Inside the Market’s roundup of some of today’s key analyst actions
Seeing “supportive tailwinds in place,” National Bank Financial analyst Baltej Sidhu sees the potential for “a more constructive year” across the sustainable infrastructure and clean technology sector after a “mixed” 2025.
“Our renewable infrastructure stocks fell 1 per cent on average (excluding AQN) and 8 per cent excluding BEP, which was up 18 per cent on its hyperscaler relationships, nuclear exposure and scale benefits,” he said. “Broader weakness reflected company-specific factors: management changes, dividend cuts, weather, growth and funding concerns, and year-end tax loss selling. Power grid manufacturers remained as standouts, continuing to outperform in an opportunistic market. Hydrogen names performed better than expected, supported by cost-cutting efforts, impressive long-term targets, and softer regulatory headwinds. In contrast, EV and transportation-related stocks saw a sharp reset amid U.S. policy tightening, reduced consumer incentives, and lingering doubts around market adoption.”
In a client report released Wednesday titled Undervalued & Underpinned; 2026 Could Mark a Turning Point, Mr. Sidhu predicted a series of drivers for the next 12 months with key areas of focusing including “power demand growth, the battery energy storage system (BESS) opportunity, renewed emphasis on baseload generation, ongoing transmission constraints, and market reactions to the evolving regulatory agenda."
"Valuations across our IPP coverage remains materially dislocated,“ he noted. ”After a mixed 2025, exacerbated by year-end tax-loss selling and company-specific events,our coverage now trades at double-digit implied discounts on cash, despite largely regulated or long-term contracted cash flows. In our view, current pricing implies an equity risk premium more consistent with cyclical or highly merchant exposed assets rather than utility-like assets. This disconnect strengthens the case for continued sector consolidation, which saw momentum throughout 2025 (Innergex, Ayana Renewable, Terna Energy, Akuo, Edify, Alinta Energy, etc.)."
“Stocks in the renewable infrastructure sector have been weak recently, possibly related to tax loss selling, also driven by company-specific events (re: NPI’s dividend cut in November). However, we have seen a slight pickup so far in 2026, with our IPP coverage on average up approximately 3 per cent. At current prices, we estimate an average implied discount on cash of 10.5 per cent for our IPP coverage (excl. PIF) and 11.1 per cent excluding AQN. Given that the overall market has been more resilient than our sector and still trades at record highs (with an estimated market risk premium of 4.0 per cent by Damodaran, NYU), the equity risk premium for the sector to the Canadian 10-year is 7.3 per cent. This gives us a beta calculation of 1.8 times for the IPP coverage, which looks oversold given the primarily contracted nature of the business and appetite for infrastructure assets from private equity investors. We expect continued sector consolidation as private capital seeks value in infrastructure platforms and IPPs seek lower costs of capital.”
Mr. Sidhu made one rating revision in the report, raising Algonquin Power and Utilities Corp. (AQN-N, AQN-T) to “outperform” from “sector perform” previously, believing its “turnaround story is underway, and the company is positioned strongly to execute”
“The company has progressively delivered on its stated initiatives,“ he said. ”We are increasingly confident in its pending rate cases ... which should support its growth trajectory going forward."
He now sees a positive outlook for the Oakville, Ont.-based company in 2026, touting “a strong opportunity to re-rate,”
“AQN is set to have an active 2026E, with multiple rate cases expected to be implemented during the year,” Mr. Sidhu explained. “We expect seven of its eight active rate cases to be approved and implemented within 2026E, inclusive of $280-million in total revenue requests and additional requests could be filed. We believe our assumptions are relatively conservative, therefore, there could be upside to our numbers from greater-than-anticipated approval rates or timelines. For example, based on our latest check, AQN’s $168-million Empire Electric rate case should see rates implemented in February 2026, although we currently estimate Q2/26E. Additionally, with a new CFO in place, we expect AQN to deliver an updated company update to investors in the new year and with this, potentially revised guidance (we currently sit at the midpoint). Also, as the U.S.’ constrained transmission landscape continues, we expect to hear more news on large-scale capex opportunities (like SPP’s 2024 ITP), either with the regional utility regulators or commercial (data centre) customers themselves.”
The analyst raised his 12-month target for Algonquin shares to US$7.50 from US$7. The average target on the Street is US$6.75, according to LSEG data.
“Despite AQN being up 38 per cent in 2025, vs. regulated utility peers up 20 per cent, we do believe share price strength should continue,” he said. “We believe there is greater potential for upside than downside in our current rate base assumptions. We currently forecast a rate base CAGR [compound annual growth rate] of 5 per cent(between 2024-2027E, in line with AQN guidance), which reflects back-end weighted capital expenditures, as the company prioritizes operational excellence, cost structure optimization and narrowing the gap between earned and allowed ROE. As AQN continues to deliver on these initiatives and progressively transition toward a more disciplined rate base capex cycle (better aligned with regulatory schedules), we are of the view that estimates should trend higher through the back-half of our forecast horizon.
“With this, we are moving to Outperform (was Sector Perform) on our valuation roll-over to 2027E. Alongside our valuation roll-over, we also adjusted our growth valuation from AQN, given the robust and long-winded opportunity set for utilities, raising our long-term target IRR [internal rate of return for AQN’s investments to 10 per cent (was 9 per cent).”
Mr. Sidhu made a pair of other target changes, raising Brookfield Renewable Partners L.P. (BEP-N/BEP.UN-T, “outperform”) to US$34 from US$33 and Polaris Renewable Energy Inc. (PIF-T, “outperform”) to $21 from $20. The averages are US$34.73 and $23.50, respectively.
“Our top ideas for 2026 include those with heavier exposure to the key themes highlighted in this piece; namely data centre capex, baseload demand, and network infrastructure build-out,” he added. “We’d point to those within our coverage that have a balance between strong visibility to growth, multiple expansion opportunities and balance sheet strength are qualities of our top picks: BLX [Boralex Inc., “outperform” and $41 target], HPSa [Hammond Power Solutions Inc., “outperform” and $195 target] and BEP. These are the catalysts/key events we expect in 2026 and the current valuation picture for each name.
National Bank Financial analyst Mohamed Sidibé expects Equinox Gold Corp.’s (EQX-T) $1.02-billion divestiture of its Brazilian portfolio to a subsidiary of CMOC Group Ltd. to “allow for a sooner-than-expected conversation over capital return to shareholders and a smoother path towards advancing future expansion/development projects at Valentine, Castle Mountain and Los Filos.”
In a client note, he upgrade his financial model for the Vancouver-based miner to reflect the deal, which was announced on Dec. 14, and now sees an improved cost profile with all-in sustaining costs (AISC) rising 5 per cent and 9 per cent in 2026 and 2027, while Canada and the U.S. jump from 58 per cent of mining assets net asset value to 74 per cent.
“Assuming a close in Q1/26, we now model the receipt of $900-million in Q1/26 which will be used to reduce debt by the same amount,” said Mr. Sidibé. “We view EQX exiting Q1/26 with a net cash position of $456-million. The reduction in interest expense and interest paid further improve our cash flow metrics and the lower leverage profile will allow the company to now open the door to capital return to shareholders sooner than previously expected.”
With his update, the analyst’s total assets NAV for Equinox decreased by 14 per cent to $24.51 per share from $28.53 and his 2026 EBITDA and FCF decreasing 20 per cent and 18 per cent to $2.32-billion and $1.48-billion from $2.9-billion and $1.80-billion.
That led him to lower his target for Equinox shares to $26 from $28, remaining a high on the Street, with an “outperform” rating. The average is $22.07.
“EQX continues to showcase an attractive FCF yield of 13 per cent (16 per cent prior) in 2026 at our deck ($4500/oz) vs. intermediate peers at 10 per cent,“ said Mr. Sidibé. “Given the improved jurisdictional mix, cost profile and the decrease in the number of assets over which management efforts will be split, we increase our target multiples to an average of 7.00 times EV/EBITDA (6.00 times prior) and 1.10 times NAV (1.00 times prior).”
RBC Dominion Securities analyst Paul Treiber expects a "more consistent and widespread performance" for Canadian technology stocks in the 12 months ahead.
“Even though the S&P/TSX Info-Tech sub-sector experienced strong returns in 2025, performance was bifurcated, with strong rallies at Shopify and Celestica offsetting significant valuation multiple contraction among the vast majority of software stocks in our coverage,” he said in a client report. “As a result only 10 of our 20 stocks in our coverage universe saw positive returns in 2025. For 2026, we expect the S&P/ TSX Info-Tech sub-sector to see solid, but more widespread returns, as we anticipate: 1) Shopify to continue to deliver healthy, above market returns; 2) the majority of Canadian software stocks to rally, given our forecast for 12-per-cent year-over-year revenue growth and 19 per cent year-over-year adj. EBITDA growth for the median stock in our coverage; and 3) software valuations to stabilize (and may even rebound).
“Although we believe returns on Canadian tech stocks may become more widespread, the performance of the S&P/TSX Info-Tech sub-sector is highly dependent on Shopify, which accounts for 62 per cent of the sub-sector; our $200.00 price target on Shopify implies a rate of return of 27 per cent over the next 12 month.”
Mr. Treiber now thinks valuation multiple compression among software stocks has “likely abated,” and he now expects “solid revenue and adjusted EBITDA growth to underpin returns across our coverage in 2026.”
“Assuming valuation multiples do not compress and future growth expectations remain similar to current levels, we believe returns for stocks in our coverage to be equal to forecasted revenue or adj. EBITDA growth, depending on the specific stock,” he said. “Drivers of our growth forecast include: 1) strengthening organic growth due to improved macro visibility leading to an increase in discretionary budgets; 2) the consolidators continuing to deploy capital on acquisitions at high rates; and 3) operating leverage and margin expansion.
“The ‘AI disruption’ overhang on Canadian software stocks may start to lift. The majority of Canadian tech stocks are software companies, which have experienced significant valuation multiple compression in 2025, due to investor concerns regarding the ‘AI disruption’ of software. We believe negative investor sentiment is likely fully reflected in valuations of software companies, given the high publicity of AI, the similar pullback in U.S. software stocks, and public comments from executives at some companies (e.g. Constellation) further raising fears regarding potential negative impacts from AI. In 2026, we believe the valuation overhang from AI concerns is unlikely to expand further and may even start to lift, given: 1) AI tailwinds and resiliency for the stocks that are well positioned may become more apparent; 2) most Canadian tech stocks trade at multi-year lows; and 3) revenue growth and adj. EBITDA growth are likely to accelerate in 2026.”
The analyst named his three top Canadian technology ideas for 2026. They are:
* Shopify Inc. (SHOP-Q, SHOP-T) with an “outperform” rating and US$200 target. The average on the Street is US$179.27.
Mr. Treiber: “Shares of Shopify expected to see continued robust, above market returns. Although we believe returns on Canadian tech stocks may become more widespread, the performance of the S&P/TSX Info-Tech sub-sector is highly dependent on Shopify, which accounts for 62 per cent of the sub-sector; our $200.00 price target on Shopify implies a rate of return of 27 per cent over the next 12 months. In 2026, we forecast Shopify to deliver 27 per cent organic growth due to robust market share gains, continued healthy consumer spending, and uptake of new offerings. Additionally, we expect Shopify to see incremental margin expansion and a sustained premium valuation.”
* Constellation Software Inc. (CSU-T) with an “outperform” rating and $5,600 target. The average is $5,080.
Mr. Treiber: “We believe that Constellation Software is likely to generate one of the highest returns for shareholders over the long term in our coverage universe. Our Outperform thesis reflects: 1) Constellation’s ability to rapidly compound capital through acquisitions; 2) solid underlying fundamentals as a result of an attractive market structure and ROIC-based performance incentives; and 3) Constellation’s valuation is attractive relative to growth potential.”
* Kinaxis Inc. (KXS-T) with an “outperform” rating and $235 target. The average is $229.50.
Mr. Treiber: “Our Outperform rating is based on: 1) Kinaxis’s compelling long-term growth story; 2) SaaS and ARR growth appear likely to re-accelerate; 3) operating leverage is likely to drive margin expansion; and 4) valuation is below peers and at trough levels.”
“Compelling long-term growth story. Kinaxis is leading a transformation of supply chains and has the unique combination of double-digit organic revenue growth and top-quartile profitability. The company’s software is highly differentiated and well positioned to capture a portion of increased supply chain investments. Kinaxis has high win rates (more than 60 per cent) and industry-high gross retention (95-100 per cent), which further affirms the strength of the company’s competitive position and value proposition.”
Following a “standout” performance operationally in the fourth quarter of 2025, Stifel analyst Cole McGill thinks a combination of execution and current lithium price momentum have the ability to “significantly” improved Lithium Argentina AG’s (LAR-N, LAR-T) balance sheet and “credibility of growth, for which LAR retains top quality assets & partners.”
“Guidance has been achieved, and we see potential for 2026 guidance to surprise consensus to the upside,” he said. “Execution at Cauchari has been rewarded, with a second half 2025 rerate leaving LAR shares trading at 18.2 times 2026 EV/EBITDA vs peers at 19.3 times. With the 2025 story anchored on execution, we think continued confidence in Cauchari operability at scope has the potential to see LAR outperform peers through 2026 on deleveraging, with a 5-per-cent 2026 FCF yield at spot (peers 1.9 per cent).”
In a client note released Wednesday, Mr. McGill emphasized the “scarcity value” of Tier One basins in the Argentine Puna region has been “reiterated.”
“Within the Argentine Puna, we think there are just four basins that support potential for both i) production scale and ii) conventional ponding, whose economics can be enhanced through potential adoption of DLE/hybrid DLE (Cauchari - Olaroz, Hombre Muerto, Pozuelos, and Pastos Grandes). Of these, two of the four have already been consolidated/validated by Rio Tinto’s acquisition of Arcadium in 2024 (Olaroz, Hombre Humerto), leaving fewer high quality growth option,” he said. “We think the combined PPG JV represents the last high quality growth play in the Puna, where the geochemical quality (high Li grade, lower total dissolved solids) present investors with a longer term growth platform when the market is more willing to value growth.”
Naming the company one of his “best lithium ideas in 2026,” he raised his target to US$8.50 from US$6, keeping a “buy” rating. The average is US$4.75.
“Execution at Cauchari has been rewarded by the market, with a second half 2025 rerate leaving LAR shares trading at 18.2 times 2026 EV/EBITDA vs. peers at 19.3 times,” said Mr. McGill. “With the 2025 story anchored on execution, we think continued confidence in Cauchari operability at scope has the potential to see LAR outperform peers through 2026 on balance sheet deleveraging, with a 5-per-cent 2026 FCF yield at spot (peers 1.9 per cent).”
“Lithium Argentina emerges from the separation with Lithium Americas focused on developing a portfolio of assets in Argentina’s Lithium Triangle. With interests in the now-producing Cauchari-Olaroz (44.8 per cent) and growth projects in the Pozuelos-Pastos Grandes JV (33-per-cent/67-per-cent LAR/Ganfeng Lithium), we believe the company has runway to become a producer of globally significant scale, with strong operational partnership.”
In other analyst actions:
* In response to its $34-million acquisition of Stryker Energy Directional Services LLC ,Raymond James’ Michael Barth raised his target for shares of Calgary-based ACT Energy Technologies Ltd. (ACX-T) target to $10 from $8.75 with an “outperform” rating, while ATB Capital Markets’ Tim Monachello bumped his target to $7.25 from $6.50 with an “outperform” rating.. The average on the Street is $6.50.
“When we initiated on ACX in July, 2025, one of the thesis points behind our Outperform rating was that there was plenty of room to profitably consolidate the directional drilling market in the U.S., and ACX would end up being one of those consolidators,” Mr. Barth said. “We didn’t include any upside value from accretive M&A in our model, but the Stryker acquisition announcement is consistent with our initial thesis, and clearly accretive. After incorporating this transaction into our estimates, our target increases by 14 per cent to $10.00/share. With the stock trading at just $4.75/share, we now have more than 100-per-cent upside to our revised target, and are surprised by the muted market reaction today. As such, we reiterate our Outperform rating, and believe an attractive entry point exists at these levels."
* Ahead of the release of its third-quarter fiscal 2026 results on Thursday, Raymond James’ Michael Glen hiked his Aritzia Inc. (ATZ-T) target to $130 from $110 with an “outperform” rating. The average is $124.01.
“These updates are based on observed sales data (Bloomberg second measure), favourable weather trends and implications for seasonal categories (e.g. sweaters, Super Puff), positive online traffic indications (plus mobile app launch), and our view that promotion activity has remained relatively muted,” said Mr. Glen. “With that, we are increasing our forecast for total comp growth to 18.3 per cent (was 11.7 per cent), which now incorporates retail SSSG [same-store sales growth] 15 per cent and e-commerce growth of 25 per cent. We are also increasing our F3Q gross margin to 46.5 per cent (previously 46.0 per cent/consensus 46.3 per cent) but believe there is upside given optimized inventory levels ... Typical 2Q to 3Q gross margin seasonality offers a 550 basis points lift, with our current forecast embedding a 270 bp lift (each 100 bps of gross margin adds 6 cents to our F3Q EPS). With these model changes, our updated F3Q adjusted EBITDA forecast is $178.9-million (consensus $173.2-million) with our F3Q EPS forecast at $0.91 (consensus $0.88).”
* In response to a higher uranium price deck, Bernstein’s Bob Brackett bumped his Cameco Corp. (CCJ-N, CCO-T) target to US$101 from US$100 with an “outperform” rating. The average is US$106.10.
* Jefferies’ John Aiken resumed coverage on Definity Financial Corp. (DFY-T) with a “buy” rating and $88 target following its acquisition of the Canadian operations of U.S. insurance giant Travelers for $3.3-billion. The average on the Street is US$80.80.
* Previewing 2026 for U.S. restaurants, Barclays’ Jeffrey Bernstein raised his target for Restaurant Brands International Inc. (QSR-N, QSR-T) to US$86 from US$78 with an “overweight” rating. The average is US$76.57.
“Our ’25 outlook headline began ‘Fundamentals Much Improved’. This prevailed to start, but derailed by mid-year. As we begin ’26, top-line challenges to persist. By segment, we expect quickservice to regain share from fast casual & casual dining, and we remain bullish on foodservice distribution,” he said.
* Raymond James’ Michael Barth raised his Suncor Energy Inc. (SU-T) target to $75 from $70 with an “outperform” rating. The average is $68.36.
“It was relatively slow in December, and boy did we go down some rabbit holes,” he said. “One of those rabbit holes was well performance and recent regulatory updates on SU’s ES-SAGD technology (Expanding Solvent SAGD). On the back of further analysis and conversations with the company, we’ve come away impressed, and believe that the positive trends in SU’s in situ portfolio are underappreciated by investors. ... In addition to some modeling changes following the pre-released 4Q25 results on Monday, we’ve also adjusted our medium-term Firebag estimates to give SU some credit for the positive solvent momentum."