Metals Inc. (DPM-T) target to $33, exceeding the $32.27 average, from $28 with a “neutral” rating.
* To reflect a special distribution paid on Sept. 25, RBC’s Jimmy Shan cut his European Residential REIT (ERE.UN-T) target to $1 from $2.45 with a “sector perform” rating. The average is $1.69.
* Raymond James’ Steve Hansen raised his Exchange Income Corp. (EIF-T) target to $90 from $85 with a “strong buy” rating. The average is $82.
“We are increasing our target price on Exchange Income Corp. (EIC) ... and reiterating our Strong Buy rating following: 1) two days of institutional meetings with EIC management; and 2) a bespoke tour of the company’s Netherlands operating base where its Provincial Aerospace Limited (PAL) subsidiary performs maritime surveillance operations for the Dutch Navy under long-term contract,” said Mr. Hansen.
“We have long argued that EIC should see the benefits of multiple expansions given the company’s exceptional track record for compounding shareholder value. Our recent Amsterdam tour only served to reinforce this view. Given this backdrop, we continue to see compelling value in EIC shares at current levels, trading at just 7.1 times FY2026 EBITDA.”
* Canaccord Genuity’s Dalton Baretto raised his Ivanhoe Mines Ltd. (IVN-T) target to $16.50 from $14 with a “buy” rating. The average is $16.03.
* With its US$118.6-million acquisition of seven service centers from Kloeckner Metals Corp., Raymond James’ Frederic Bastien reduced his Russel Metals Inc. (RUS-T) target to $54 from $56 with an “outperform” rating. The average is $50.83.
“We remain constructive on Russel Metals amid softening steel prices, believing investors face an asymmetric opportunity to support a well-run organization with healthy secular tailwinds and acquisition upside. For proof, consider that management entered into an agreement to buy seven service center locations from Kloeckner Metals Corporation, consistent with its long-term growth strategy in the United States. We are constructive on the US$119 mln transaction as RUS handpicked service centers that mesh perfectly with its own. We also understand the assets have seen limited strategic engagement of late, leaving opportunities for Russel to drive synergies over a 2-3 year period. We fully anticipate these operational benefits to improve deal economics, lowering the implied EV/EBITDA multiple of about 6 times in due course,” said Mr. Bastien.
* In response to its accretive US$140-milion acquisition of Brooks, a U.S. manufacturer of treated wood distribution crossarms and transmission framing components, Desjardins Securities’ Benoit Poirier raised his target for Stella-Jones Inc. (SJ-T) to $92 from $89, keeping a “buy” rating. The average is $85.63.
“We are pleased with this deal given the attractive multiple paid for such a profitable business, minimal leverage impact and new growth opportunities it brings,“ he said. ”It marks SJ’s entry into the crossarms industry and, with the recent Locweld acquisition, adds two strong adjacent growth vectors. These moves further position SJ as a one-stop shop for utility customers.”