Inside the Market’s roundup of some of today’s key analyst actions
TD Cowen analyst Mario Mendonca favours Canadian life insurance companies over banks ahead of the release of the industry’s fourth-quarter 2025 results in mid-February.
“After outperforming the banks for 3 years, the lifecos underperformed materially in ’25,” he said in a client report. “We believe the first step in restoring a better relative P/E [price-to-earnings] is a clean quarter from SLF. We expect SLF to report more modest experience losses in U.S. and point to a better result in 2026. We believe the key driver is what we are calling the ‘release’ phase of the U.S. stop-loss reserving cycle in ’26.”
“Recent outperformance from Canada’s banks has the insurers trading at a 17-per-cent discount to the banks on a forward P/E basis. Relative valuation, greater capital flexibility, slowing capital markets activity and lower downside risk to earnings support favouring the insurers. We upgraded SLF to BUY last quarter and now rate all four life insurers BUY. Effective with our Q3/25 preview report, we set our target prices for the four life insurance companies with reference to target P/E (conforms with the banks). Our target prices are based on the group trading at a modest 6-per-cent discount to the banks. Consistent with the strong double-digit returns to our target prices, our top picks are SLF and MFC.”
Mr. Mendonca is current projecting 9-per-cent year-over-year earnings per share for lifecos, which he calls “healthy” and largely mirrors the expectations of his peers on the Street.
“We see good, but moderating growth in Asian insurance sales and strong gross flows in WM (but net outflows at MFS, MFC’s GWAM and Empower),” he added. “While net investment income (including earnings on surplus) growth is slowing (lower rates & surplus used for share repurchases), a lower share count (2-4-per-cent year-over-year declines across the group) supports both EPS growth and progress toward ROE targets.”
“Barring a sharp market reversal, the insurers’ large and high ROE wealth management segments should support lifeco earnings and multiples in 2026. Lower fees in HK retirement savings products should be offset by very strong market performance (MFC & SLF), segregated fund flows at IAG should remain elevated, and we expect GWO’s Empower business to report 15-per-cent year-over-year earnings growth this quarter.”
Reiterating his “buy” ratings for the four stocks in the space, Mr. Mendonca made these target adjustments:
- Great-West Lifeco Inc. (GWO-T) to $73 from $70. The average on the Street is $64.50.
- IA Financial Corp. Inc. (IAG-T) to $192 (Street high) from $178. Average: $170.20.
- Manulife Financial Corp. (MFC-T) to $60 from $57. Average: $55.67.
- Sun Life Financial Inc. (SLF-T) to $104 (Street high) from $99. Average: $90.22.
Citing “increased valuation risk to shares and a more balanced risk-to-reward dynamic in the near-term absent any fundamental catalysts” following a period of steep share price appreciation, National Bank Financial analyst Mike Stevens downgraded Kraken Robotics Inc. (PNG-X) to “sector perform” from “outperform” previously.
He made the change following Tuesday’s premarket announcement of $35-million in battery sales to three unnamed customers, which he called “positive,” and pointed to “digesting the Company’s large share price move to begin 2026 (up 36 per cent year-to-daye, which follows a 133-per-cent gain in 2025) - likely due in large part to President Trump’s bullish defense budget commentary last week amidst heightened geopolitical tensions globally.”
“We emphasize that Kraken continues to demonstrate strong operational execution and our move does not reflect any change to our long-term thesis for the Company which centres around Kraken’s innovative product set along with industry tailwinds continuing to drive demand across all of its businesses – subsea power, SAS sensors and platforms and commercial services," said Mr. Stevens.
He raised his target for the St. John’s-based company’s shares to $8.75 from $7.50. The average is $6.50.
“As for our multi-stage DCF, our mid-term growth rate for Kraken out to 2030 calls for nearly 35-per-cent growth on average per year, which aligns with the Company’s growth expectations over the next several years on an organic basis,” he explained. “On profitability, we think EBITDA margins can expand modestly toward 25 per cent during that period. That said, given Kraken’s $2-billion-plus pipeline, which we expect has grown since its last update in early 2025, the Company is well-positioned to potentially outperform those expectations depending on its win-rate across upcoming large defense program bids; for example, even when just considering programs for (mainly) Kraken’s KATFISH / SAS products, multi-year contracts can generate anywhere from $20–150-million in revenue to Kraken per contract over two-to-three years. When then factoring in the Company’s battery prospects alongside a burgeoning UUV space, there is no shortage of opportunities ahead to sustain (and even accelerate) this pace of growth. However, for now, we believe our expectations and assumptions are reasonable."
Elsewhere, others making target revisions include:
* Desjardins Securities’ Benoit Poirier to $9.50 from $6.50 with a “buy” rating.
“We raised our exit multiple and DCF growth assumptions for Kraken as we believe the company remains undervalued vs drone/defence tech peers such as KTOS (93 times EV/2027 EBITDA), ONDS (266 times), RDW (42 times) and FLT (96 times) despite superior profitability. Our confidence in Kraken’s battery growth outlook has strengthened following this morning’s announcement and recent industry newsflow. Moreover, Kraken’s valuation and underlevered balance sheet position it well to execute on accretive, value-enhancing M&A opportunities,” said Mr. Poirier.
* Canaccord Genuity’s Doug Taylor to $9 from $6 with a “hold” rating.
“We expect the company to continue delivering strong top-line growth, powered by battery supply and demand expansion and the conversion of the sonar systems pipeline. However, the high valuation balances our view,” said Mr. Taylor
In a client report released before the bell titled The Great Wood Reset: 6 Investable Themes for 2026, Raymond James analyst Daryl Swetlishoff said he saw 2025 marking “the trough of a four-year downturn” in forest products.
“Sector equities are down roughly 25–70 per cent, and many names are trading at or near all-time-low valuations,“ he said. ”The sector has been left for dead - but we think that’s exactly why alpha potential is rising. We see 2026 shaping up as a ‘reset’ year, supported by low valuations, tightening supply, and several identifiable catalysts.
Those include:
* “Asymmetric upside”
Analyst: “We believe commodity prices and cycle valuations bottomed in 2025 at levels not seen since the Great Financial Crisis. By virtually every metric, the group screens unequivocally cheap, skewing risk/reward to the upside.”
* Technical tailwinds
Analyst: “Our Technical Quant Analyst, Javed Mirza, highlights Basic Materials—particularly Forest Products and lumber—as attractive into 2026. Interfor and Stella‑Jones also screen well.”
* Supply curtailments support cash flow
Analyst: “The fundamental setup reinforces the technical view. We expect tighter lumber supply driven by incremental North American curtailments, structurally constrained Canadian harvesting, and ongoing U.S. trade frictions that limit shipments to the U.S. While we prefer lumber, OSB (oriented strand board) supply discipline is also emerging after a steep downturn, setting up a more balanced market—though near-term single-family housing-start concerns remain."
* “The South will (not) rise again“
Analyst: “Despite ample wood fibre, we do not expect the U.S. South to deliver meaningful lumber capacity growth. Weak financial returns, elevated greenfield build costs, and softer residual chip markets remain key constraints.”
* “Make Housing Great Again (MHGA)”
Analyst: “RJA U.S. Housing Analyst Buck Horne’s refreshed outlook sees 2025 housing headwinds extending into 2026. That said, he sees potential for increasing U.S. housing-policy optionality into the November 2026 midterms, which could improve mortgage affordability and housing activity—particularly existing-home sales (and, by extension, repair-and-remodel and lumber demand)."
* M&A optionality
Analyst: “Depressed valuations and cash-rich strategics create credible upside from consolidation and deal-driven earnings accretion.”
Given those catalysts, Mr. Swetlishoff made raised his ratings for three stocks:
Canfor Corp. (CFP-T) to “strong buy” from “outperform” with a $17 target, up from $15. The average on the Street is $15.02.
Interfor Corp. (IFP-T) to “strong buy” from “outperform” with a $14 target, up from $12. Average: $11.34.
West Fraser Timber Co. Ltd. (WFG-N, WFG-T) to “outperform” from “market perform” with a US$75 target, up from US$70. Average: US$80.72.
“We view Canfor and Interfor as preferred commodity producers given their higher relative torque to lumber pricing, with Interfor also likely to deliver a 4Q25 beat,” he said. “We reiterate our Strong Buy ratings on our diversified industrial picks ADENTRA and Doman, and recommend investors add to positions (along with recent coverage addition Outperform rated Stella‑Jones)."
Conversely, he downgraded Canfor Pulp Products Inc. (CFX-T) to “market perform” from “outperform” with a target of 50 cents, down from 75 cents and below the 52-cent average.
Scotia Capital analyst Jonathan ‘Goldman thinks the actions taken by the management of Boyd Group Services Inc. (BYD-T) over the past year to reduce both its cost base and support sales growth should “enable the company to hit its 5-year targets to double EBITDA regardless of an industry recovery.”
“That alone is sufficient to drive double-digit share price returns absent a re-rate,” he added. “But we see optimism for a sustained rebound in same-store sales growth (SSSG) as lower fleet age and higher used prices raise the threshold for total loss, which should see a return of higher ticket repairs to Boyd’s shops. Insurance premium inflation continued to moderate in Q4 and our analysis of 50+ years of data indicates “repair deferral” cycles rarely last longer than a year, supporting the view that maintenance, including body work, is ultimately non-discretionary. Sustained SSSG and margin recovery should alleviate structural concerns and support a re-rate.”
In a research report titled Green Shoots to Firm Roots, Mr. Goldman resumed coverage of the Winnipeg-based operator of non-franchised collision repair centres with a “sector outperform” recommendation with view that “total losses are coming back,” leading to expectation for share gains to accelerate."
“A bumper crop of new car sales in 2025 should lower average fleet age and raise actual cash value,” he explained. “Thus far, OEMs have absorbed tariffs, but these could start getting passed on to consumers on model year 2026 as OEMs look to recover margins. 60 per cent of new vehicle inventory is now MY26, and as this flows into the market, price increases should gain more traction and lift used prices in tandem. Used car CPI inflected positively in January 2025 and increased every month since. The Manheim Index was up again in December and Cox Automotive expects another 2 per cent increase in 2026.”
“Better KPI alignment with insurers and the new agreement with Mitchell could lift direct repair program (DRP) volume, while a large cohort of new stores reaching maturity in 2026 could add 200 bp to SSSG alone.”
Mr. Goldman also emphasized his belief fears of insurance cycle are “overdone” as he does not see “a structural shift in consumer behavior.”
“Inflation finally moving in the right direction,” he said. “Insurance premiums have more than caught up with repair inflation. The pace of increases decelerated through 2025 and is now back to historicals while insurers continue to seek approval for decreases. We believe Boyd has largely recovered labour margins while industry labour rates are trending at or below inflation.”
The analyst set a target of $264 per share. The current average is $276.54.
“Shares don’t need a re-rate to work, but it’s not off the table. Shares are flat over the past five years, primarily on multiple compression: BYD is trading at 9.9 times EV/EBITDA (post-IFRS) on our 2026E/2027E vs. historicals of 13.5 times. We think 5-year targets are low-lying fruit given EBITDA growth is supported by internal initiatives (i.e., no recovery, no opex leverage, share gains, good visibility on new locations). More evidence of a sustained SSSG and margin expansion could lead to a re-rate.”
In response to “solid” share price appreciation, Raymond James analyst Steve Hansen lowered his rating for Methanex Corp. (MEOH-Q, MX-T) to “market perform” from “outperform” while emphasizing its “attractive” long-term fundamentals and “solid” free cash flow profile remain intact.
“We think it is prudent to step to the sidelines until recent seasonal/geopolitical constraints fade and a more attractive entry point emerges,” he said
“As indicated, Methanex’s share price has surged 26.8 per cent over the past three months, drawing strength from a series of macro factors that include: 1) widespread Iranian natural gas shortages and commensurate methanol capacity shut-ins (8.0 millon tpy); 2) surging Iranian civil unrest over the past 3 weeks; 3) derivative concerns over a potential US military strike; and 4) rising commensurate spot methanol values—particularly in China/Asia (NA & Europe still flat-to-down).”
In a client note released before the bell, Mr. Hansen emphasized his argument that “what winter gives, spring usually takes.”
“As previously opined, winter ‘fly-ups’ are a common seasonal dynamic in global methanol markets due to acute gas shortages & methanol capacity downtime that surface in key production hubs like Iran and China,” he explained. “This winter has been no exception, with 8.0 million of Iranian capacity currently shut-in (approximately 80 per cent of Iranian total). While these outages often persist into late Feb./early March, they also tend to revert quickly when spring ultimately emerges. Importantly, ‘peak industry downtime’ each year typically corresponds with Chinese New Year, a period when many Chinese producers also take scheduled downtime (this year: Feb. 17-Mar. 3). We expect a similar pattern again this year — one where prices will ultimately fade off their winter highs through late Q1 & Q2.”
He reiterated his US$45 target for Methanex shares, which sits below the US$50.14 average on the Street.
National Bank Financial analyst Cameron Doerksen think demand for air travel in Canada “appears to be healthy” and near-term results for Air Canada (AC-T) may “be boosted by lower fuel prices, which could be a short-term catalyst for the stock.”
However, ahead of the release of its fourth-quarter results in early February, he predicted the airline’s shares will likely remain range-bound, seeing “some potential headwinds to sustained share price appreciation in the near-to-medium term.”
“Canadian airline industry system-wide capacity growth as measured by seats is up 0.6 per cent year-over-year in Q1/26, which is a moderation from prior quarters,” he explained. “Demand for air travel still looks positive into early 2026, but we see some risk of yield erosion, notably on sun routes this winter as industry capacity is up significantly (7.0 per cent). Our early look at trans-Atlantic industry capacity for summer 2026 shows that industry seats will be up a fairly aggressive 6.3 per cent year-over-year (versus 3.3-per-cent industry capacity growth in summer 2025).
”Fuel an earnings tailwind at current spot In Q1/25, the average jet fuel spot price was $0.97/litre and the jet fuel price ranged on average between $0.85-$0.89 in subsequent quarters. The current spot price is $0.83/litre so if prices stay at current levels, fuel will be a material cost tailwind for Air Canada in Q1/26 and also a modest tailwind for the remainder of the year. We have adjusted our Air Canada estimates to reflect lower fuel prices."
Mr. Doerksen is now projecting 2026 EBITDA of $3.4-billion, which is narrowly under the Street’s expectation, however he noted current estimates assume a higher fuel price than the current spot price.
“If Air Canada guides based on fuel and f/x rates that are closer to spot, we could see the guidance range for 2026 coming in at closer to $4.0-billion (although we suspect management may take a more cautious approach),” he said. “As such, depending on how fuel and f/x rates trend over the coming weeks, the potentially positive guidance could be a catalyst for Air Canada shares when the company reports its Q4/25 results.”
Reiterating a “sector perform” rating for Air Canada shares, Mr. Doerksen bumped his target to $24 from $23. The average is $23.12.
“At just 3.0 times 2026 EV/EBITDA, valuation is also still attractive. However, we expect the stock to remain range-bound as we see some potential headwinds, notably still competitive market conditions, ongoing weakness on U.S. transborder routes, and more labour-related risk later in the year,” he concluded.
TD Cowen analyst John Shao assumed coverage of a group of Canadian technology stocks from colleague Daniel Chan in separate research reports released before the bell.
They include:
* Docebo Inc. (DCBO-Q, DCBO-T) with a “buy” rating and US$37 target. The average target is US$35.34.
Analyst: “We believe Docebo’s product leadership to continue to support growth across enterprise, government and SMBs. We expect ARR growth to tick up through the year while retention challenges (AWS and Dayforce) remain isolated. Catalysts include federal wins, large SI-driven opportunities, and consistent margin expansion.”
* Lightspeed Commerce Inc. (LSPD-N, LSPD-T) with a “hold” rating and US$15 target. Average: US$15.29.
Analyst: “The key catalyst remains consistent execution on growth initiatives. We believe continued momentum on its strategy would both support growth acceleration and drive a recovery in the shares. Beyond the topline, expanding operating leverage and efficiency initiatives should support profitability growth.”
* Real Matters Inc. (REAL-T) with a “buy” and $9 target. Average: $7.
Analyst: “We remain positive on Real given its market share gains, new T1s customers, and improved structural setup ahead of a possible favorable rate environment in 2026, particularly considering the U.S. administration’s recent announcement to buy $200-billion in mortgage bonds to increase refi activities.”
In other analyst actions:
* In a 2026 outlook for base metals equities, Canaccord Genuity’s Dalton Baretto upgraded Ero Copper Corp. (ERO-T) to “buy” from “hold” with a $48 target, up from $31 and above the $38.44 average, pointing to its “combination of strong near-term production and cash-flow growth coupled with an attractive valuation.”
“We see a very strong year for ERO. We believe operating momentum from Q4 2025 will carry over through 2026, with both Tucuma and Xavantina hitting their stride and cash flow bolstered by gold concentrate sales from the stockpile over the year,” he said. “We expect year-over-year copper production to increase by 22 per cent and gold production to increase by 49 per cent, with cash flow further bolstered by lower unit costs and our assumption of higher commodity prices. The real prize, however, is the cash flow from gold concentrate sales, where we forecast 71koz of sales, at operating costs of $500/oz and a realized price (net of the RGLD stream) of $3,741/oz. As such, we forecast a strong year of cash flow from ERO, which will help deleverage the balance sheet and remove an overhang on the stock. We also expect a PEA on the promising Furnas project in H1/26, which should help the market better reflect value of the project in the share price. ERO is expected to close out 2026 with the completion of the shaft construction at Caraiba, setting the company up well for 2027 as well.”
* Citing higher potash price forecasts, Morgan Stanley’s Vincent Andrews upgraded Nutrien Ltd. (NTR-N, NTR-T) to “overweight” from “equal-weight” with a Street-high target of US$77, up from US$70. The average is US$67.22.
* Seeing “high execution risk” in its plan to triple its enterprise value in 3-5 years. Wolfe Research’s Keith Stanley downgraded South Bow Corp. (SOBO-N, SOBO-T) to “underperform” from “peer perform” with a US$24 target. The average is US$28.74.
* UBS’ Mauricio Serna initiated coverage on Groupe Dynamite Inc. (GRGD-T) with a “buy” rating and $115 target, pointing to large global expansion potential as well as earnings momentum. The average is $98.20.
* In report previewing fourth-quarter earnings for Canada’s steel companies, RBC’s James McGarragle raised his target for Russel Metals Inc. (RUS-T) to $51 from $47 with an “outperform” rating, while he maintained a $6 target and “sector perform” rating for Algoma Steel Group Inc. (ASTL-T). The average targets on the Street are $47.72 and $7.88, respectively.
“We update our estimates to reflect our updated steel price forecast, recent channel checks, and takeaways from conversations with management teams at ASTL and RUS,” he said. “On the trade front, following stalled October negotiations, we continue to anticipate tariff relief through the broader CUSMA process with a potential deal by 2H26, while recent government trade protection measures should help stabilize the Canadian steel market in the near term through import restrictions and ‘Buy Canadian’ policies, in our view. For Algoma, we maintain our Q4 EBITDA estimate at a loss of $97-million (slightly below consensus but within management guidance) while improving our 2026 EBITDA forecast to a loss of $104-million from a loss of $123-million due to higher steel price assumptions and better supply dynamics. For Russel, our Q4 EPS estimate holds steady at $0.49, which trails consensus expectations of $0.53. We are reducing our Q1/26 EPS forecast to $0.84 from $0.99 to reflect weaker Canadian and US PMI data, though this is partially offset by our improved steel price outlook for 2026, keeping our full-year 2026 EPS estimate unchanged at $3.63, aligned with consensus projections.”
* National Bank’s Don DeMarco raised his Alamos Gold Inc. (AGI-T) target to $75 from $68 with an “outperform” rating after adding the changes to its Island Gold mine to his model ahead of the release of an expansion study in early February. The average is $63.32.
“One of our gold sector top picks on scope for NAV accretion and valuation re-rate,” he said.
* Canaccord Genuity’s Aravinda Galappatthige lowered his Cineplex Inc. (CGX-T) target to $11.50 from $13 with a “hold” rating. The average is $13.13.
“Cineplex reported its December box office confirming the final Q4/25 numbers,” he said. Overall, box office sales for the quarter came in at $140.7-million, down 5 per cent year-over-year. This compared to previous consensus expectations of 17.1-per-cent growth and our own prior forecast of 7.6-per-cent growth. However, with the slow start to quarter in October and November, and the latest edition of Avatar underperforming domestic box office expectations by approximately $100-million (for the first 4 weeks), we saw a meaningful variance. As a result, we expect a more moderated Q4 result with adj. EBITDAal of $51.3-million (vs. consensus of $64.7-million).
“Furthermore, we believe that the Q4 variance could result in 2026 expectations being tapered down a bit, with consensus calling for high single-digit box office growth in the current year.”
* With Tuesday’s introduction of 2026 guidance as well as a 10-per-cent increase to the quarterly dividend, Canaccord Genuity’s Luke Hannan increased his target for Maple Leaf Foods Inc. (MFI-T) by $1 to $37 with a “buy” rating. The average is $34.33.
“Though the guidance is in line with consensus expectations, we expect investors will view the news positively, reflecting that MFI’s near-term growth expectations remain unchanged after the recent run-up in pork cutout values towards the end of last year,” said Mr. Hannan.
* Seeing the “potential to create a new mid-tier gold-copper producer,” Beacon Securities’ Michael Curran initiated coverage of NorthIsle Copper and Gold Inc. (NCX-X) with a “buy” rating and $5 target.
" Our fair value assessment of a potential mining operation at North Island suggests that NorthIsle shares represent an attractive investment opportunity at current price levels. We believe further studies are likely to generate improved economics for North Island and create additional value for shareholders," he said.
* Stifel’s Justin Keywood increased his target for Savaria Corp. (SIS-T) to $28, matching the average on the Street, from $26 with a “buy” rating.
“We raise our SIS target price $2 to $28.00, demonstrating conviction in the assisted lift solutions provider with an expected return to organic growth (4-6 per cent), boosted FCF growth (up 15 per cent) as onetime consultant fees drop off and a balance sheet to support M&A (1.2 times levered),” he said. “New elevator products (Luma), price increases (2-4 per cent) and a Europe leadership change to drive organic growth. M&A funnel remains robust with dealer assets and product opportunities, conservatively factored into forecasts. Savaria sells 10-15-per-cent direct with a 30-per-cent target to help further lift already healthy, 20-per-cent EBITDA margins. Age at home is no longer just a demographic preference as a favourable policy backdrop, including subsidies/tax breaks supports lower cost senior care vs. nursing home settings. Q1-Q4 organic growth with robust FCF to drive valuation. M&A, S&P/TSX index inclusion, Savaria 2.0 (April reveal) to also aid in better valuation, only 9 times NTM [next 12-month] EBITDA, vs. elevator peers, 13 times.”
* Expecting “weak consumer confidence and elevated promotions” to weigh on its fourth-quarter results, National Bank’s Adam Shine cut his Spin Master Corp. (TOY-T) target to $25 from $27 with an “outperform” rating. The average is $28.20.
“TOY noted last month that overall industry POS [point-of-sale] in the company’s TAM [total addressable market] across the G11 markets per Circana was incrementally worse in November compared to October, with total POS for the two months at down 5 per cent driven by negative 8 per cent in the United States and up 2 per cent in the other 10 countries,” said Mr. Shine. “We likely won’t get December data until late in January, but we don’t believe there was any improvement on these metrics as the University of Michigan Consumer Sentiment survey showed a 1.4-per-cent month-over-month decline in December on Current Economic Conditions which reflected a 33-per-cent year-over-year drop. In an effort to stimulate holiday sales, promotional activity stepped up more than anticipated.”