Inside the Market’s roundup of some of today’s key analyst actions
Heading into second-quarter earnings season for Canada’s real estate sector, TD Cowen analyst Sam Damiani and Jonathan Kelcher see rising valuations as “accelerated AFFO growth comes into focus.”
“Year-to-date sector returns are already near our 15-per-cent full-year view, supported by improved leasing fundamentals and transaction markets – most notably in Retail,” they said. “REIT valuations have tightened on a yield-spread basis but remain reasonable on P/NAV. With upcoming Q2 reporting, we look for favourable results and management commentaries to sustain the valuation and growth momentum across most property types.”
In a client report released before the bell, the analysts said the “wide” adjusted funds from operations (AFFO) growth disparity continued in the quarter with sectors ranging a drop of 56 per cent year-over-year for Office to a gain of 23 per cent for Seniors, and seeing the average being nil. They now expect “muted” growth for their overall coverage universe through the fourth quarter “but then sharply accelerating to high-single-digits by Q4/27 (mid-single-digits average for 2027).”
“Factors To Watch in Q2: 1. Continuation of positive operating fundamentals. Retail, Industrial and Seniors Housing have all delivered solid YTD returns on the back of strong or improving fundamentals. We believe sustained unit price momentum will require favourable management outlooks to reinforce this narrative. 2. Acquisition pipelines. With an improving cost of capital, we will be focused on management commentary around acquisition opportunities and updates to targets for the year, as well as broader trends in the transaction market. 3. Cap rates compressing. With growing signs of cap rate compression across the Retail, Industrial, and Office sectors, we will be looking for further evidence and management commentary to shed more light on this trend. This could provide a near-term tailwind for NAV growth,” they said.
The analysts reaffirmed the Retail REITS as their top industry preference, believing “sustained and largely unprecedented leasing strength has enhanced SPNOI growth prospects and reduced risk, which should attract more capital and pull cap rates lower.”
“In this context, with valuations still below their long-term peak levels, we see more upside potential,” he said.
In order of preference, the rest of their pecking order is: Industrial, Seniors, Residential, and Office.
Their top picks in the sector are:
- RioCan Real Estate Investment Trust (REI.UN-T) with a “buy” rating and $26 target. The average on the Street is $25.69.
- Chartwell Retirement Residences (CSH.UN-T) with a “buy” rating and $27 target. Average: $26.19.
- Dream Industrial Real Estate Investment Trust (DIR.UN-T) with a “buy” rating and $15.50 target. Average: $15.88.
- Storagevault Canada Inc. (SVI-T) with a “buy” rating and $6 target. Average: $5.75.
Their smaller-cap picks are:
- Dream Unlimited Corp. (DRM-T) with a “buy” rating and $30 target. Average: $34.
- Flagship Communities Real Estate Investment Trust (MHC.U-T) with a “buy” rating and US$25. Average: US$24.50.
- Morguard North American Residential Real Estate Income Trust (MRG.UN-T) with a “buy” rating and $23 target. Average: $21.50.
In a client report released before the bell previewing second-quarter earnings season for Canada’s energy sector titled Expect Big Numbers, Very Big, RBC’s Head of Global Energy Research Greg Pardy emphasized “quality continues to matter when it comes to stock selection, especially given the inherent volatility that oil prices may continue to exhibit given the ongoing Iran conflict.”
“Suncor Energy remains our favorite integrated, Canadian Natural Resources is our favorite senior producer and Ovintiv is a stock we believe has legs—all of which are on our Global Energy Best Ideas List. Cenovus Energy (poised for impressive performance), and Cardinal Energy round out our Outperform roster,” he said.
Driven by oil prices, Mr. Pardy estimated Canada’s majors — Canadian Natural Resources, Suncor Energy, Cenovus Energy and Imperial Oil — will “generate combined second-quarter free funds flow (before dividends, including A&D) of $13.2 billion (up $5.1 billion sequentially) after paying some $6.9 billion in Crown royalties and $4.4 billion in current taxes (all jurisdictions), while their net debt fell about $8.3 billion amid share repurchases of $3.2 billion.”
“Just what the recently executed tri-lateral MOU (aimed at a one million bbl/d west coast bitumen pipeline and oil sands decarbonization) amongst the Pathways Alliance and governments of Canada and Alberta means for the upstream growth initiatives, capital investment and shareholder returns of Canada’s majors are sure to be focal topics on forthcoming conference calls,” e added. “We do not envision any major dislocation from the re-engineered model of free cash generation and shareholder returns which emerged following the pandemic, but growth will likely play a bigger role.”
Mr. Pardy updated his 2026 and 2027 operating earnings and funds from operations estimates to reflect second-quarter 2026 actual commodity prices as well as the analyst’s updated interim commodity price outlook alongside disclosed share buybacks and a “multitude of other fine-tuning adjustments including current taxes, royalty rates and hedging.”
“Our updated one-year price targets reflect the application of target multiples applied to 2027 cash flows under our mid-cycle price outlook (US$75 WTI and US$4 Henry Hub gas),” he added.
For his favourite picks, which all have “outperform” ratings, Mr. Pardy’s targets are now:
- Canadian Natural Resources Ltd. (CNQ-T) at $79, down from $80. The average is $71.34.
- Cardinal Energy Ltd. (CJ-T) at $13.50, down from $14. Average: $14.
- Cenovus Energy Inc. (CVE-T) at $47 (unchanged). Average: $46.11.
- Ovintiv Inc. (OVV-N/OVV-T) at US$70 (unchanged). Average: US$70.06.
- Suncor Energy Inc. (SU-T) at $100 (unchanged). Average: $102.76.
Desjardins Securities analyst Jerome Dubreuil expects second-quarter results from Canada’s telecommunications companies to “continue reflecting the impact of the highly competitive pricing environment that emerged in 1Q, resulting in stable pressure on industry growth.”
“Pricing has improved during 2Q (and improved more post quarter) and the key question is whether the recent stabilization has been sufficient to preserve full-year guidance, especially for Telus,” he added. “Concerns about potential increased competition from satellite operators (based on recent SpaceX executives’ comments) have weighed on share prices recently.
“However, we believe Canadian telcos are better positioned to withstand satellite competition than their U.S. counterparts, given Canada’s greater spectrum scarcity and higher degree of wireless/wireline integration.”
In a client report titled Playing the longer game through more pricing discipline, Mr. Dubreuil reaffirmed BCE Inc. (BCE-T) as his “top pick” in the sector, keeping a “buy” rating and $43.50 target for its shares. The average on the Street is $37.39.
“We expect a relatively quieter quarter at BCE now that management has largely established its strategic roadmap,” he said. “Telecom operations remain under pressure, but we anticipate positive announcements on AI in the coming quarters. We view the shares as undervalued on 2028 estimates and believe the market could increasingly begin to anchor its valuation on that year over the next six months.”
The analyst’s other ratings and targets are:
* Cogeco Communications Inc. (CCA-T) with a “hold” rating and $68 target. Average: $76.49.
Analyst: “Cautious on the quarter. An FX headwind in the quarter and continued high competition in U.S. broadband could make for a challenging quarter and our adjusted EBITDA estimate is slightly below the Street. The recently announced impairment charge has reignited investor speculation regarding a potential divestiture of U.S. assets.”
* Quebecor Inc. (QBR.B-T) with a “buy” rating and $72 target, up from $66. Average: $70.02.
Analyst: “Less room for multiple expansion. Unlike the Big 3, QBR’s shares have largely avoided the recent sector selloff and have continued to outperform despite an elevated valuation. Our wireless EV/EBITDA is now 12 times(was 11 times) to reflect additional DCF work. We maintain our Buy rating but with lower conviction given QBR’s high valuation. We expect the stock-based compensation charge to create a modest headwind in 2Q, but the market has seen past this dynamic in recent quarters.”
* Rogers Communications Inc. (RCI.B-T) with a “hold” rating and $58 target, down from $59. Average: $60.10.
Analyst: “We’re gradually warming up. Last quarter, RCI introduced a credible plan to significantly reduce capex over the medium term, bringing telecom capital intensity closer to T’s level. Historically, we assigned a valuation premium to T, partly due to its better capex profile—that distinction has now narrowed materially. Meanwhile, RCI’s repurchase of Kilmer Sports’ 25-per-cent stake in MLSE for $4.35-billion was pricey, but partially de-risked the path to monetization."
* Telus Corp. (T-T) with a “buy” rating and $19 target, down from $21. Average: $20.28.
Analyst: “Annual guidance looks too high. This may prove to be one of the most consequential quarters for T in many years, as new CEO Victor Dodig hosts his first earnings call. Several potential developments could be well-received by investors, including an update on health monetization, DDRIP removal, capex reduction and a dividend cut (we see a more than 50-per-cent chance that it will happen). That said, the update could be overshadowed by a potential downward guidance adjustment, or skepticism on the achievability of full-year targets. We maintain our Buy rating, but our conviction is stronger over the longer term vs near term.”
Scotia Capital analyst Mike Rizvanovic thinks Canadian life insurance companies are “well positioned in the current macroeconomic backdrop and set to report another round of decent results in Q2.”
“Having said that, we expect the quarter to highlight the group’s stability rather than excite investors with any meaningful upside surprise potential given an absence of sector-specific catalysts, while the very strong share price performance across-the-board post-Q1 suggests that frothy expectations are already embedded into valuation multiples,” e added.
“While our ratings are unchanged, we have moved our price targets higher to be more consistent with current market multiples. GWO remains our top pick among the large lifecos ahead of Q2.”
Mr. Rizvanovic is projecting average year-over-year earnings per share growth of 7 per cent, noting the results are “roughly flat sequentially as some of the tailwinds that supported Q1 begin to moderate.”
“Our EPS estimates sit modestly below consensus for the large lifecos, and are in line with consensus for SFC,” he said.
The analyst’s target adjustments are:
- Great-West Lifeco Inc. (GWO-T, “sector outperform”) to $95 from $83. The average is $83.35.
- IA Financial Corp. Inc. (IAG-T, “sector perform”) to $198.52 from $168. Average: $175.60.
- Manulife Financial Corp. (MFC-T, “sector outperform”) to $61 from $56. Average: $58.77.
- Sun Life Financial Inc. (SLF-T, “sector perform”) to $111 from $98. Average: $105.37.
“We continue to prefer GWO as our top pick heading into Q2 results, which we believe is best-positioned to execute and report another solid quarter driven by the Empower business. We also expect IAG to report a strong quarter, supported predominately by Wealth Management, while we are a bit cautious on the quarter for SLF, which may see some headwinds in its U.S. segment, and MFC on potential net outflows in GWAM and noise in the ALDA portfolio,” he said.
Emphasizing "the inflection in industry drivers and higher order capture across Wire & Cable and Xerxes," National Bank Financial analyst Nathan Po raised his forecast for Mattr Inc. (MATR-T) to fall in line with Monday’s release of stronger-than-expected preliminary results.
Shares of the Toronto-based materials technology enterprise jumped over 22 per cent on Thursday after it said it expects revenue of $390-400 million for the quarter, which is a gain of 21-25 per cent year-over-year and exceeding the Street’s previous projection of $335-million. Adjusted EBITDA is projected to be $60-65-million, also blowing past the consensus estimate of $43.1-million.
“Management attributed the upside primarily to stronger order capture across the Wire & Cable business and increased order fulfillment in Xerxes, as internal efficiency initiatives continue to prove out,” said Mr. Po. “As such, we increase our Q2 organic growth assumptions for Connection Technologies to 32 per cent(was down 2 per cent), seeing FY26 organic growth rise to 8.6 per cent (was flat), and Q2 organic growth assumptions for Composite Technologies to 13 per cent (was 5 per cent), seeing FY26 organic growth increase to 13.4 per cent (was 7.8 per cent). Given the magnitude of the beat, we now forecast 2026e Adj. EBITDA of $193.3 million and expect management to raise its guidance for $170 million come Q2.”
With his higher forecast, Mr. Po said Mattr’s operational momentum is increasingly visible.
“Beyond the preliminary beat, the results provide further evidence that recent capacity investments and efficiency initiatives are translating into stronger revenue and profitability,” he said. “Overall, we believe Connection’s exposure to electrification, mining, and data centre tailwinds, and Composite’s sustained execution continues to bode well for the company’s inflecting momentum.”
Keeping an “outperform” rating for its shares, Mr. Po hiked his target to $18 from $14.50. The average on the Street is $14.56.
“In light of the significant outperformance in Q2, we believe it is appropriate to give MATR credit for its improvements on the execution front, as well as its exposure to thematic tailwinds, which have seen peer multiples tick upward,” he explained. “We therefore raise the multiples used in our sum-of-the-parts valuation methodology on 2027e Adj. EBITDA to 8x Connection Technologies (was 7.5 times) and 6.5 times Composite Technologies (was 6.0 times). The combination of our increased forecasts and higher multiples sees our target rise ... equivalent to a 6.3-per-cent FCF yield, and replicated in our long-term DCF using an 11.0-per-cent discount rate.”
“With exposure to attractive thematic tailwinds, including electrification, grid investment, energy infrastructure and data centre demand, coupled with continuing success on internal initiatives, we reiterate our Outperform rating,” he said.
TD Cowen analyst Wayne Lam initiated coverage of Talamore Mining Corp. (TALA-X) with a “buy” rating, seeing its Coffee project as “the first of a wave of projects being advanced in the Yukon, representing the next Canadian frontier, with significant catalysts ahead of a construction decision in early-2027.
“Given the scarcity of advanced-stage assets in Canada, we anticipate strong investor support and potential rerating as Coffee progresses,” he added.
Mr. Lam said the Vancouver-based company’s acquisition of Coffee from Newmont Corp. last year for upfront consideration of US$10-million in cash and US$40-million in common and preferred shares is “transformational ... in providing an advanced-stage Canadian development asset while reigniting progress in putting the project back on the path to production.”
“We view Coffee as the first among a new wave of development projects in the prospective Yukon, with start of construction targeted for Q2/27,” he said. “We estimate first gold by mid-2029 with production of 232 Koz/year Au at mine-site AISC [all-in sustaining cost] of $1,703/oz over an 11-year mine life, representing one of the next oncoming Canadian projects.”
“We see a number of meaningful near-term catalysts for TALA, including permitting and exploration ahead of a formal construction decision. This includes approval for build-out of the 214 km Northern Access Route to connect Coffee to Dawson City via an all-season access road, which could also include government support via federal growth initiatives and the Yukon Resource Gateway fund. Additionally, we anticipate the final receipt of permits and initiation of early works in H2/26, helping the project get a head start ahead of formal construction. Lastly, we view renewed exploration via a 40,000 m drill program underway as key to demonstrating resource conversion focused on higher-grade zones including the Supremo Extension, which could bolster upfront economics with the upcoming FS by yearend. Overall, in our view, Coffee is on an accelerated path to construction with a number of catalysts ahead.”
Also emphasizing its “strong” shareholder register and a “discounted valuation supports potential for re-rating ahead,” Mr. Lam set a target of $12. The average is $14.
“We estimate TALA is trading at 0.56 times spot NAV, representing a 27-per-cent discount vs Junior producer peers,” he said. “In our view, this reflects current development status as Coffee approaches impending construction with anticipated re-rating potential as de-risking milestones are achieved. Given the scarcity of advanced-stage Canadian development assets and increasing investor focus on Tier I jurisdictions, we see potential for significant re-rating ahead as TALA continues to advance to production.”
Elsewhere, TD Cowen’s Michael Tupholme raised his rating for Mattr to “buy” from “hold” with a $23 target, up from $14.
“We are upgrading MATR to BUY (from Hold) after a very strong prelim. Q2/26 update. While encouraged by MATR’s recent execution, slower organic revenue growth has held us back. Q2/26 midpoint rev. guide implies a sharp inflection (up 23 per cent year-over-year), while the Q2 margin guide is also strong. We expect momentum to continue (raised our 2026/2027 estimates) and we see value in MATR despite [Tuesday’s] strong move,” he explained.
In other analyst actions:
* With revised expectations for the margins of its Civil Aviation business and a lower fiscal 2026 price-to-earnings (P/E) multiple, Morgan Stanley’s Kristine Liwag downgraded CAE Inc. (CAE-T) to “underweight” from “equalweight” with a $37 target, up from $43. The average is $43.61.
““With more ways than ever for investors to express these themes, we are becoming increasingly selective and repositioning our preferences accordingly,” she said.
* After ARC Resources Ltd. (ARX-T) shareholders voted in favour of being acquired by Shell (SHEL-N) in a $22-billion deal, RBC’s Michael Harvey raised his target to $32 from $28 with an “outperform” rating. The average is $33.95.
“In our view, its acquisition by Shell represents a fitting culmination to the story of a true Montney champion—and an endorsement of the Montney’s standing as one of the premier liquids-rich natural gas plays in North America. For ARC shareholders, it marks a well-deserved exit at a valuation that reflects the quality of the asset base assembled over nearly 30 years," said Mr. Harvey.
* Mr. Harvey also increased his PrairieSky Royalty Ltd. (PSK-T) target to $38 from $36 with an “outperform” rating. The average is $36.17.
“PSK’s quarter featured volumes of 27,479 boe/d driving a modest cash flow beat; recording CFPS of $0.57 against RBC/Street estimates of $0.55/$0.56. During the quarter, PSK completed incremental royalty acquisitions totalling $1.8-million largely targeting light and heavy oil plays. We reiterate our OP rating and shift our PT upwards to $38 on higher estimates and the expectation of multiple expansion; PSK remains on the RBC Global Energy Best Ideas List,” he said.
* Ahead of the release of its second-quarter results on Aug. 13, TD Cowen’s Brian Morrison raised his target for Canadian Tire Corp. Ltd. (CTC.A-T) to $210 from $200, keeping a “hold” rating. The average is $204.79.
“We are seeing positive results from CTC’s True North initiatives, notably in its Retail operating margin. This combined with its active NCIB are key drivers of our EPS growth forecast. Its return to growth and a re-rate of financials appear to have supported multiple expansion, that to continue we believe will require sustainable Retail SSSG [same-store sales growth] from CTR (3-4 per cent) and consistent SG&A operating leverage,” said Mr. Morrison.
* ATB Cormark’s Jeff Fenwick hiked his target for Exchange Income Corp. (EIF-T) to $146, exceeding the $137 average, from $125 with an “outperform” rating.
“EIF will release Q2 results on August 11, after market close. We expect another solid quarter of performance, potentially including an upgrade to full-year earnings guidance. We believe there are multiple catalysts that remain on the horizon for EIF, including new contract wins and accretive M&A, which are not factored into our forecast and can be both material earnings drivers and potentially prompt continued multiple expansion,” said Mr. Fenwick.
* In response to its acquisition of a 70-per-cent stake in the French earth observation company Collecte Localisation Satellites for roughly $920-million in cash, Desjardins Securities’ Benoit Poirier raised his target for MDA Space Ltd. (MDA-T) to $72 from $70 with a “buy” rating. Other changes include: CIBC’s Erin Kyle to $59 from $67 with an “outperformer” rating and Scotia’s Konark Gupta to $67 from $71 with a “sector outperform” rating. The average is $70.62.
“We like the transaction as it: (1) materially accelerates MDA’s international expansion; (2) offers a strong strategic fit through downstream vertical integration and revenue synergies, particularly around MDA CHORUS; and (3) adds recurring cash flow that should de-risk MDA’s growth story,” said Mr. Poirier.
* With the sale of a majority stake in its global print unit to U.S.-based investment manager KKR & Co. Inc. (KKR-N) for US$500-million, National Bank’s Adam Shine cut his Thomson Reuters Corp. (TRI-T) target to $171 from $175 with an “outperform” rating. The average is $191.11.
“Despite the valuation disconnect, we like TRI shedding the majority of a business in secular decline to better focus ‘on providing fiduciary-grade AI solutions for the legal, tax, audit, and compliance industries,’” said Mr. Shine.