Inside the Market’s roundup of some of today’s key analyst actions
Desjardins Securities analyst Doug Young expects the third quarter to be “solid” for Canadian banks, predicting “strong capital markets and wealth management results, while credit will be the focus once again.”
“The market seems to be tuning out the siren song around the banks trading at all-time highs,” he said in a client report previewing earnings season in the sector, which begins later this month.
“With our 2Q FY26 postview, we moved our sector call to market weight (from overweight) following a run-up in bank stocks over the past year. To be clear, we’re not negative on the sector, and we see several positive catalysts including potentially plateauing PCLs, strong regulatory capital positions, steady stock buybacks, and potential for further upward revisions to estimates. However, the group trades at a 37-per-cent premium (to historical average) on a price-to-book value basis (vs 30-per cent discount when we went overweight).”
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Mr. Young is currently projecting a 13-per-cent year-over-year increase in cash earnings [er share, “primarily driven by 11-per-cent year-over-year growth in adjusted pretax, pre-provision (PTPP) earnings and, to a lesser extent, buybacks.”
“We expect another quarter of strong contributions from capital markets and wealth management (similar to last quarter), complemented by solid P&C banking results in Canada and the U.S.,” he added. “Credit remains the topic du jour. We forecast an average PCL rate of 43 basis points (up 3bps year-over-year), with performing PCLs of 1–3bps and impaired PCLs broadly in line with last quarter. Given all the global and macro uncertainties, the focus once again will be on the management outlook.
“We expect NIMs to benefit from tractors and improved business mix, partially offset by competition in Canada, and a slower pace of deposit (vs loan) growth. We expect stable loan growth.”
Citing valuation concerns and a lack upside to his targets for their shares, Mr. Young downgraded both Canadian Imperial Bank of Commerce (CM-T) and National Bank of Canada (NA-T) to “hold” ratings from “buy” previously, emphasizing the moves are “not related to any specific concerns.”
In order of preference, his ratings and revised targets are now:
- Toronto-Dominion Bank (TD-T) with a “buy” rating and $183 target, up from $160. The average on the Street is $160.56.
- Royal Bank of Canada (RY-T) with a “buy” rating and $320 target, up from $275. Average: $277.24.
- EQB Inc. (EQB-T) with a “buy” rating and $155 target, up from $132. Average: $129.57.
- National Bank of Canada (NA-T) with a “hold” rating and $238 target, up from $217. Average: $222.
- Canadian Imperial Bank of Commerce (CM-T) with a “hold” rating and $173 target, up from $160. Average: $156.61.
- Bank of Montreal (BMO-T) with a “hold” rating and $260 target, up from $230. Average: $230.56.
- Bank of Nova Scotia (BNS-T) with a “hold” rating and $125 target, up from $115. Average: $115.22.
- Laurentian Bank of Canada (LB-T) with a tender rating and $40.50 (unchanged). Average: $40.38.
While investors punished 5N Plus Inc. (VNP-T) following in-line quarterly results on Tuesday, sending its shares plummeting 8.6 per cent, Scotia Capital analyst Jonathan Goldman thinks “temporary margin pressure doesn’t change [its] secular growth runway.”
“We updated our estimates for 2Q actuals and lower margin assumptions in 2H,” he said. “Gross margin declined 430 basis points year-over-year in 2Q split about evenly split between input cost pressures and operational inefficiencies associated with ramp of new capacity. Management expects to partially recoup higher metal costs, albeit at a two-quarter lag, while mitigation measures already underway should ensure no impact to 2H deliveries. Net-net, management expects 2H consolidated gross margin to remain at 2Q levels plus/minus 1 per cent or around 29 per cent to 31 per cent. We model well below that out of conservatism, but a 2027 margin recovery seems like a reasonable assumption given existing contractual mechanisms in the FSLR contract and tight supply/demand in AZUR (bid dollar value up 2 times year-over-year in 1H26). Moreover, a good portion of the margin expansion over the past few years is structural due to mix shift to downstream.”
Late Monday, the Montreal-based producer of specialty semiconductors and performance materials reported quarterly adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) $26.6-million, which narrowly topped the consensus forecast of $26.4 -million with higher sales offset by lower margins. It maintained full-year adjusted EBITDA guidance of $100-million to $105-million, below the Street’s projection of $109-million.
“Margin normalization was expected, but not to this degree and not in Specialty Semiconductors – particularly in light of 1Q call commentary about margin sustainability or minor variability,” he said. “The company called out “increased cost pressures as expected, as well as temporary reduced operational efficiencies associated with ongoing capacity expansion initiatives [unplanned equipment maintenance].’ The latter suggests upside to SS margins as capacity ramps while 2Q PM gross margin of 31 per cent is now back within the normal range.”
Keeping a “sector outperform” rating for 5N Plus shares, Mr. Goldman cut his target to $35 from $48 after lowering his estimates. The average target is $48.24.
“Margin normalization should support outsized earnings growth next year and beyond as its Renewable Energy (FSLR) and Space Solar Cells (AZUR) segments, which account for approximately 2/3 of its sales, have a strong line of sight for revenue growth of high-teens percent in 2027 and low high-single-digits in 2028,” he explained. “We reduced our 2026/2027 estimates by 8 per cent/2 per cent. As we value VNP on 2027E, the main driver of our target price reduction to $35/share (from $48/share) is a lower multiple at 18.5 times EV/EBITDA (from 24.5 times) consistent with lower valuations across VNP’s across its end-markets (semis, space, solar, defence). Shares offer a much more attractive entry point now that estimates are likely rebased and valuations have de-rated.”
Elsewhere, seeing “a large disconnect between market valuation and underlying fundamentals” and continuing to “see a very strong growth outlook,” Raymond James’ Michael Glen raised his rating for 5N to “strong buy” from “outperform” with a $45 target (unchanged).
“We would be reluctant to say we have any real explanation for the reaction in 5N+ stock stemming from the 2Q report,” said Mr. Glen. If anything, we believe the 2Q results offered further progress with the initiatives 5N+ is pursuing as a critical supplier of niche materials and compounds. Results were slightly better than expected overall, with Performance Materials (bismuth) ahead and Specialty Semiconductor slightly below."
“In terms of our forecast - nothing really changes. Guidance was left unchanged for the full year, and we are not making any substantial changes. VNPs balance sheet remains in a very strong position with net debt/EBITDA dropping to 0.2 times vs 0.7 times in 1Q26. We see significant balance sheet capacity available for the company to pursue M&A. That said, based on commentary from the call, we do not believe there is any imminent M&A. Management highlighted that despite recent pullbacks, valuations remain quite high across the many sectors the company covers.”
Others making target changes include:
* Desjardins Securities’ Frederic Tremblay to $45 from $50 with a “buy” rating.
“We believe the negative share price reaction post 2Q results is overdone. The quarter was affected by temporary operational challenges and input cost pressures, but we see no evidence of any fundamental deterioration in the business. Demand remains robust, deliveries are on track, margins will recover and the company’s long-term growth drivers remain firmly intact. In our view, the market’s focus on near-term margin pressure is overshadowing the strength of VNP’s competitive position and future earnings potential,” said Mr. Tremblay.
* National Bank’s Baltej Sidhu to $45 from $50 with an “outperform” rating.
“All in, we view the margin pressure from the above factors as transitory. Equipment-related issues are not expected to affect H2/26 delivered volumes, unabsorbed overhead should moderate as incremental capacity ramps, and pricing actions should increasingly offset higher input costs. Moreover, as equipment constraints subside, we believe the company could announce a further capacity expansion at AZUR to support elevated demand,” said Mr. Sidhu.
With RB Global Inc.’s (RBA-N, RBA-T) financial results topping expectations, National Bank Financial analyst Maxim Sytchev saw it “a positive quarter, especially when it comes to market share narrative.”
“While we think some might focus their attention on margin puts and takes given variability (plateauing?) of take rate, we are of the view that absolute numbers get carried to a bank, not percentage, even though, of course, everyone wants to see an upward margin trajectory,” he said in a client note. “Management’s comment about growing EBITDA faster than service revenue is something that we view as achievable. We also believe that additional synergies could be created from BigIron over time given the asset’s scale and private ownership structure.
“We also want to remind investors that 2026 has been a relatively quiet hurricane season, suggesting that we are not facing tough comps from that perspective. Importantly, the market share narrative is being supported by incremental volumes from a key customer while the re-bid pipeline for insurance carrier contracts over the next three years could also provide some incremental opportunity to IAA. While the construction market is blowing hot and cold, depending on which vertical/life cycle, we do believe that as equipment in the post-pandemic boom, incremental volume will end up at RBA’s lots.”
TSX-listed shares of RB Global, which is legally domiciled in Canada with headquarters in Westchester, Ill., rose 1.5 per cent on Tuesday after it consolidated gross transaction value of US$4.67-billion for the second quarter, up 11 per cent year-over-year and 5 per cent above the Street’s projection of US$4.45-billion. Revenue of US$1.317-billion topped the consensus (US$1.234-billion) by 7 per cent, while adjusted EBITDA of US$387-million met estimates ($384-million).
Following RB’s conference call with analysts, Mr. Sytchev said its recent acquisition of agriculture-focused Big Iron Auction Co. provides “a new avenue for growth,” while operating leverage is set to become a greater focus in 2027.
“The acquisition provides immediate scale in the U.S. and opens up approximately US$60billion-worth of North American ag opportunity, split 50-per-cent equipment/50-per-cent agricultural real estate; the latter carries low single-digit take rates (type of transaction function, just like in any real estate deal),” he explained. “BigIron has limited overlap with RBA’s existing footprint and complements the company’s Canadian agricultural franchise, where it has developed a playbook over the past 25 years. Integration is progressing well, with the near-term focus on preserving BigIron’s local customer relationships while adding RBA’s transportation, financing, technology and global buyer network. Longer term, management views agriculture as a global vertical rather than simply a U.S. adjacency, with potential to leverage the platform in other markets.”
“RBA raised its 2026E GTV growth outlook to 9 per cent to 11 per cent, including approximatelyUS$500mln from BigIron, while adjusted EBITDA is expected to grow 8.6 per cebt at the midpoint. Q2/26 20.0-per-cent service take rate, down 110 basis points year-over-year, is not a fixed run rate given BigIron’s partial contribution, lower estate take rate, and volume incentives in Automotive; management suggested waiting until next year before establishing a more representative base. The newly aligned Heavy Equipment & Transportation segment now includes agriculture and machinery, while Other primarily comprises real estate, consumer, marine, rail and aircraft assets.Looking ahead to 2027E, management stopped short of providing guidance but committed to growing EBITDA faster than service revenuethrough yard leverage, technology / AI and operating efficiencies. Any take-rate increases will be tied to incremental value provided to customers rather than implemented solely to offset costs. Note that as well that there are more insurance contract renewals that are not exclusive to IAA over the coming three years, presenting another potential market recapture upside, over time.”
Reiterating his “outperform” rating, Mr. Sytchev increased his target by US$1 to US$133. The average on the Street is US$135.20.
“At 23.4 times 2027 estimated P/E, the shares are not expensive vs. their own history, even though, of course, its direct peer has experienced material de-rating given IAA’s market share recapture,” he said. “As long as we don’t get into a pricing war, we believe the duopoly players can both compound.”
Elsewhere, RBC’s Sabahat Khan raised his target to US$152 from US$150 with an “outperform” rating.
“RBA reported Q2 ahead of consensus (2026 GTV guidance revised higher following closing of BigIron), with results reflecting a 6th consecutive quarter of share gains for IAA, and continued cost control. Company also active on the capital allocation front with ongoing M&A and return of capital (repurchases during the Q and a 6.5-per-cent increase to the dividend). At a 2026 estimated P/E of 24 times, we continue to view RBA shares as being attractively priced,” said Mr. Khan.
TD Cowen analyst Brian Morrison sees Martinrea International Inc.’s (MRE-T) valuation not reflecting its “development of [a] consistent track record.”
“The Q2/26 adjusted EBITDA/EPS were right in line with consensus on slightly lower than forecast sales/higher than forecast operating margin, supporting confidence in maintained 2026 guidance,” he said. “Track record of solid earnings/FCF, active NCIB, and likely forthcoming non-core asset monetization we do not think are appropriately reflected in its valuation at 3.0 times/2.8 times our 2026/2027 estimated EBITDA.”
After the bell on Tuesday, the Toronto-based auto parts manufacturer reported adjusted earnings per share of 61 cents, exceeding both Mr. Morrison’s 54-cent estimate and the Street’s projection of 58 cents.
“The key North American operations were ahead of our forecast due to margin strength, offset by European sales/margin ‘softness’ largely attributable to EV sales weakness,“ he said. ”In aggregate, the modest year-over-year decline in production sales was 2.5 per cent below our forecast, offset by an operating margin of 5.9 per cent, or 45 basis points ahead of our forecast.”
“Management noted the potential for non-core asset sales totaling $50-$100-million, that we surmise come from a combination of asset sales from its planned lowering of its ROW [rest of the world] exposure, and monetization of surplus real estate. With leverage at its target level (1.5 times), we believe proceeds could be allocated to tuck-in acquisitions and/or its NCIB. This, along with an anticipated return to growth in 2027/2028, continuation of strong FCF, improving outlook for its European operations, and potential for a USMCA resolution, we believe should improve its valuation. Our current financial forecasts have Martinrea at a sustainable 13-per-cent FCF yield and 2026E/2027E EBITDA multiples of 2.6 times/2.3 times including forecast FCF/low end of potential non-core asset dispositions.”
Seeing “meaningful upside potential to the share price should Martinrea achieve its financial targets,” Mr. Morrison raised his target for its shares by $1 to $16, keeping a “buy” rating. The average on the Street is $12.83.
“Progress made on our potential catalysts outlined should finally support an improved valuation, including optionality of capital allocation from forecast FCF/non-core asset sales,” he added. “Martinrea trades at a material discount to group peers, and we calculate the sensitivity to a multiple turn is $8.25.”
“We believe Martinrea continues to illustrate its commitment to asset optimization and positive FCF generation. This appears to be discounted by investors, with a valuation at the low-end of its average range and upon considering its relative underperformance to MGA/LNR in 2025. We believe that progress upon its 2026 forecast guidance should heighten investor confidence upon its mid-term earnings/FCF growth potential and upside upon an improved macroeconomic environment.”
Desjardins Securities analyst Jerome Dubreuil thinks investors may “ultimately look through” Lumine Group Inc.’s (LMN-X) “mixed” second-quarter results “as M&A activity has significantly increased since quarter-end—year-to-date capital deployment has reached a record US$513-million.”
After the bell on Tuesday, the Toronto-based software company reported revenue of $235-million for the quarter, up 28 per cent year-over-year and narrowly above the $233-million estimate of both Mr. Dubreuil and the Street. Adjusted EBITDA of $78-million was an increase of 19 per cent but below expectations ($79-million and $81-million).
While margins fell short of projections, the analyst emphasized Lumine’s “impressive year-to-date capital allocation.”
“LMN had already announced the acquisitions of Quortex (cloud-native video networking) and of Imagine Communications (video connectivity and advertising monetization), but it announced today that the total consideration for both deals (closed on July 1) was US$233-million, which is more than we had estimated,” said Mr. Dubreuil. “Combined with the US$275-million Synchronoss acquisition completed in February, LMN has now deployed more than US$500-million year-to-date in M&A, making 2026 a record M&A year after only seven months. We estimate pro forma net leverage at just 0.6 times (our definition). Those deals should contribute to CSU’s capital deployment, for which we also anticipate strong capital deployment in the quarter.”
Expecting consensus estimates to move “materially” higher and applauding “management’s ability to deploy capital in a challenging software environment,” he raised his target for Lumine shares to $38 from $36, keeping a “buy” rating, after increasing his 2026 and 2027 revenue and earnings expectations. The average is $37.
Elsewhere, TD Cowen’s David Kwan moved his target to $42 from $39 with a “buy” rating.
“The modest EBITDA miss (4 per cent) due to higher-than-expected M&A/integration costs could see LMN give up some of the 20-per-cent gain in the last two weeks,” said Mr. Kwan. “However, we think the outlook is strong, aided by the sharp increase in M&A (more than $0.5-billion in deals year-to-date) that is driving a strong re-acceleration in growth (28% in Q2). Normalized margins (mid-30 per cent) remain healthy with potential upside in our view.”
In other analyst actions:
* After lowering his estimates in response to weaker-than-anticipated second-quarter results and seeing less “relative upside,” ATB Cormark’s Tim Monachello downgraded Akita Drilling Ltd. (AKT.A-T) to “sector perform” from “outperform” and cut his target to $4.25 from $5. The average is $3.
“Operationally, AKT’s Q2/26 results were modestly below our model, largely due to 7 per cent lower than forecast U.S. segment daymargins. Given reduced Canadian activity forecasts and more conservative U.S. margin assumptions, we reduce our price target to $4.25 from $5.00. Our revised price target implies a 25-per-cent return to target, which is materially below the 47-per-cent median across Outperform rated companies in our Canadian energy services coverage,” said Mr. Monachello.
* National Bank’s Baltej Sidhu reduced his target for Brookfield Renewable Partners L.P. (BEP-N, BEP.UN-T) to US$37 from US$39 with an “outperform” rating. The average on the Street is US$42.40.
“BEP maintains significant financial flexibility, supported by $5.1-billion of liquidity, a robust asset-recycling program and multiple sources of capital. We expect 2026 to remain another active year for capital recycling ($2.2-billion of proceeds year-to-date; $630-million net), providing funding for both organic development and strategic acquisitions while supporting management’s long-term equity deployment targets. Post quarter end, management also announced plans to simplify the corporate structure through the combination of BEP and BEPC into a single publicly traded corporation, which we view as incrementally positive for liquidity, investor accessibility and valuation over time,” said Mr. Sidhu.
* Scotia Capital’s Jonathan Goldman moved his target for Dexterra Group Inc. (DXT-T) to $14.50 from $14 with a “sector perform” rating. The average is $18.44.
“We updated our model for 2Q actuals following an in-line quarter both on the top and bottom-line,” said Mr. Goldman. “DXT shares trade at 8.0 times EV/EBITDA on our 2027 estimates compared to the company’s 5-year average of 6.0 times – or 6.5 times post-Modular divestiture. We believe a good portion of the multiple expansion has been driven by optimism around nation building, and more recently, data centers as mentioned at the June IR Day. However, we still view that as a show-me story, given organic growth has lagged internal targets. 2Q organic growth in Support Services was 5 per cent, in-line with the low-end of the target range of 5-7 per cent, but it comes on an easy comp of 2.4 per cent, per our estimate. Moreover, Asset-Based Services (ABS) revenue decreased 3 per cent year-over-year year-over-year in 2Q, and we estimate organic declines in double-digits range vs. target range of 2-5 per cent. That also comes on a depressed comp of 17.5 per cent, per our estimate. This is perfectly explainable as workforce accommodations revenue can be lumpy based on project timing. But, it also reinforces why asset-based businesses with cyclical end-markets tend to trade at lower valuations.”
* ATB Cormark’s Jeff Fenwick increased his Dominion Lending Centres Inc. (DLCG-T) target to $13.50 from $11.50 with an “outperform” rating. The average is $9.25.
“The acquisition of Filogix represents a highly strategic, complementary and accretive transaction for DLCG. The transaction significantly expands the scope and scale of its mortgage fintech platform, powered by the firm’s strong balance sheet and robust FCF profile,” said Mr. Fenwick.
* National Bank’s Don DeMarco raised his target for shares of Eldorado Gold Corp. (ELD-T) to $69 from $65 with an “outperform” rating. The average is $56.12.
“[Second-quarter] financials light; however, focus was on McIlvenna Bay’s inaugural guidance, and confirms the transition from construction into ramp-up, while Skouries remains on budget and on schedule with first concentrate reiterated Q3/26. After model updates, our NAVPS is up 1.0 per cent,” said Mr. DeMarco.
* In response to a “rebound quarter, boosted by claims and credit gains,” National Bank’s Gabriel Dechaine increased his iA Financial Corporation Inc. (IAG-T) target to $216 from $205 with a “sector perform” rating, while TD Cowen’s Mario Mendonca bumped his target to $218 from $214 with a “hold” rating. The average is $181.88.
“We are increasing our forecasts to reflect stronger Wealth income and somewhat higher experience gains, partly offset by higher expenses and new-business strain. We also increase our equally weighted 2028E P/B and P/E target multiples to 2.1 times (from 2.0 times) and 13 times (from 12.5 times), respectively, to account for IAG’s consistent EPS and ROE outperformance. As a result, our target rises,” said Mr. Dechaine.
* TD Cowen’s Menno Hulshof bumped his Imperial Oil Ltd. (IMO-T) target to $151 from $150 with a “sell” rating. Other changes include: , while Scotia’s Chris MacCulloch to $156 from $159 with a “sector perform” rating and National Bank’s Travis Wood to $209 from $214 with a “sector perform” rating. The average is $155.13.
“IMO remains a clean story, underpinned by a best-in-class balance sheet, fiscal discipline and a strong commitment to returning the majority of FCF through NCIBs, SIBs and base dividend hikes,” Mr. Hulshof said. “We now model an accelerated NCIB in 2026, but will not model a fourth SIB until one is announced. Operationally, Kearl and Cold Lake cost reductions remain on track and achievable, while IMO has the resource base to double production over time, should the macro backdrop be supportive. While the rail yard expansion is somewhat disruptive to downstream efficiencies, we believe the positive margin impact of Strathcona RD may be underappreciated. We also continue to monitor the potential efficiency impact of a prolonged restructuring and the planned relocation of its HQ to Edmonton by 2028. IMO remains expensive on our estimates (2027E FCF yield on total capex — 7.4 per cent vs. peers 9.9-11.9 per cent; EV/DACF — 10.1 times vs. peers 5.1-6.8 times). We therefore recommend investors look elsewhere for a better risk-reward opportunity.”
* ATB Cormark’s David McFadgen increased his target for Telesat Corp. (TSAT-T) to $118 from $99 with an “outperform” rating. The average is $93.
“Telesat signed a $2.3-billion (US$1.5-billion) contract with Canada’s Defence Investment Agency (DIA) for use of Telesat Lightspeed’s mil-Ka band capacity for an initial five years. The contract has two 5-year extensions with each valued at $200 MM taking the total value of the contract over 15 years to $2.7-billion (US$1.9-billion). We believe that investors should look at this as a 15-year contract and Telesat expects to recognize approximately $180-million a year over the 15 years. This payment is solely for arctic MILSATCOM. If the DIA wants global MILSATCOM, then it will have to pay Telesat substantially more. We believe that the DIA will buy global MILSATCOM in time. Telesat updated its long-term forecast to 2032 now calling for revenue and EBITDA of US$4.9-billion and US$4.1-billion, up from US$3.2-billion and US$2.7-billion, respectively,” he said.