Inside the Market’s roundup of some of today’s key analyst actions
While he sees CAE Inc. (CAE-T) benefitting from “solid secular trends and strong execution,” RBC Dominion Securities analyst James McGarragle thinks those are “offset” by a full valuation, leading him to lower his rating for its shares to “sector perform” from “outperform” previously.
"We view CAE as a well-run company, with exposure to solid long-term trends in pilot training and defense spending," he said in a client note released Wednesday. “However, the shares trade most expensive in our coverage group, and we therefore see these trends as being appropriately reflected at current levels. Moreover, following an impressive turnaround in the company’s defense segment and some near-term macro headwinds that we expect to weigh on Civil results, we see less in the way of catalysts. Net-net, we view solid secular tailwinds as being offset by full valuation, and see risk-reward as well-balanced."
Mr. McGarragle’s rating revision comes following the May. 13 release of its fourth-quarter 2025 results, which he deemed to be “solid” with adjusted earnings per share of 47 exceeding his estimate by 2 cents and the consensus projection by a penny.
“We believe CAE shares are trading the most expensive versus the other transports, aerospace, and diversified industrials in our coverage, at 27 times F26 consensus EPS,” he explained. “Moreover, we model for FCF/share of $0.86 in F26, which we flag incudes total capex, finance lease payments, and intangible assets expenditures, which is consistent with how we calculate FCF across our coverage group and which represents a FCF yield of 2.4 per cent. Excluding growth capex, which we think is a reasonable adjustment to consider, we calculate a FCF yield of 4.6 per cent. While we believe CAE’s premium valuation is deserved following an impressive turnaround in the company’s defense segment and on the back of our expectation for 11-per-cent EPS CAGR [compound annual growth rate] F25-27, we see less in the way of near-term catalysts until pilot hiring re-accelerates.
“Where we see risk to our downgrade? The basis of our downgrade is on valuation and near-term macro headwinds that could weigh on growth; however, we point to potential upside to our forecasts should pilot training rebound ahead our expectations and/or defence margins improve more versus what is implied in guidance.”
After reducing his fiscal 2026 and 2027 earnings expectations to reflect lower expected revenue in its Civil segment, Mr. McGarragle reduced his target for CAE shares to $38 from $41. The average target on the Street is $40.71.
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In a separate report, Mr. McGarragle warned near-term transportation headwinds make NanoXplore Inc.‘s (GRA-T) outlook uncertain and prompting him to downgrade the Montreal-based graphene company to “sector perform” from an “outperform” recommendation.
“NanoXplore reported an in line FQ3 ex. R&D credits and again lowered revenue guidance reflecting weaker volumes from transportation customers,” he said. “While we continue to see NanoXplore as having leverage to very positive long-term demand trends in graphene, we believe nearterm transportation headwinds increase risk associated with execution, especially because our forecasts call for a meaningful ramp in revenue longer-term.”
On May 13, NanoXplore lowered its sales guidance for the current fiscal year to $130-million from the “lower end” of its previous $140-155-million range for F2025, which compared to consensus estimate of $142-million. Its management also indicated 2026 revenue of $145-million, below the Street’s $177-milion due to weaker volumes and project delays from transportation customers impacted the outlook.
“We remain encouraged by the advancements in new product commercialization and the North Carolina expansion, recognizing the opportunity for meaningful operating leverage as volumes recover and higher-margin graphene sales gain traction by 2026,” the analyst said. “That said, we see near-term challenges such as a softer transportation market, delays in projects and customer timelines, and hesitancy around EV investments as near term headwinds.”
After cutting his own forecast to reflect the adjusted guidance, Mr. McGarragle reduced his target for NanoXplore shares to $2.50 from $3. The average is $3.79.
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Touting its “committed customers and strong retention,” CIBC World Markets analyst Erin Kyle initiated coverage of D2L Inc. (DTOL-T) with an “outperformer” recommendation in a report titled Climbing The Class Rankings.
“D2L is a learning management system (LMS) provider and holds the number two position in the North American LMS market with a 19-per-cent market share,” she said. “After establishing a strong foothold in North American higher education, management has shifted its strategy to focus on expanding profitability as well as growing market share in corporate and international markets.
“We foresee potential for D2L to reach 30-per-cent-plus margins over the long term as it continues to scale. D2L currently trades at 1.9 times forward EV/S [enterprise value to sales], a 1.0-times discount to comparable small-cap SaaS peers after a recent contraction on demand concerns that we believe have been overstated. We value the business at 3.0 times EV/S, which is consistent with the average for small-cap SaaS peers and aligns with where D2L was trading in early 2025, prior to negative macroeconomic headlines.”
Seeing its valuation as “attractive after recent contraction,” Ms. Kyle set a target of $20 per share. The current average is $18.60.
“Valuation has contracted significantly, down from a peak of 3.1 times EV/S in February as concerns around enrollment in U.S. higher education have weighed on the stock,” she said. “With enrollment fixed for contract terms of three to five years, we believe concerns have been overblown and that the market was pricing in growth below D2L’s F2026 guidance.”
“D2L is positioning for growth beyond North American higher education, targeting the corporate and international markets. We also foresee cross-selling and upselling opportunities from AI enhancements. With a net cash balance of nearly $100-million, the company is well equipped to execute on strategic M&A to grow its portfolio offerings.”
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TD Cowen’s David Kwan thinks Coveo Solutions Inc.‘s (CVO-T) revenue guidance should “provide comfort to investors, especially given the challenging macro.”
The analyst said the Quebec City-based e-commerce and enterprise search software provider’s new targets, released with its quarterly results on Tuesday, imply a reacceleration in organic growth in line with expectations, with Coveo reaffirming its target of 20-per-cent year-over-year growth exiting fiscal 2026.
“The increased growth spending will hurt near-term profitability but should help drive a stronger medium-term/long-term growth profile, which net/net, we view positively.”
“CVO is seeing stronger customer demand, as evidenced by: * Best Q4 new business bookings performance, with 2H/F25 new business bookings up more than 50 per cent year-over-year, and strong land-and-expand activity, with NER at 107 per cent excl. Qubit (vs. 105 per cent last quarter). * CRGA [Coveo Relevance Generative Answering] was greater than 25 per cent of new bookings in Q4. CRGA customer count was up greater than 3 times year-over-year and 30 per cent quarter-over-quarter to 75. The initial cohort of CRGA customers are spending more than 50 per cent more vs. initial spend, driven by increased usage, use cases, and pricing. * Stronger contribution from its channel partners . Q4 was the strongest quarter of SAP bookings.”
Mr. Kwan did warn that increased growth investments is likely to “depress” the company’s fiscal 2026 profitability.
“Given the stronger demand for its (Gen)AI solutions and improvements in sales efficiency, CVO is making significant investments to capitalize on increased opportunities to gain market share and drive even stronger growth in F2027 and beyond (i.e., the increased investments are not to help CVO achieve its F2026 revenue guidance),” he said. “Most of the incremental spend will be focused on GTM [Google Tag Manager] initiatives (e.g., building an account management team, increased quota-carrying sales reps) with some increased R&D spend to help accelerate certain innovation initiatives in tandem with large strategic customers.”
Following a reduction in his earnings forecasts due to the higher growth spending, Mr. Kwan cut his target for Coveo shares by $1 to $10, keeping a “buy” rating. The average is $9.78.
“Coveo has continued to be at the forefront of the AI-driven search/recommendations market, driving new innovative solutions on a timely basis, including its newest GenAI solution, Coveo Relevance Generative Answering (CRGA),” he concluded. “Leveraging its 10+ years of AI experience, we believe the company is well-positioned to benefit from the expected strong demand for GenAI solutions, as CRGA addresses key customer concerns about deploying GenAI in its businesses with its solutions targeting many early use cases (e.g., customer service). We expect organic revenue growth to reaccelerate and for Coveo to generate stronger Adjusted EBITDA and FCF in the coming years, while its large cash balance provides significant financial flexibility, including on the share buyback and M&A fronts. However, we believe concerns about pre-IPO investor Elliott Management selling the rest of its shares could remain a key (near-term) overhang.”
Elsewhere, others making changes include:
* RBC’s Paul Treiber to $11 from $10 with an “outperform” rating.
“Coveo is trading at a deeply discounted valuation (2.4 times EV/S vs. peers at 10 times), given the growth deceleration over the last 3.5 years,” said Mr. Treiber. “While Q4 revenue was just in line with consensus and FY26 guidance was below consensus, leading indicators (i.e. RPO/bookings) continue to re-accelerate and guidance implies core Coveo ARR growth exceeds 20 per cent by the end of FY26, up from 14 -per-cent Q4.”
* Stifel’s Suthan Sukumar to $13 from $11 with a “buy” rating.
“Coveo’s FQ4 headline results were solid, but the spotlight this quarter was on (1) a re-acceleration in ARR growth to 14 per cent year-over-year, and (2) a new FY guide that reflects visibility to 20-per-cent-plus year-over-year ARR growth by year-end – both key factors that we believe will help alleviate concerns about Coveo’s competitive differentiation, boost investor sentiment, and re-rate the stock higher,” said Mr. Sukumar. “Given sustaining bookings momentum with elevated enterprise demand for high-ROI AI/genAI solutions, Coveo is keeping the foot on the pedal for growth investments, which will weigh on EBITDA margin expansion but could drive greater upside to the current growth outlook (a trade-off we like). With confirmation of a sustainable and accelerating growth trajectory ahead with growth-skewed rule-of-30 ambitions near-term, we raise our target ... We see a compelling risk/reward on shares with this pure-play AI story trading at 2x revenues.”
* Canaccord Genuity’s Doug Taylor to $12 from $11 with a “buy” rating.
“Our positive thesis on Coveo is grounded in the view that, as the company’s growth reaccelerates coming out of the LLM noise-related slowdown over the last couple of years, the multiple should continue to reinflate from the current inexpensive 2.4 times NTM [next 12-month] sales level,“ said Mr. Taylor. ”To that end, Q4 results showed normalized core SaaS growth of 12-peer-cent constant currency (vs. 12 per cent in Q3), and new guidance points to Q1 growth of 14 per cent and F2026 growth of 15–17 per cent following another quarter of record bookings. We see this confirmation of Coveo’s top-line expansion as a key positive and also justifying the decision to reinvest in supporting further growth.”
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RBC Dominion Securities analyst Jimmy Shan said StorageVault Canada Inc.‘s (SVI-T) key message during recent investor meets was that fundamentals remain “sluggish,” however he emphasized the Toronto-based company continues to generate positive same-property net operating income growth and 2026 is “setting up to be a turnaround year.”
“On the demand side, the main drivers of softness are 1) declines in housing resale activity, 2) lower immigration, 3) weak consumer,” he explained. “While no one driver is overly material, any improvement in any one of them should help with getting SVI back to its targeted NOI growth range (4-6 per cent), he said. “In Q1/25, move in volumes were up 5 per cent matched by move outs of 5 per cent, likely being driven by economic pressure by consumer. Occupancy was relatively flat quarter over quarter, ending in the mid-80 per cent.”
“SVI believes that 2026 could be a turnaround year, given that on supply side, at the national level, Canada remains undersupplied though there are always pockets of oversupply (e.g., Ajax). Construction costs remain high with hard cost at $150 PSF and soft costs having risen materially given development charges.”
Mr. Shan also thinks QuadReal Property Group’s recent deal to acquisition of Vancouver-based Maple Leaf Self Storage is “notable and topical.”
“SVI noted the Maple Leaf portfolio trade to be largest portfolio (by value) to trade,” he said. “The portfolio comprises 12 properties in BC and 4 in Calgary with QuadReal (owned by bcIMC) being the acquirer. The transaction is estimated to be at sub-4-per-cent cap rate. There is another portfolio on the market in Montreal which could also trade at a low cap rate. SVI is the largest operator/owner in B.C. (20 stores) and Que. (22 stores).”
“YTD, SVI acquired $126-million at low 6-per-cent cap rate. It is looking to achieve $150-milion in 2025 and given current share price, it is unlikely to issue shares to vendors upon acquisitions. 2024’s acquisitions included larger than usual amount of lease up properties (Saskatoon, Ajax and Vaughan) with occupancy of 30-50 per cent at time of purchase. SVI has previously guided that these acquisitions (and expansions) would add $8.5-million of annualized NOI on stabilization.”
The analyst kept an “outperform” rating and $5.50 target for StorageVault shares. The current average is $9.50.
“Dare we think: A 4-per-cent cap rate on SVI = $9 NAV! Finally, we observe that SVI appears to be undergoing a transition in investor base from growth to value,” he concluded.
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In other analyst actions:
* In response to its increased offer for for SatixFy. Canaccord Genuity’s Doug Taylor cut his target for MDA Space Ltd. (MDA-T) to $36 from $37 with a “buy” rating. The average is $35.43.
“In the context of our valuation framework for MDA, the added consideration is a small incremental negative (representing $1/MDA share) to achieve the same transaction, which MDA management considers to be very strategic to its LEO capabilities. We have made no change to our revenue and profit expectations; however, our target price is lowered to $36.00 (from $37.00) as we bake in the balance sheet impact. We maintain a BUY rating as we continue to believe MDA’s significant and highly visible growth profile warrants a premium valuation,” he said.
* Scotia’s Himanshu Gupta bumped his Nexus Industrial REIT (NXR.UN-T) target to $7.50 from $7 with a “sector perform” rating. The average is $8.08.