Inside the Market’s roundup of some of today’s key analyst actions
Fundamentals for Canada’s telecommunications industry are “generally underwhelming” as first-quarter earnings season approaches, according to RBC Dominion Securities analyst Drew McReynolds.
“Despite publicly-stated intentions, the provision of 2025 guidance and commitments to longer-term targets, we are generally underwhelmed by the overall lack of progress on pricing and promotional discipline through April 2025,” he said. “For the Big 3 in Q1/25, we expect: (i) largely flat average network revenue growth alongside a notable year-over-year decline in wireless net additions and low-single-digit wireless ARPU [average revenue per user] pressure; (ii) largely flat average wireline revenue growth YoY with Internet revenue growth offset by television and telephony cord-cutting; and (iii) a still challenged advertising market for traditional media. Company-wise, we expect: (i) TELUS/TTech, Rogers and Cogeco to deliver positive consolidated year-over-year revenue growth of 1.2 per cent (up 2.0 per cent for TTech), 0.9 per cent and 0.7 per cent, respectively; (ii) Quebecor to lead on wireless net additions (up 35k) and network revenue growth (up 4.6 per cent); and (iii) Rogers to further narrow the gap to BCE and TELUS on Internet net additions (25k versus 28k and 24k, respectively).”
In a research report released before the bell, Mr. McReynolds predicted Canadian telecom stocks “should continue to be relative beneficiaries of any flight to quality/safety,” however he warned “a subdued revenue growth environment to limit any meaningful sector-wide multiple expansion and put greater emphasis on NAV growth and company-specific catalysts.”
“Year-to-date, the S&P/TSX Telecom Index has generated a negative 2-per-cent total return compared to negative 7 per cent for the S&P/TSX Composite Index,” he said. “Following a year in which wireless promotional activity in H1/24 was more aggressive than expected, the Big 3 downwardly revised 2024 revenue growth guidance, and Quebecor and Cogeco both struggled to generate even modest positive underlying revenue growth, we continue to expect industry revenue growth to remain under scrutiny in 2025.
“Until new value propositions emerge and scale to create meaningful new revenue streams for the industry, 2024 revenue headwinds are likely to persist through 2025, making any meaningful Canadian telecom comeback more of a 2026 story. However, we see potential for the industry to take one small step for growth, and possibly one giant leap for sentiment, reflecting: (i) the flow-through of more disciplined wireless and Internet pricing behaviour that began in earnest in H2/24, albeit with Q1/25 progress admittedly being somewhat underwhelming; and (ii) what was undoubtedly exceptionally negative sentiment on the sector as we began 2025.”
Mr. McReynolds made a series of target prices for the companies in his coverage universe. They are:
* BCE Inc. (BCE-T) to $37 from $39 with a “sector perform” rating. The average on the Street is $35.12.
Analyst: “We look for more timely entry points with the closing of the MLSE and Ziply transactions (H2/25), an associated uptick in revenue and EBITDA growth, and/or greater progress in tracking toward targeted dividend payout and leverage ratios (including additional non-core asset sales and/or infrastructure crystallizations) being potential catalysts for the stock. While the current dividend yield is compelling, until these potential catalysts emerge and until there is more clarity from the Board on the company’s current dividend policy, we see the stock as largely rangebound compounded by a relatively high cost of equity following the pullback in the shares alongside the newly instituted DRIP.”
* Cogeco Communications Inc. (CCA-T) to $78 from $77 with a “sector perform” rating. Average: $78.15.
Analyst: “Despite competitively intense operating environments in Canada and the U.S., management continues to execute on multiple growth initiatives that include rural broadband expansion, entry into North American wireless markets, digitization, and Canadian Broadband and American Broadband integration. While we remain on the sidelines given the more challenged revenue environment, we continue to see value in the stock and look for better visibility on potential catalysts that could include an eventual uptick in revenue growth (driven by rural broadband expansion, price increases and/or wireless entry), the eventual realization of greater-than-expected synergies, and/or any potential easing in U.S. competition/concerns.”
* Quebecor Inc. (QBR.B-T) to $41 from $38 with an “outperform” rating. Average: $39.04.
Analyst: “Following a period of downward estimate revisions since the acquisition of Freedom alongside lowered growth expectations, we upgraded the stock in December 2024 based on a more attractive risk-reward heading into 2025. We expect Quebecor to be a beneficiary of a more disciplined wireless and Internet pricing environment on the margin with potential for renewed growth in Telecommunications that could be a catalyst for multiple expansion. In the absence of renewed growth and/or multiple expansion and even with rising capex, we still see some (albeit less) upside potential in the shares on the back of equity reflation driven by FCF generation and outright debt repayment given the low dividend payout ratio (30 per cent of FCF).”
* Rogers Communications Inc. (RCI.B-T) to $54 from $57 with an “outperform” rating. Average: $53.36.
Analyst: “Following the meaningful pullback in the shares in 2024 and year-to-date in 2025, at 5.8 times FTM EV/EBITDA the stock continues to trade at a notable discount to large cap peers. While the low revenue growth environment in 2025 works against sector-wide multiple expansion, at current valuation levels, we continue to see an equity reflation story in 2025 driven by FCF generation, outright debt repayment given the relatively low dividend payout ratio (more than 30 per cent of FCF postDRIP), and further progress on balance sheet de-levering that includes closing the $7-billion structured equity investment (Q2/25) and providing further clarity on MLSE financing (closing H2/25). As visibility improves on the path to crystallize the value of the company’s sports assets, we see potential for Rogers to narrow the valuation discount to large cap peers.”
* Telus Corp. (T-T) to $24 from $25 with an “outperform” rating. Average: $22.12.
Analyst: “With TELUS outperforming large cap peers in 2024 and year-to-date in 2025, the company’s premium valuation remains notable (FTM [forward 12-month] EV/EBITDA of 7.9 times versus 5.8 times for Rogers and 6.8 times for BCE) suggesting that valuation risk has risen on the stock, particularly in the low revenue growth environment. While given this premium valuation we see limited potential for multiple expansion in 2025, we believe TELUS as the structural leader within the group can maintain a premium valuation provided that certain boxes are ticked through 2025–2027, including: (i) sustaining 3-4 per cent or higher adjusted EBITDA growth for TTech systematically realizing cost efficiencies; (ii) continuing to make progress toward management’s 10-per-cent consolidated capex intensity objective (below 16-19 per cent for large cap peers); (iii) turning the DRIP off postmm Wave auction; (iv) reducing leverage to the low-3 times range while pausing on major M&A; (v) renewing the annual dividend growth commitment for 2026-28, albeit at a lower rate versus the current 7-10 per cent; and (vi) ultimately instituting an NCIB to absorb excess FCF given the structural decline in capex.”
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Heading into first-quarter earnings season for Canadian industrial companies, National Bank Financial analyst Maxim Sytchev thinks “a period of pronounced stagflation is once again a realistic possibility,” given an increasingly volatile U.S. economic policy.
He now expects most companies to re-iterate their guidance ranges for the remainder of the year, however he warned “most investors will view these as lagging/stale given the heightened level of uncertainty around aggregate demand.”
“The longer this drags on, the higher the probability of a recession,” said Mr. Sytchev. “The logical question is whether following a 19 per cent (on average) year-to-date decline across our coverage - 2 times that of the TSX (our top ideas at down 10 per cent) – the names discount a calamity. The short answer is no, with an average downside in case of a downturn (based on 2001 and 2008 precedents) pointing to another 26-per-cent slide. We frame our modeling via precedents context (engineers/construction companies’ revenues are resilient due to backlogs; equipment peers come down 15 per cent to down 20 per cent; RBA actually up; capital goods are akin to equipment while consumer discretionary names are more sensitive). The above does not account for a fiscal/monetary response, making the downside potentially too conservative as governments worldwide have used infrastructure (and now potentially defense/re-shoring) spending as a reason/means to offset weaker aggregate private sector demand via public spending (rate cuts are certainly back on the table, again) – a real life data point around such Keynesian behavior was the most recent Quebec budget that upped infrastructure spending (prior projections had called for a compression).”
In a research report released Wednesday titled We live in a binary (tariff) world, the analyst, Mr. Sytchev adjusted his estimates and valuation rationale to adjust to the trade war.
“We positioned ourselves relatively conservatively in late 2024 for our best ideas; not because we thought that the U.S. administration would impose such drastic tariffs (quelle surprise, indeed) but idiosyncratic preferences/valuation and overall skew made us more comfortable with RBA (defensive + growth / market share gains), STN (lagged vs. peers last year), ATS (benefits in labour constrained backdrop), FTT (stronger-for-longer EPS generation at a reasonable valuation) and RUS (direct beneficiary of steel tariffs),” he explained.
“On average/median, this cohort has returned negative 10 per cent/negative 4 per cent vs. the TSX/S&P 500 at down 9 per cent/down 15 per cent year-to-date. Now that recession modeling is once again in vogue/necessity (assuming tariff regime is static and permanent, not a negotiation walk-down ploy), RBA is the only counter-cyclical (equipment)/a-cyclical (salvage) in this list, with a caveat around the multiple still representing an unknown (history of course provides some guideposts). When re-running a ‘normal’ recession scenario, our coverage would need to decline on average another 26 per cent to impute such an outcome; the above does not account for a fiscal/monetary response, making the downside potentially too conservative as governments worldwide have used infrastructure (and now potentially defense/re-shoring) as a reason/means to offset weaker aggregate private sector demand via public spending (rate cuts are certainly back on the table, again). We highlight the most real data point around such Keynesian behavior – the Quebec infrastructure budget announced two weeks ago; the prior QC Government projection assumed a step-down in spending; now, we are staying at historically elevated levels for the next 3 years, matching the IIJA spending roll-out duration in the U.S., incidentally. So, the fiscal response is a potential silver lining (if one were to subscribe to such a thesis in our recession downside modeling). While we generally expect most companies to likely re-iterate their guidance ranges for the ones that have official forecasts, we suspect most investors will view these as lagging / stale given the heightened level of uncertainty around aggregate demand.”
With his estimate changes, Mr. Sytchev made a series of target adjustments to stocks in his coverage universe.
He raised his target for Stantec Inc. (STN-T) to $144 from $143 with an “outperform” rating. The average on the Street is $142.18.
Meanwhile, he cut his targets for these companies:
- AG Growth International Inc. (AFN-T, “outperform”) to $49 from $51. Average: $47.75.
- Finning International Inc. (FTT-T, “outperform”) to $48 from $49. Average: $49.67.
- RB Global Inc. (RBA-N/RBA-T, “outperform”) to US$115 from US$118. Average: US$108.55.
- Russel Metals Inc. (RUS-T, “outperform”) to $55 from $58. Average: US$54.33.
- Wajax Corp. (WJX-T, “sector perform”) to $20 from $22. Average: US$22.50.
“Top 3 ideas for the remainder of the year are RBA, STN and ATS [”outperform” and $54 target (unchanged)],” said the analyst. “RBA is not expensive given its defensive attributes (plus, investors need to own something and there is a possibility that the shares could be re-admitted into Canadian indices based on new S&P methodology); STN is acquisitive, once again has margin momentum as a tailwind (not the case for most of 2024), is more balanced vs. prior cycles, showing strong backlog momentum recently, and benefits from a number of U.S. infrastructure programs (IIJA more specifically); ATS was a bad call last year and so far 2025 is no better as anything short-cycle is viewed more negatively now; 80 per cent of the projected backlog is healthcare/food/ nuclear-related; we doubt companies that do go ahead with rollout of new products will rely less on automation; a slowdown in orders appears to be better reflected in valuation; a full-blown recession is not. That being said, strategic value in the platform is higher than the current share price, in our view.”
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Citing its “attractive” value and defensive attributes, TD Cowen analyst Aaron Bilkoski raised PrairieSky Royalty Ltd. (PSK-T) to a “buy” recommendation from “hold” previously.
“Given the recent share-price decline, comparably stable production/FCF and significant value tied to long-dated (in some cases perpetual) mineral ownership, we are jumping on the opportunity to upgrade PrairieSky,” he said. “In our view, this is a unique opportunity to acquire shares of a defensive company that has been oversold in a risk-off macro environment.”
“Our BUY recommendation reflects a combination of the company’s improved valuation relative to its historical trading multiple and the E&P alternatives. Even in a lower WTI and industry spending environment, PSK’s production, FCF and relative valuation remain attractive. Moreover, there is a looming catalyst - the May 14 investor day in Calgary.”
Mr. Bilkoski thinks PrairieSky can maintain its production levels through 2025 without further capital expenditures and now sees its free cash flow yield reaching the high end of its historical range.
“During 2018-2020 when WTI contracted materially, PSK’s shares generally traded in line with the broader E&P coverage universe. However, we believe that is not a fair comparison as the company’s valuation entering that downturn was materially (nearly 40 per cent) higher than it is today,” he added.
“We acknowledge the merits of PSK’s model over a variety of business types - zero capital costs, self-replenishing/growing assets, negligible cash expenses, and lack of ARO. The business offers diversified exposure to the WCSB, while management has demonstrated its expertise acquiring mineral acres and GORRs ahead of major industry trends.”
His target for the Calgary-based company’s shares remains $27. The current average is $31.09.
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Raymond James analysts Michael Barth and Luke Davis made a series of rating revisions for stocks in Canada’s energy sector after the firm upgraded its commodity price deck ahead of the start of first-quarter 2025 earnings season, expressing a preference for natural gas companies over oil.
“This publication normally focuses on expectations for the quarter already in the books (in this case 1Q25), but let’s get real, does that even matter today?,” they said in a report. “The world has changed a lot since March 31st, and it’s pretty clear that investors are primarily focused on what is yet to come as the rest of 2025+ unfolds (especially true given we largely expect 1Q25 to be uneventful). For starters, where does WTI go from here? WTI is already off 18 per cent over the last week and back to levels not seen since early-2021, but it’s not difficult to paint a picture where crude continues to slide given potential tariff escalation, a decline in global growth expectations, and OPEC unwinds. What happens to E&P budgets, oilfield services demand, and oil production in that environment? What happens to natural gas prices if oil production rolls over? If nothing else, uncertainty is increasing, and that’s a tough backdrop for energy equities. We’ve adjusted most of our estimates, targets, and ratings to reflect the lower commodity price deck and increased uncertainty, and provide a summary of our current views on Canadian energy equities below.”
“In particular, we think risk for NYMEX is skewed to the upside vs. current strip given the long awaited LNG capacity ramp south of the border coupled with the fact that the gas rig count has yet to inflect higher. At current oil strip (should it hold), we would also expect to see a modest decline in the oil-directed rig count, which in turn should result in lower oil production. As a result, associated gas production may decline, which would further tighten the gas market at a time when demand is marching higher. There’s also the medium-term question of whether there is significant reshoring of manufacturing to the U.S., which should further increase industrial (and maybe power) gas demand. At the same time that we expect NYMEX to climb higher, we also see a path to (at least temporarily) a narrower AECO basis as LNG Canada starts to ramp up into year-end and 2026. That’s not a bad setup for AECO, which has limped along for much of the last two years. We recently launched on the gas-weighted E&P universe, and highlight ARX, TOU, NVA, KEL, and PEY as providing attractive absolute and relative returns at these levels.”
With their forecast changes, Mr. Barth upgraded his recommendations for these companies:
Canadian Natural Resources Ltd. (CNQ-T) to “outperform” from “market perform” with a $49 target, down from $52. The average on the Street is $54.
Analyst: “Canada’s bellwether producer is down nearly 20 per cent year-to-date (vs. TSX down 9 per cent), and while our target declines by 6 per cent (from $52.00/share to $49.00/share), our return to target has also widened to 36 per cent. At last close, our model suggests that CNQ is now pricing in something like flat US$54/bbl WTI into perpetuity, which strikes us as overly punitive for one of the lowest cost producers and best capital allocators in Canada. The company boasts a 6.6-per-cent dividend yield, with a sustaining free cash flow breakeven (maintenance capex + dividends) of somewhere in the high-US$40/bbl range (WTI) still sitting well below current strip. While we acknowledge that commodity prices can get worse, we think risk is now skewed to the upside for the first time since we launched on CNQ last year. For the first quarter specifically, we’ll be looking for updates on capital allocation priorities and whether CNQ plans to reduce capital spending for FY2025 to maintain debt repayment and buyback cadence.
Imperial Oil Ltd. (IMO-T) to “outperform” from “market perform” with a $104 target, down from $108. Average: $101.13.
Analyst: Given the highly integrated nature of IMO’s business (refining capacity more-or-less matches upstream production volumes), IMO has the lowest sustaining free cash flow breakevens in the peer group (sitting at US$45/bbl WTI). On our math, IMO is now pricing in US$56/bbl WTI into perpetuity, and similar to CNQ, we think the risk/reward from here skews attractive. We are slightly below consensus on 1Q25 production but ahead slightly on AFFO (slightly more optimistic refining assumptions), but we ultimately expect a more-or-less in-line quarter. Looking ahead, we see the April 17th Investor Day as being a potential positive catalyst, and expect the company to talk more about growth projects and solvent applications.”
Conversely, Mr. Barth downgraded these stocks:
Precision Drilling Corp. (PD-T) to “outperform” from “strong buy” with a $124 target, down from $141. The average is $119.47.
Analyst: “We sit slightly below consensus for 1Q25, and well below consensus on FY25 and FY26 estimates as we bring down our U.S. active rig count, day rate, and day margin estimates. We expect that the oil-directed rig count should start to decline more than US$65/bbl WTI, with the pace of decline accelerating every US$5/bbl below that. Even if gas-directed drilling rebounds later this year, we don’t expect it would be enough to offset the decline on the oil side, and net/net that reduction in activity should also drag down day rates and day margins. Our target falls from $141.00/share to $124.00/share on these revisions, but still sits a whopping 128 per cent above the last close price. We acknowledge A) the headwinds drilling faces in a lower commodity price environment, B) the risk that commodity prices move lower, and C) that our estimates sit will below consensus… but the stock has been aggressively punished, is currently still sitting at a mid-20-per-cent FCF yield on our lower revised estimates, and we think investors are more than compensated for the “extra risk” at this share price/return-to-target.
STEP Energy Services Ltd. (STEP-T) to “market perform” from “outperform” previously, in order to be consistent with his rating on Trican Well Service Ltd. (TCW-T), with a $5 target, down from $5.50. Average: $5.18.
Analyst: “While we ultimately think Canadian OFS activity will hold up better than U.S. OFS activity, we remain cautious. Part of our concern is that any incrementally idled frac spreads in the U.S. could move north and put further pricing pressure on the Canadian frac market. Valuations don’t look totally unreasonable for the Canadian frac space, but in the current environment we see better risk-adjusted returns elsewhere.”
Meanwhile, Mr. Davis downgraded these stocks:
Surge Energy Inc. (SGY-T) to “market perform” from “outperform” with a $6 target, down from $8.50. The average on the Street is $10.06.
Analyst: “Our production estimates decrease 0 per cent/4 per cent in 2025/26 alongside a trim to our capital spending outlook beyond 2025, with our CFPS estimates dropping 19 per cent/35 per cent. Of note, we have not factored in a reduction to the base dividend, but we believe it could be at risk in the event that prices remain weak for an extended period. That said, a decent balance sheet combined with a strong hedge profile through 2025 likely provide some buffer and time for management to see where things settle out on the macro front. In any case, we believe oil-weighted equities broadly will remain under pressure for the foreseeable future.”
Obsidian Energy Ltd. (OBE-T) by two levels to “market perform” from “strong buy” with a $10 target, down from $14. The average is $12.80.
Analyst: “This comes on the back of reduced estimates alongside a trim to our capital spending assumptions and believe delineation will take a back seat, for now. We believe oil-weighted equities broadly will remain under pressure in the context of the current macro environment and while our favourable long-term view on both development and latent value across the company’s Peace River asset remains intact, our new oil outlook suggests management will likely have to trim development capital below current street expectations — recall the company is expected to provide a formalized capital plan incorporating the recent disposition, though we think this may be delayed until after the 1Q print.”
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In a research report titled Deep Value: Trading Like It’s Pandemic All Over Again, Scotia Capital analyst Konark Gupta argued Air Canada’s (AC-T) valuation “doesn’t make sense.”
“We agree that the probability of a recession has increased amid the ongoing U.S. trade war, which is clouding consumer, business and investor sentiment,” he said. “We also agree that Canada-U.S. travel is falling and could further soften due to traveller caution, patriotism, border scrutiny, or simply currency gap. However, we can’t really make much sense of current valuation, which is strikingly similar to the level when the stock troughed during the pandemic despite very slim chances of pandemic-like losses and cash burn in this cycle.
“While it is not easy to pound the table on AC in the very short term, considering several high-quality industrials have sold off too and airline fundamentals are under pressure, we nevertheless don’t see any point in throwing in the towel here. In other words, we think the stock has almost hit the bottom and patient investors would reap high rewards in time. We have made incremental adjustments to our estimates to reflect demand weakness, led by transborder, partially offset by fuel tailwinds (we are still above spot).”
The analyst noted Air Canada’s closing share price of $12.83 on Tuesday is now similar to the trough level of $12.15 seen on March 19, 2020. At that point, passenger traffic was falling more than 95 per cent year-over-year with the airline “broadly expected to raise capital (debt and equity) to offset cash burn, reflecting the aftermath of the pandemic.”
“Using the end-2020 share count and net debt, to reflect capital raise and peak cash burn, the trough share price of $12.15 equated to EV of $9.0-billion and market cap of $4.0-billion,” he added. “AC’s current EV and market cap are back to those pandemic levels at $9.1-billion and $4.1-billion, respectively, with share count and net debt similar to 2020. This would suggest, at least mathematically, that the market is expecting pandemic-like dire scenarios for earnings and cash flows in the near term. We don’t quite see a repeat of the pandemic as we are forecasting more than $3-billion in annual EBITDA vs. negative $2.0-billion in 2020. Our 2025 FCF estimate of negative $477-million (before IFRS leases) compares to negative $3.6-billion in 2020 and doesn’t reflect potential capex cuts or deferrals in light of demand weakness.”
With reductions to his projections, Mr. Gupta cut his target to $21, which is below the $23.93 average, from $25 with a “sector outperform” rating.
“We were already quite conservative vs. 2025 consensus and guidance in light of U.S. tariffs’ potential impact on CAD and outbound international travel from Canada,” he explained. “While CAD has held steady at 1.43 vs. USD, supporting our existing assumptions, we have noticed that non-domestic travel has decelerated and market jet fuel prices have pulled back. Incorporating these trends into our model results in a net decline of 3 per cent in our 2025 EBITDA estimate to $3.2-billion, which is well below guidance of $3.4-$3.8-billion (Street $3.5-billion). With our fuel/FX assumptions remaining unfavourable vs. guidance, we have moved our 2025 capacity assumption to the low-end of guidance range and our adj. CASM [cost per available seat mile] estimate to above the high-end of guidance range. We have also trimmed our load factor and yield assumptions, led by the Transborder segment. We expect AC to redeploy capacity from transborder routes to relatively stronger markets in transatlantic, Caribbean and domestic, which could provide some revenue offset albeit potentially at lower yields due to capacity additions. While we still share AC’s views about the continuation of positive Q4 trends into 2025, especially yield given easier comps, we have grown most cautious about Q2 yield due to the apparent softening in transborder demand. For Q1, we have modestly trimmed our EBITDA estimate to $313-million (5.9-per-cent margin) from $317-million previously (now assuming ASM up 1.9 per cent, RPM down 0.1 per cent, Yield up 1.5 per cent, PRASM [passenger revenue per available seat mile] down 0.4 per cent, adj. CASM up 7.3 per cent) but incrementally reduced our FCF estimate to $190-million (was $280-million) to reflect reduced forward bookings. The Street is currently expecting $365-million EBITDA (6.9-per-cent margin) and $228-million FCF, which could prove optimistic, particularly EBITDA.”
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While he thinks Cineplex Inc.’s (CGX-T) second quarter is likely “off to a good start” and predicts a strong movie slate should led to attendance gains, National Bank Financial analyst Adam Shine cut his full-year forecast following Tuesday’s release of disappointing first-quarter box office results.
“The 2025 box office was expected to see a slow start and build traction with more appealing product post-Q1, but a deeper hole was dug in March which not only faced a tough comp but was materially impacted by the poor results of Snow White,” he said. “After seeing January flat year-over-year and February up 24 per cent, March came in down 50 per cent, with Q1 box office down 18.5 per cent and 65 per cent of 2019. BoxOfficeMojo and Comscore had North American (NA) Q1 box office down 11.6 per cent and down 13 per cent, respectively. We now forecast CGX’s Q1 revenues fall 10 per cent to $266-million (consensus estimate $299-million), Adj. EBITDAaL down $9.4-milllion vs. $4.6-million, and Adj. EBITDA down 28 per cent to $34-million (CE $44-million).
“Gower Research trimmed its 2025 forecast for NA box office to US$9.5-billion from US$9.7-billion, with this up 8 per cent year-over-year (was up 11 per cent) and down 17 per cent to average of 2017-2019. We’ll see how the impact of tariffs will affect consumer behaviour amid concerns of rising costs and a recession. Visiting the multiplex may offer a respite from negative headlines, as has historically been the case during economic downturns, but we’re conscious of the proliferation of streamers since the last recession. A Minecraft Movie outperformed last weekend and improved year-to-date North American box office to down 5 per cent, with CGX’s early April box office already more than 50 per cent of its March 2025 and April 24 results.”
Repositioning his forecast “more conservatively,” Mr. Shine is now projecting box office revenues to rise 7.6 per cent in 2025 (down from 14 per cent previously) and 5.5 per cent in 2026 (versus 5). His total revenue expectation slid to $1.447-billion from $1.512-billion, narrowly above the Street’s expectation of $1.471-billion. His adjusted EBITDA estimate is now $333-milllion, down from $369-million and below the consensus of $345-million.
Maintaining an “outperform” rating for Cineplex shares, Mr. Shine cut his target to $13.50 from $15. The average is $13.58.
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Despite lowering his forecast following better-than-expected first-quarter results in response to recent market weakness, Desjardins Securities analyst Gary Ho said he still favours AGF Management Ltd.’s (AGF.B-T) “story,” pointing to “solid fund performance, strong balance sheet, divvy increase and attractive low 2 times EV/EBITDA.”
On Tuesday, the Toronto-based firm reported quarterly adjusted earnings per share of 48 cents, topping both Mr. Ho’s 39-cent estimate and the Street’s projection of 41 cents. He attributed the beat to “an outsized contribution from the alt platform, which is consistently delivering above its 8–10-per-cent return threshold.”
“AGF has a more conservative portfolio stance in the current environment, with retail flows flattish quarter-to-date,” said the analyst.
“Positives. (1) Results beat on adjusted EPS. (2) Retail flows were strong at $258-million, well above our $25-million estimate and $125-million in net redemptions last year. ETFs/SMA AUM [assets under management] grew at a significant 45-per-cent CAGR [compound annual growth rate] in the past two years ($2.9-billion in AUM). Retail flows in 2Q have been flattish despite recent market volatility. (3) Solid fund performance continued (indicator of future net sales), with 67 per cent of strategies outperforming peers on a three- and five-year basis. (4) Alternatives drove an outsized beat — AGF generated $15.6-million in FV adjustments/distribution income, ahead of our C$7.0m (we estimate a $0.09–0.10 EPS benefit). AGF targets a 8–10-per-cent return on its alt investments (but has been trending above this threshold). (5) TTM [trailing 12-month] FCF was $106-million, implying a conservative 28-per-cent LTM payout ratio. (6) As a result, AGF announced a 8.7-per-cent quarterly divvy increase to $0.125/share, above our 4.3-per-cent forecast. At this new level, AGF offers an attractive 5.4-per-cent yield. (7) The balance sheet is strong — $403-million in short/long-term investments against $52-million in net debt ($5.40/share).”
After reducing his earnings expectations through fiscal 2026, Mr. Ho lowered his target for AGF shares to $12.25 from $13.50, reiterating a “buy” recommendation. The average is $12.96.
“We foresee a few near/medium-term positive catalysts: (1) retail net flows trending at/above industry; (2) redeployment of capital for organic growth to seed new private alt strategies and for share buybacks; (3) growth in fees/earnings from its private alt platform; and (4) M&A should be EPS-accretive,” he said.
Elsewhere, others making changes include:
* Scotia’s Phil Hardie to $11.50 from $12 with a “sector perform” rating.
“We think AGF’s first quarter results provide an additional data point that demonstrates the company’s ability to deliver solid operating momentum despite a challenging backdrop,” said Mr. Hardie. “While we are impressed with the results, we view the quarter as backward-looking given a dramatic shift in the operating environment. We expect the recent sell-off, spike in market volatility mix, and waning household and retail investor confidence to put near-term pressure on AUM and sales levels. Management expects low-volatility solutions such as liquid alternatives and fixed income to gain traction with investors. We believe AGF’s expansion into the alternative space and recent launch of new funds could partially mitigate the impact of a potential acceleration in outflows from more traditional equity and balance fund solutions.”
“An uncertain market outlook keeps us on the sidelines despite a discounted valuation. Given AGF’s high exposure to global equities, we see downside risk given a further market sell-off, but also believe the stock will lead other financials through an eventual market recovery phase.”
* TD Cowen’s Graham Ryding to $12 from $13 with a “buy” rating.
“Adjusted EPS of $0.48 was above our $0.41 forecast (and consensus) due to stronger-thanexpected returns from AGF Capital Partners co-investments. Flows were also stronger than expected. We have reduced our target price to reflect lower estimates due to the recent market sell-off. Valuation remains compelling, given the solid asset manager fundamentals, and we reiterate our BUY rating,” said Mr. Ryding.
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In other analyst actions:
* Raymond James’ Steve Hansen initiated coverage of Toronto’s Firan Technology Group Corp. (FTG-T), which manufactures and sells aerospace and defence electronic products and subsystems, with an “outperform” rating and $10 target. The current average is $11.17.
“In short, we believe FTG is well-positioned to deliver outsized revenue and earnings growth throughout our forecast horizon based upon the company’s unique competitive position, proven track record, and strong macro tailwinds,” he said.
“FTG is currently enjoying robust momentum across all three of its key end-markets (Commercial Aviation, Business Aviation, Defense). As demonstrated herein, this momentum is reflected in deep, multi-year backlogs across the world’s largest OEMs, including Airbus, Boeing, Bombardier, COMAC, and Gulfstream, just to name a few. Global defence spending has also proven robust
given the volatile geopolitical backdrop that includes conflicts on multiple continents. ... We believe FTG is in the early innings of a long-term growth plan that will benefit from both organic & acquisitive growth. As described, robust macro tailwinds are expected to deliver healthy baseline organic growth across the company’s existing core platforms. Beyond this baseline, management intends to pull several levers to further augment growth and bolster margins, including: 1) growing its content on existing programs; 2) winning content on new programs; 3) expanding into new geographies; 4) driving incremental operating leverage; and 5) pursuing strategic acquisitions. FTG’s record backlog (ending 4Q24) suggests this strategy is clearly gaining traction.”
* TD Cowen’s Graham Ryding initiated coverage of Goeasy Ltd. (GSY-T) with a “buy” rating and $199 target. The current average is $239.11.
“Goeasy provides investors with exposure to a fast-growing Canadian financial company,” he said. “The non-prime consumer lender has a track record of double-digit loan, revenue, and earnings growth, which we expect to persist. U.S. tariff uncertainty appears largely priced-in, implying an attractive risk-reward, in our view.”
“There are several areas ‘We Like’ about Goeasy. These include: 1) a strong growth profile and attractive market opportunity to support future growth; 2) a multi-year track record of solid execution against guidance; and 3) increased scale driving margin expansion, strong profitability, and credit performance. Our estimates are in line with guidance and reflect EPS growth of 15 per cent/22 per cent in 2025/2026, with expanding margins and stable ROEs.”
* BNP Paribas initiated coverage of Nutrien Ltd. (NTR-N, NTR-T) with an “outperform” rating and US$60 target. The average is US$60.40.
* BMO’s Katja Jancic lowered his Algoma Steel Group Inc. (ASTL-T) target to $12 from $14 with an “outperform” rating. The average is $15.67.
* Wells Fargo’s Roger Read cut his Canadian Natural Resources Ltd. (CNQ-T) target to $40 from $44 with an “equal-weight” rating. The average is $54
* Stephens’ John Campbell cut his Descartes Systems Group Inc. (DSGX-Q, DSG-T) to US$125 from US$137 with an “overweight” rating. The average is US$121.02.
* Truist’s Joseph Civello cut his Lululemon Athletica Inc. (LULU-Q) target to US$297, below the US$353.61 average, from US$380 with a “buy” rating.
* In response to Tuesday’s release of an updated resource estimate for its Koné project in Côte d’Ivoire, SCP’s Justin Chan raised his Montage Gold Corp. (MAU-X) target to $5.10 from $5 with a “buy” rating. The average is $4.46.
“In our view, [Tuesday’s] Kone MRE update shows that there is still multimillion ounce growth potential at Kone. 430koz at 1.06g/t was added today from satellites, with initial MREs at seven deposits, with six advanced targets (have promising drilling but not yet at MRE), and ten drill ready targets,” he said. “In terms of where the further ounce growth comes from, we think the allocation of this year’s 90,000m is instructive - 45,000m targeting new discoveries, 20,000m on advanced targets to delineate additional MREs, and 25,000m on known deposits – the key takeaway for us is today’s additions represent less than half of the targets that will be drilled by the end of this year. For additional context, Montage’s exploration target is more than 1Moz at greater than1g/t of M&I additions by first gold pour (2Q27). We expect the additional ounces to come in the first 8 years of the mine plan, lifting production above 300kozpa in years 4-8 (note we estimate Kone produces more than 300kozpa at 0.95g/t head grade and above at nameplate 11Mtpa).”
* Canaccord Genuity’s Carey MacRury raised his Sandstorm Gold Ltd. (SSL-T) target to $12.75 from $12.25 with a “buy” rating. The average is $11.29.
* Following Tuesday’s post-market release of a business update and revised 2025 financial outlook, Beacon Securities’ Gabriel Leung cut his VerticalScope Holdings Inc. (FORA-T) target to $12 from $19.50 with a “buy” rating, while Raymond James’ Steven Li dropped his target to $9 from $14.50 with an “outperform” rating. The average is $16.75.
“While FORA closed 2024 on a high note with upside, Google updated its core algorithm just a few weeks ago in March that has had an immediate material impact on traffic trends and advertising revenues for FORA. FORA is working on recovery initiatives, but recovery timelines are uncertain and may extend over multiple quarters — hence the revision in F2025 outlook,” said Mr. Li.