Inside the Market’s roundup of some of today’s key analyst actions
Initiating coverage of the North American Diversified Financials Sector, RBC Dominion Securities analyst Bart Dziarski said he’s bullish on Brookfield entities, pointing to “their demonstrated track record of compounding capital over time and positioning amongst the largest alternative asset managers globally.”
“Brookfield Corporation (Outperform) is our top pick given the current valuation disconnect is too extreme for what we view to be an industry leading franchise in a sector benefiting from positive secular trends,” he said. “In our view, valuation relative to the fundamental outlook is too depressed, particularly around Brookfield Wealth Solutions. We rate Brookfield Asset Management Outperform as it provides investors with pure-play exposure to a capital light alternative asset manager with an attractive growth outlook. We rate Brookfield Business Partners Outperform as we believe the company is entering its next harvesting and monetization cycle, which will likely be a positive catalyst for the stock.”
In a research report released Wednesday, Mr. Dziarski initiated coverage of 10 companies across the sector, saying he’s also bullish on the property and casualty (P&C) insurance industry, “given its defensiveness in a volatile macro environment coupled with the potential for M&A.”
“We initiate on four names: Definity (Outperform – transformational Travelers acquisition), Fairfax Financial (Outperform – investors are still not recognizing solid franchise value), Intact (Sector Perform – we like the franchise, we don’t like current valuation), and Trisura (Outperform – penalty has been served, time to get out of the penalty box)," he said “We believe Definity’s recent acquisition of Traveler’s Canadian operations (excluding Surety business) could serve as a catalyst for future M&A in the highly fragmented Canadian P&C insurance market.”
The analyst named three stocks his “top ‘diversi-finds” in the sector:
* Brookfield Corp. (BN-N, BN-T) as his “secular winner” with an “outperform” rating and US$81 target. The average on the Street is US$67.
Analyst: “Brookfield is our top idea and we believe a core holding driven by its long-term track record of compounding capital. The company has significant liquidity available to deploy in the current market environment to drive future NAV growth. A controlling position in one of the world’s largest, differentiated alternative asset managers contributes further to NAV growth. We believe current valuation provides an attractive entry point into a leading franchise set to benefit from increasing carried interest realizations and its growing Wealth Solutions business.”
* Element Fleet Management Corp. (EFN-T) as his “growth” pick with an “outperform” rating and $43 target. Average: $36.08.
Analyst: “Element is entering what we view as the 5th stage in its evolution with expected 15-per-cent-plus EPS growth over the near term, ROE expansion from midteens to high-teens driven by a growing portion of capital-light revenue, all while continuing to provide counter-cyclical upside and defensive attributes underpinned by a lower-risk business model with a sticky client base.”
* Fairfax Financial Holdings Ltd. (FRFHF, FFH-T) as his “value” pick with an “outperform” rating and US$2,050 target. Average: $2,600 (Canadian).
Analyst: “We rate Fairfax Outperform as we believe valuation does not reflect positive momentum in Fairfax’s underwriting operations and investment portfolio. We expect Fairfax’s underwriting results to remain strong in a favourable (albeit slowing) pricing environment where Fairfax has a historical track record of opportunistic growth (including its InsureTech company, Ki, also backed by Blackstone). Fairfax’s investment portfolio has been re-positioned to take advantage of the current interest rate environment driving improving investment results, which we expect to continue. We expect the P/B valuation discount vs. peers to narrow as Fairfax continues to consistently deliver solid operating results.”
He also initiated coverage of these companies:
* Brookfield Asset Management Ltd. (BAM-N, BAM-T) with an “outperform” rating and US$72 target. Average: US$57.61.
Analyst: “BAM is an asset-light, pure-play alternative asset manager operating at scale and poised to benefit from secular trends favouring larger asset managers as LPs consolidate relationships. We believe BAM can compound FRE at its targeted 17-per-cent CAGR [compound annual growth rate] over the next 5 years, which is an attractive growth rate.”
* Brookfield Business Partners LP (BBU-N, BBU-UN-T) with an “outperform” rating and US$33 target. Average: US$30.33.
Analyst: “We believe BBU’s strong investment track record driven by a differentiated strategy and capital deployment over the past several years in an attractive deployment environment could generate strong NAV growth as the company enters what we believe is a powerful combination of a harvesting & deployment cycle over the next 2-3 years. BBU is effectively an LP interest in private equity, providing investors with a liquid way of accessing this asset class managed by Brookfield.”
* Definity Financial Corp. (DFY-T) with an “outperform” rating and $87 target. Average: $78.67.
Analyst: “We rate Definity Outperform as we believe current valuation does not fully reflect the benefits of the transformative Travelers acquisition. The acquisition propels Definity to 4th place as a scaled challenger that is set to continue delivering outsized growth as it gains market share. On a core basis, Definity is tracking well towards its medium-term 12-per-cent operating ROE objective. The company’s strong track record of growth without comprising underwriting profitability is a testament to the strong management team and we believe sets the company up to continue delivering excess returns over time.”
* IGM Financial Inc. (IGM-T) with a “sector perform” rating and $46 target. Average: $49.20.
Analyst: “Our Sector Perform rating on IGM is predicated on a more cautious view of the asset management space, driven by an uncertain macro outlook, market volatility and persistent fee pressure. IGM’s current valuation does not compensate investors for our cautious stance, in our view. IGM has completed turnarounds at both its Wealth Management (IG WM) and Asset Management (Mackenzie) businesses which has helped stabilize net flows (particularly at IG WM). With the re-positioning now complete, IGM is focused on new growth opportunities driven by strategic investments within both its IG WM (e.g. Wealthsimple, Rockefeller) and Mackenzie (e.g. ChinaAMC, Northleaf) businesses. IGM has an attractive 5-per-cent dividend yield which we view as sustainable.”
* Intact Financial Corp. (IFC-T) with a “sector perform” rating and $329 target. Average: $323.58.
Analyst: “IFC’s solid long-term track record of strong execution and defensive attributes drive the company’s currently elevated valuation, which we believe is warranted. We believe Intact is a core holding for many investors and will remain so but we remain on the sidelines waiting for a better entry point. With Definity’s recently announced in-market acquisition of Travelers, we believe this could be a catalyst for continued underwriter consolidation and Intact is well positioned to be on the offensive in this regard, with $3-billion excess capital, a 20-per-cent leverage ratio and a track record of 20-per-cent IRR on prior underwriting acquisitions.”
* Power Corp. of Canada (POW-T) with an “outperform” rating and $57 target. Average: $55.50.
Analyst: “We view POW’s current discount to NAV being too wide given i) POW simplifying its organizational structure over the last 5 years, ii) GWO, IGM and GBL re-positioning their businesses and sporting respectable growth outlooks, and iii) growing Alternatives platform providing upside optionality. Since 2019, POW has been actively surfacing value with $3.6-billion of asset monetizations to simplify its equity story, re-deploy capital into seed investments within its Alternatives platform and return capital to shareholders via NCIB and growing dividends. We expect further value-enhancing transactions over time. We see valuation upside potential driven by NAV growth, NAV discount narrowing and an attractive 4.7-per-cent dividend yield.”
* Trisura Group Ltd. (TSU-T) with an “outperform” rating and $51 target. Average: $52.86.
Analyst: “We rate Trisura Outperform given the current valuation does not reflect the company’s multi-year favourable growth and profitability outlook. We believe Trisura is still in the penalty box from its 2022 write-down (& associated 2024 reserve build) in its US Programs despite continued solid BVPS [book value per share] growth and high-teens ROE generation since then. In our view the company’s ability to deliver consistent results without another meaningful writedown in its U.S programs business will drive a valuation re-rate over time.”
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BMO Nesbitt Burns analyst Ben Pham raised his rating for Keyera Corp. (KEY-T) in response to its acquisition of all of Plains’ Canadian natural gas liquids business, along with some U.S. assets, for $5.15-billion as well as its shares underperformance thus far in 2025 compared to peers.
“We believe the Plains NGL deal is highly strategic for KEY,” he said. “First, it enhances KEY’s scale: fee-based adj. EBITDA increases 50 per cent; DCF/sh mid-teens increase, and enterprise value up 40 per cent to $19-billion. Second, it enhances KEY’s existing integrated NGL footprint in Western Canada and extends the footprint into eastern North America, creating a more efficient NGL platform and expands connectivity and service offerings. Third, it further diversifies cash flows while maintaining a high degree of fee-based assets (approximately 70 per cent) supporting dividend sustainability. Lastly, it accelerates growth (currently guiding for 7-8-per-cent fee-based growth through 2027). On business mix, gas processing declines to 21 per cent from 29 per cent, liquids infrastructure increases to 49 per cent vs. 38 per cent and marketing to 30 per cent from 33 per cent.
“Also, significantly accretive. Assuming 2025 acquisition valuation of 7.8 times (6.8 times including $100-million near-term run-rate synergies), KEY stated the acquisition to be DCF/sh accretive to the tune of mid-teens in the first full year of operations. ... We believe accretion guidance is conservative and estimate a higher 20 per cent plus.”
Moving the Calgary-based energy infrastructure company to “outperform” from “market perform” previously, Mr. Pham raised his target to $54 from $45.50. The average target is $46.56.
“KEY is not as defensive as peers with a higher degree of non-fee based assets, but it owns some attractive strategic infrastructure, its anticipated growth is significantly higher (10 per cent or more), and leverage is lower,” he explained. “With 30-per-cent-plus potential total return to our new $54 target (vs. $45.50), we would accumulate shares at these levels.”
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Following “strong” first-quarter results and a raise to its full-year guidance, Stifel analyst Martin Landry thinks investors should reward shares of Groupe Dynamite Inc. (GRGD-T) with a higher valuation as it “continues to build its track record as a public company with results above expectations.
“GRGD currently trades at 11 times our F2026 EPS estimate, representing a 17-per-cent discount to the peer average, despite better operating metrics and faster growth,” he noted.
Shares of the Montreal-based fashion retailer surged 18.8 per cent on Tuesday after it reported quarterly revenue of $227-million, up 20 per cent year-over-year and above both the analyst’s $209-million projection and the consensus forecast of $211-million. Comparable same-store sales growth of 13 per cent year-over-year blew past the 6-per-cent estimate of both Mr. Landry and the Street.
Groupe Dynamite suffers from Trump tariff chaos despite supply chain flexibility
“The increase was roughly evenly split between higher traffic and higher average unit retail (AUR),“ said Mr. Landry. ”GRGD successfully attracted customers despite raising AUR throughout the quarter to mitigate the impact of tariffs, exiting Q1 with an approximately 9-per-cent tear-over-year increase in AUR, exceeding its target of growing AUR at twice the rate of inflation. Momentum has continued into Q2FY25, with quarter-to-date comparable store sales trending above Q1FY25 levels. Following this strong performance, GRGD raised its FY25 comparable store sales growth guidance to 7.5–9.0 per cent, from 5.0–6.5 per cent.
“Gross margin pressure expected to persist in Q2FY25. Given GRGD’s fast inventory turnover, the impact of tariffs is reflected in the P&L more quickly than for peers. Q1FY25 gross margin eroded 180 basis points year-over-year to 62.1 per cent, below our expectation of 63.9 per cent, due to tariff impacts, which particularly affected the final weeks of the quarter. Excluding tariffs, gross margin would have been up year-over-year. Tariffs are also expected to weigh on the early part of Q2FY25. In addition, Q2FY25 faces a particularly difficult year-over-year comparison, as gross margin in Q2FY24 was elevated by favorable timing of receipts and lower occupancy costs. Management expects gross margin erosion to abate in Q3FY25 and Q4FY25, supported by easing year-over-year comparisons and operational efficiencies from its new U.S. distribution centre.”
Emphasizing its expense leverage is “offsetting” gross margin pressures and its “sales per square foot growth reflects the success of the premium real estate strategy,” Mr. Landry raised his fiscal 2025 and 2026 earnings per share estimates by 1 per cent and 4 per cent, respectively, to reflect higher revenue assumptions and improved margin expectations for FY26. His new 2025 EPS estimate of $1.51 represents an increase of 11 per cent year-over-year with his 2026 estimate of $1.78 pointing to a 18-per-cent gain.
Keeping a “buy” rating for its shares, he raised his target to $27.50 from $26. The average target on the Street is $25.15.
“GRGD’s brands continue to resonate with consumers despite price increases taken to offset margin pressures from tariffs,” said Mr. Landry. “Even with the 19-per-cent rally in the stock [Tuesday], shares remain 7 per cent below the IPO price.”
Elsewhere, Barclays’ Adrienne Yih upgraded Groupe Dynamite to “overweight” from “equal weight” and hiked her target to $26 from $15.
Analysts making target adjustments include:
* RBC’s Irene Nattel to $27 from $23 with an “outperform” rating.
“Strong and better-than-expected Q1 KPIs/results put GRGD in pole position to meet/exceed prior and modestly revised F25 guidance, supportive of our Outperform rating. Although expectations for strong F25 results and better flow of funds into small cap and discretionary names have resulted in shares bouncing over 60 per cent from April lows, we continue to see compelling upside potential to target. Reiterating our view of GRGD as an attractive SMID-cap with sector-leading growth outlook, compelling optionality for FCF deployment/potential valuation expansion.”
* BMO’s Stephen MacLeod to $28 from $24 with an “outperform” rating.
“We continue to believe that Groupe Dynamite is well-positioned for growth in the North American fast fashion women’s apparel market, with several drivers of annual mid-teens adj. EBITDA growth,” said Mr. MacLeod.
* Desjardins Securities’ Chris Li to $23 from $20 with a “buy” rating.
“GRGD’s very strong comparable sales reflect continuing successful execution of its growth initiatives (real estate optimization, product innovation, enhanced customer engagement through loyalty/digital, etc),” said Mr. Li. “2Q should reflect peak tariff pressures, with higher margins in 2H. While the strong share price reaction likely reflects these positives, for long-term investors GRGD’s valuation is inexpensive, supported by low-double-digit EPS growth and a healthy balance sheet supporting a higher capital return.”
* National Bank’s Vishal Shreehar to $25 from $23 with an “outperform” rating.
“We now view GRGD to be a top pick in our discretionary universe along with Dollarama,” said Mr. Shreedhar. “Investment in GRGD is differentiated by strong financial metrics, with an EBITDA margin and ROIC that is amongst the highest in our apparel group ... We believe GRGD can re-rate higher, given superior key metrics vs. our apparel group.”
* Scotia’s John Zamparo to $21 from $13 with a “sector perform” rating.
“Groupe Dynamite’s FQ1 demonstrated solid execution in marketing and product offering, as well as the brand’s pricing power. A 13-per-cent comp wasn’t remotely on investors’ radars, and an acceleration into FQ2 justifies the stock’s near-20-per-cent move upward, which is par for the course in this industry. ... Double-digit moves have happened more often than not in Q4 & Q1. Candidly, we got our April downgrade of this stock wrong, as it has bounced up 80 per cent since. We believe improved sentiment has been justified at the moment. We acknowledge the exceptional performance to start the year for the business; however, we reiterate our Sector Perform rating, as we do believe some risks exist: slowing SSS in H2, the ongoing specter of a meaningful economic slowdown, lower EPS growth than some peers, and potential time to optimize the U.S. DC launch.”
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Desjardins Securities analyst Brent Stadler thinks the growth rates stemming from Boralex Inc.’s (BLX-T) 2030 strategic plan are “impressive and reflect accelerating organic growth on the back of strong demand.”
“We view the organic growth rates as more of a floor, given they can be complemented by M&A,” he said. “BLX’s execution track record, peer-leading payout ratio, strong-return projects, flexible funding plan and clarity of recurring RFPs give us confidence in the team’s ability to execute on the plan. We maintain our Top Pick rating.”
On Tuesday, the Montreal-based renewable power company unveiled a plan to invest as much as $6.8-billion to more than double its production output despite uncertainty south of the border. It’s aiming to boost its installed capacity from 3.2 gigawatts currently to approximately 7 gigawatts by 2030 driven by solar and wind power.
“BLX’s EBITDA and AFFO/share CAGRs [compound annual growth rates] of 8–10 per cent out to 2030 from organic growth are impressive and could be viewed as a floor, with the potential for M&A to drive upside,“ said Mr. Stadler. ”We believe BLX should be able to drive impressive AFFO/share growth largely from its peer-leading payout ratio (expected to be 20–40 per cent) and expected strong-return pipeline.
“7GW installed capacity target by 2030 signals material contract wins are on the horizon. BLX’s current installed capacity is 3.3GW, with a 1.8GW secured pipeline, leaving a 2GW gap to achieving its 7GW target. Given the clarity of recurring RFPs and BLX’s advanced-stage pipeline, we believe it is well-positioned for significant RFP wins over the near term. We would expect BLX to have the projects all secured by 2H27 to achieve its 2030 targets.”
Also touting the “flexibility” of its funding plan, Mr. Stadler reiterated a “top pick” rating and Street-high $45 target for Boralex shares. The average is $38.60.
“We believe BLX has a number of near-term incremental positives that should continue to drive share price momentum,” he said.
“BLX remains our Top Pick. We continue to recommend buying BLX with confidence.”
Elsewhere, TD Cowen’s Sean Steuart raised his target for Boralex shares to $38 from $35 with a “buy” rating.
“We believe that BLX’s organic growth targets through 2030 are attainable, and we are encouraged by funding plan details, with relatively low equity issuance needed (none expected over the next two years). Growth targets are oriented around a discretionary cash flow/share 2024-2030 CAGR objective of 8-10 per cent - in line with expectations. BLX’s focus regions (Canada, UK, France, US) are consistent,” said Mr. Steuart.
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Scotia Capital analyst Ovais Habib emphasizes Equinox Gold Corp.’s (EQX-T) acquisition of Calibre Mining and its flagship Valentine gold project in Newfoundland and Labrador “creates a diversified Americas-focused gold portfolio of producing and development assets with a pathway to production of more than 1.2 million ounces annually (plus further upside from a resumption of operations at Los Filos).”
“As the company refines its focus on the two flagship Canadian assets, which are expected to represent almost one half of 2026E gold production and effectively all of 2025E to 2026E production growth, we see some of the company’s other assets operating in non-tier 1 jurisdictions as becoming increasing less core to the overall portfolio,” he said upon resuming coverage in a report titled Adding Another Canadian Gold Producer to the Portfolio.
“This presents an opportunity to monetize non-core assets to raise additional cash that can be used to fund growth projects or pay down debt. At spot precious metal prices, we estimate EQX’s Brazilian portfolio, Nicaraguan portfolio, and Nevada assets to be worth $2.1-billion, $0.6-billion, and $0.2-billion, respectively, which could raise between $1.5-billion and $3.0-billion worth of proceeds (depending on the transaction multiple applied).”
However, citing Calibre’s recent update to push back Valentine’s first gold pour and increase the construction budget as well as Equinox’s cut to its Greenstone production guidance (among other guidance updates), Mr. Habib reduced his 2025 and 2026 production and cost estimates downwards. That led him to cut his target for Equinox shares to $8.50 from $9 with a “sector perform” rating. The average is $10.85.
“We look forward to the ramp up of Greenstone and Valentine into 1H/26, as well as updates on potential non-core asset sales to streamline the portfolio,” he said.
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