Inside the Market’s roundup of some of today’s key analyst actions
National Bank Financial analyst Vishal Shreedhar saw the third-quarter fiscal 2025 results from Alimentation Couche-Tard Inc. (ATD-T) as a “tepid performance,” however he did acknowledge “management suggests that green shoots are emerging.”
After the bell on Monday, the Canadian convenience store giant reported revenue for the period of $17.4-billllon, up $16.4-billion a year ago and ahead of Mr. Shreedhar’s $16.8-billion estimate but behind the $18.2-billion consensus projection. However, earnings per share fell 8 cents year-over-year to 74 cents, a penny above the analyst’s projection but 3 cents under the Street’s forecast.
“We view performance to be short of CE [consensus estimates],” said Mr. Shreedhar. “While EPS and other metrics were coarsely in line versus NBF, we note that a retroactive adjustment benefited Europe fuel margin by 0.88 cents/litre (c/l), or approximately $0.03 to EPS. Accordingly, we view results to be modestly light versus NBF as well.”
Despite the disappointing results, the analyst emphasized the emergence of improving merchandising trends.
“U.S. merchandising trends were positive over the first 8 weeks of Q3/F25,” he said. “Also, merchandising margins are expected to improve sequentially (negotiating better supplier run rates, data-driven promotions, pivoting to more accretive promotions, etc.). Fuel volumes were pressured in the U.S. (partly impacted by hurricanes; same store volume drag of 70 bps). Mgmt expects pressure to continue, partly reflecting consumer stress as well as fleet efficiency, and intends to offset through market share gains (accelerate growth in B2B, new pricing tool and Inner Circle).
“Management views ATD to be on track for its ’10 For The Win’ plan despite macro challenges; however, given deteriorating organic performance, we cannot validate ATD’s assessment. We made slight revisions to our EPS estimates: F2025 remains $3.07 and F2026 goes to $3.41 from $3.50.”
Maintaining a “sector perform” recommendation for Couche-Tard shares, Mr. Shreedhar raised his target to $87 from $85. The average target on the Street is $88.64, according to LSEG data.
“If ATD achieves its F2028 targets, upside remains,” he said.” That said, recent lacklustre merchandising trends call into question ATD’s aggressive plans under its ‘10 For The Win’ strategy. Perhaps this shortfall has motivated ATD to accelerate acquisitions. While green shoots appear to be emerging, we await better evidence of improved organic growth.”
Elsewhere, others making target changes include:
* Desjardins Securities’ Chris Li to $87 from $84 with a “buy” rating.
“While the consumer remains under stress, easier year-ago comps, more effective promotions (ie meal deals), and enhanced data analytics and pricing tools are having a favourable impact, with 3Q-to-date U.S. merch SSSG turning positive (after five consecutive quarterly declines),” said Mr. Li. " If macro conditions improve next year and ATD resumes its share buybacks (assuming no 7-Eleven deal), we expect EPS growth to accelerate to 13 per cent next year from 4 per cent this year.”
“We expect ATD to remain range-bound pending improved macros and more clarity on 7-Eleven. Our positive view is based on ATD’s attractive long-term growth and trong financial position.”
* BMO’s Tamy Chen to $87 from $85 with an “outperform” rating.
“We entered the FQ2/25 print cautious, particularly given the stock’s recent rally. The quarter itself was challenging with organic EBITDA decline of HSD% [high-single-digits percentage]. Early-FQ3/25 U.S. merchandise SSS [same-store sales] in modest positive territory helped by more impactful in-store offerings and improving trends in EU and Canada are encouraging to see. Headwinds across ATD’s markets may now be bottoming. We continue to assume a gradual recovery,” said Ms. Chen.
* CIBC’s Mark Petrie to $89 from $88 with an “outperformer” rating.
“Q2 results were underwhelming, but we believe ATD has the building blocks to deliver improved organic growth in the coming quarters. Fuel volumes remain a headwind but margins are strong and ATD is outperforming. Our estimates are updated to reflect more modest sales growth, offset by higher fuel margins. We believe a Seven&i deal is less likely than a month ago but the balance sheet still holds value for M&A,” said Mr. Petrie.
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Following MEG Energy Corp. (MEG-T) unveiling “a clear and comprehensive” business update, including a longer-term 2025-30 growth outlook of 25,000 barrels per day, RBC Capital Markets analyst Greg Pardy reaffirmed his “constructive” stance, pointing to “its capable leadership team, solid operating performance, strong balance sheet and abundant shareholder returns.”
“The company’s strategic game plan makes sense to us, especially as it relates to driving down its WTI break-even (and presumably GHG emissions per barrel) over time by developing higher quality resource,” he said. “At the same time, we are hopeful that such growth will be delivered at a capital intensity of well under $25,000 per barrel per day. The company also emphasized that it will remain focused on its core assets and sees no need to diversify its portfolio.”
Mr. Pardy was pleased the Calgary-based company emphasized its “high-quality” resource base, including 1.9 billion barrels of proven + probable reserves, and an “aim to develop future pads in the northwest/southeast areas of its Christina Lake lease targeting areas of thicker (circa 35 meters of net pay) and 5 per cent higher average oil saturation of about 80 per cent which should drive a lower average well SOR [steam-oil ratio] of circa 2.5 times.”
“MEG’s 2025-30 investment plan will see its capital investment sit at $635-million in 2025, rising to $650 million in 2026-27 before dropping to sustaining capital levels of circa $450-million (about $10/bbl) in the 2028-30 timeframe,” he said. “Eyeballing the charts from the company’s business update presentation would suggest to us that MEG’s bitumen production is expected to climb to about 110,000 bbl/d in 2026, 115,000 bbl/d in 2027, 125,000 bbl/d in 2028, 120,000 bbl/d in 2029 and finally circa 130,000 bbl/d by 2030.”
After modest trims to his 2025 forecast, Mr. Pardy lowered his target for the Calgary-based company’s shares by $1 from $34. The average target on the Street is $32.53.
“Under our base outlook, MEG is trading at debt- adjusted cash flow multiples of 4.9 times in 2024 (vs. our oil sands weighted peer group avg. of 6.1 times) and 5.4 times in 2025 (vs. our peer group at 6.3 times), and free cash flow yields of 13 per cent in 2024 (vs. our peer group at 10 per cent) and 9 per cent in 2025 (vs. our peer group at 8 per cent),” he said. “We believe that MEG should trade at an average valuation vs. our peer group given its capable leadership team, strong balance sheet, top quartile Christina Lake operations, solid operating momentum and abundant shareholder return.”
Elsewhere, others making target changes include:
* ATB Capital Markers’ Patrick O’Rourke to $35 from $37 with an “outperform” rating
“Overall, we view the event as neutral. MEG provided formal 2025 capital guidance of $635-million that was directly in-line with estimates (ATB estimate $640-million; consensus $640-million), including $435-million of maintenance capital (from $450-million in 2024, roughly flat year-over-year reflecting improved pad/drilling efficiencies and anticipated drilling in better resource quality), $70-million in turnaround costs (reflecting a Q2/25 major turnaround), and $130-million of capital targeted at the Christina Lake growth project that aims to take processing capacity to 135.0 mbbl/d (from 110.0 mbbl/d currently) by 2028,” he said. “The midpoint of the 2025 production guidance range of 95.0-105.0 mbbl/d was modestly below estimates (prior ATBe 103.8 mbbl/d; consensus 104.3 mbbl/d), reflecting an expected Q2/25 major turnaround impact of 8.0 mbbl/d on 2025 FY volumes, with the regulatoryrequired turnaround also providing MEG an opportunity to add tie-ins for the expansion project in advance of extending to four-year turnaround cycles (from three currently), providing an expected NPV10 $175-million in turnaround cost savings over a 10-year period.”
* National Bank’s Travis Wood to $28 from $31 with a “sector perform” rating.
“Although the capital outlay for the next several years was in line with whisper and conference call commentary, we view the aggregate amount of spending as slightly higher than expected relative to the original plan (perhaps 2027 was the bogey), with the production ramp largely as expected,” he said. “Additionally, the implied capital efficiencies of $20-25,000/bbl/d to build out capacity to 135 mbbl/d remains robust, with our production forecast reaching an average of 126 mbbl/d in 2028E (the end of our forecast period) which is in line with the CAGR plan of 5 per cent. Appreciating the company has a continued focus on improving efficiencies through leveraging both operational and development optimizations, we are forecasting higher than budgeted sustaining capital through 2028.”
* Desjardins Securities’ Chris MacCulloch to $30.50 from $31.50 with a “hold” rating.
“While acknowledging the disappointing production guidance on the back of a deeper-than-expected 2Q25 turnaround, we were impressed by the business update, specifically the detailed expansion plan to increase Christina Lake production capacity to 135,000 bbl/d in a capital-efficient manner while maintaining competitive capital returns,” he said.
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Capital Power Corp.’s (CPX-T) late Tuesday announcement of the sell-down of 49 per cent of an aggregate 246 megawatt operating Canadian wind portfolio to Axium Infrastructure for pre-tax cash proceeds of $340-million “enhances financial flexibility in a market ripe with growth opportunity given the rising demand for reliable thermal generation investments and competing decarbonization goals that will require further renewable investment,” according to ATB Capital Markets analyst Nate Heywood.
The assets include the 104 MW Port Dover & Nanticoke wind facility and the 142 MW Quality wind facility, both of which are fully underpinned by long-term contracts with an average weighted life of 11 years. The proceeds are expected to provide Capital Power with “enhanced financial flexibility as it continues to progress with flex gen and renewable growth opportunities in its existing pipeline.”
“We estimate the projects have a combined EBITDA of $75-million annually and the 49-per-cent selldown provides an 9.3 times transaction multiple (CPX 2025 EV/EBITDA: 8.7 times),” the analyst said.
Mr. Heywood added: “CPX continues to allocate a significant amount of capital to growth initiatives and is focused on additions to both its flex gen portfolio and renewables. Flex gen includes the addition of 850 MW between its Genesee repowering, Ontario asset expansions and Ontario BESS projects. CPX is also developing four renewable projects for 300 MW of capacity between Halkirk wind and three solar projects. We see the added financial flexibility with this update as supportive to CPX’s strategy as it continues to make new growth investments and positions itself for rising base power demand.”
Maintaining a “sector perform” rating, he raised his target to $57 from $55. The average is $54.10.
“In the near term, we expect Capital Power to continue investing heavily in growth initiatives, with a significant focus on the Genesee 1 & 2 repowering, accompanied by ongoing efforts on renewable projects in both Canada and the U.S.; however, we remain cognizant of recent inflationary cost pressures,” he said. “Additionally, as illustrated by recent acquisitions, management has a clear strategy around natural gas generation M&A between its acquired stakes in Midland, Frederickson, La Paloma and Harquahala. These examples illustrate management’s strategy for acquiring mid-life assets with attractive contracting profiles and favourable interconnection infrastructure that diversifies its cash flow base. Appetite for reliable natural gas generation has been supported by increasing capacity factors across major US markets and the CPX portfolio. These trends could be amplified with data center development, as CPX is positioning itself across its portfolio but specifically in Alberta around Genesee. CPX currently has 1.5 GW of potential data center demand load in the AESO queue. With a 2025 estimated EV/EBITDA of 8.5 times, we note that Capital Power is trading at a discount to the peer average of 10 times, though we attribute the discount to its exposure to thermal generation — a business line exposed to carbon compliance costs.”
Elsewhere, Scotia’s Robert Hope increased his target to $66 from $60 with a “sector outperform” rating.
“We view the transaction favourably as Capital Power is monetizing mid-life renewable assets at an implied valuation (100-per-cent basis) that is nearly their build cost,” said Mr. Hope..” We expect proceeds will be redeployed into higher-returning projects and help reinforce the balance sheet. Our EBITDA estimates don’t materially move following the transaction as Capital Power will continue to consolidate the results of these facilities. Our cash flow estimates move down 1 per cent to reflect the selldown, though this is offset by improved leverage metrics. Our target price moves up to $66 from $60 to reflect the sell down (approximately $1 per share) as well as higher multiples for its merchant and contracted gas assets as we see increased optionality for re-contracting and enhancing these assets. Overall, we see Capital Power as among the best positioned of our coverage to benefit from the AI/data centre theme.”
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Scotia Capital analyst John Zamparo thinks potential U.S. tariffs will likely be “more impactful” on Rogers Sugar Inc. (RSI-T) than its business.
“Monday’s news of a proposed/threatened 25-per-cent tariff on all imports to the U.S. would impact consumption of the end products that RSI supplies,” he said. “A 10-per-cent tariff is insufficient to force producers to exit the country and build greenfield facilities stateside, but 25 per cent, if actually enacted, would cause greater disruption. Approximately 40 per cent of RSI’s sugar production is indirectly exported to the U.S. However, specific terms of the tariffs aren’t the point, in our view. The mere uncertainty creates an overhang on RSI in the near term. We believe RSI’s current valuation represents good theoretical value, but the current environment necessitates an even greater discount.”
In a research report released Wednesday, he resumed the firm’s coverage of Rogers with a “sector perform” rating, touting its “dominant (approximately 55-per-cent) share in an industry with sticky demand and significant barriers to entry” and noting its valuation now sits a 10-year low.
“RSI’s recently improved EBITDA growth and opportunity from increased production are clouded by two main risks, in our view,” said Mr. Zamparo. “First is the uncertainty surrounding the final cost of RSI’s expansion project, which will become clearer after Q4/F24. The expansion could cost $230 million rather than the $160 million initially planned (with the latest update at $200 million). The second risk is the prospect of tariffs on products shipped into the U.S. While these may not materialize, the specter of tariffs creates an overhang on the stock, and President-elect Trump’s recent social media activity underscores increased uncertainty that will deter some investors.
“It is difficult to confidently calculate a sufficiently compelling valuation to offset these risks, but we believe less than 10 times P/E (versus 10.7 times today) would be a starting point for some investors. External factors aside, we view RSI as a well-managed business that operates in a duopoly and pays out significant income (6-per-cent-plus yield).”
Mr. Zamparo set a target of $6.25, below the average on the Street of $6.60.
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After Calian Group Ltd. (CGY-T) reported “solid” fourth-quarter revenue and free cash flow despite headwinds from lower military spending, Ventum Capital Markets analyst Rob Goff called it a “relatively low-risk investment with an attractive upside,” pointing to “portfolio strength, demonstrated stewardship and attractive valuation.”
“Calian recorded 13.4-per-cent year-over-year revenue growth in F2024, led by 11-per-cent inorganic growth, while lower government spending led to an organic decline of 2 per cent,” he said. “Excluding the lower government spending, organic growth of 5 per cent aligned with management’s mid-to-upper single-digit organic growth objective. We remain bullish as we believe fluctuations in momentum are expected due to government funding swings and macro volatility. Management noted that current government spending was seen as a baseline, with Calian anticipating potential budget increases. Looking beyond these headwinds, we concur with management’s view that improved organic results together with Calian’s accretive acquisitions leave it solidly on track to achieve its ambitious F2026 targets of $1-billion in revenue (15-per-cent annual growth) and $125-million in EBITDA. We look for portfolio growth across Calian’s four strategic pillars to be sustained by secular tailwinds supporting mid-to-high single-digit organic growth. Furthermore, the within-pillar scale has advanced to where CGY can leverage increased revenue and cost synergies thereby ensuring greater deal accretion.”
On Tuesday before the bell, the Ottawa-based firm reported revenue of $181.2-million, falling short of Mr. Goff’s $183.3-milion estimate and the consensus projection of $188.7-million. EBITDA of $23.8-million was higher than anticipated ($20-miion and $23-million, respectively).
“Management is guiding to a slow start for F2025 and reflects a significant back-end recovery,” said Mr. Goff. “We are forecasting revenue below the low end of guidance as we conservatively await evidence supporting greater strength in H2/F25. Our EBITDA aligns with the low end of guidance on higher margins. With the quarter, we trimmed our F2025 revenues/EBITDA by $20-million/$2.5-million. We are forecasting F2025 revenue/gross profit/EBITDA of $792.4-million/$272.1-million/$97.1-million against revenue/EBITDA guidance of $800-million-880-million/$96-million-106-million and the pre-quarter consensus for revenue/EBITDA of $829-million/$96-million. We believe the new definition of EBITDA (before share-based compensation and one-time M&A costs), will likely add $5-million to EBITDA to the pre-quarter consensus.”
“We look for further acquisitions and potential NATO-related contract wins. CGY invested $90-milion across three acquisitions in F2024 with an average EV/EBITDA of 4.9 times, while each acquisition has realized 25-per-cent0-plus year-over-year growth. Management reflected an openness to modestly larger acquisitions than seen in F2024. While we await stronger Canadian government military spending, we see acquisitions as the most likely positive catalyst. While not in CGY’s guidance, we hold the potential for incremental NATO-related contracts where the Mabway acquisition strengthened CGY’s long-standing NATO relationships. In August, CGY renewed its NCIB, set to expire on August 31, 2025, permitting the repurchase of up to 10 per cent of its float, or 995,904 shares. CGY is allowed to purchase 2,000 shares per day.”
Maintaining a “buy” rating, Mr. Goff trimmed his target to $68 from $70. The average is $71.86.
Elsewhere, Acumen Capital’s Jim Byrne reduced his target to $70 from $75 with a “buy” rating.
“The company remains well positioned to execute on its three-year strategic plan as it aims to deliver another year of double-digit growth in FY25. The balance sheet remains strong and with significant free-cash flow we anticipate the company will be active on the acquisitions again in the next year. To that end, the company will be hiring some new team members to complement the acquisitions group in the near future,” he said.
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In other analyst actions:
* Following Dye & Durham Ltd.’s (DND-T) announcement CEO Matthew Proud is stepping down, Scotia’s Kevin Krishnaratne raised his target for its shares to $25 from $20 with a “sector outperform” rating. The average is $23.05.
“We view the opportunity for new leadership as positive. Furthermore, we continue to mainly focus on the underlying value of DND, which we believe to be a strong asset leveraged to the rebounding real estate market with an increasing focus on organic growth acceleration and strong Adj. EBITDA margins,” he said.
* Canaccord Genuity’s Mike Mueller initiated coverage of Gran Tierra Energy Inc. (GTE-T) with a “buy” rating and $12 target. The average target on the Street is $13.75.
* Oppenheimer’s Brian Nagel cut his Lululemon Athletica Inc. (LULU-Q) target to US$380 from US$445 with an “outperform” rating. The average is US$318.70.
* TD Cowen’s Steven Green trimmed his Newmont Corp. (NEM-N, NGT-T) target to US$48 from US$53 with a “hold” rating. The average is US$57.57.
“We have updated our model to reflect recent assets sales, revisions to our NGM and PV forecasts, and updates to our Cadia and Tanami models (following the site visits). We remain cautious of the difficulties often experienced in large integrations where assets have more challenges and longer timelines than expected — NGM being a case in point,” he said.
* CIBC’s Kevin Chiang raised his Parkland Corp. (PKI-T) target by $1 to $49 with an “outperformer” rating. The average is $48.42.
“On the back of PKI’s analyst update meeting, our key takeaways were: 1) The company noted it has good earnings visibility to get to its 2028 $2.5-billion EBITDA target on the back of normalizing refinery margins, incremental legacy synergies, and organic growth opportunities. 2) PKI expects to generate $5-billion of cumulative cash flow over the next four years, $2.5-billlion of which is expected to be deployed towards M&A or buybacks. In our view, once PKI reaches its target leverage ratio in 2025, accelerating its share repurchase plan would be a medium-term catalyst. 3) The company also highlighted the stability and predictability of its marketing segments. Despite the challenging 2024, the marketing segment has performed well as the underperformance this year was solely being driven by its refining segment,” said Mr. Chiang.
* Following the close of a bought deal financing, National Bank’s Rabi Nizami resumed coverage of STLLR Gold Inc. (STLR-T) with an “outperform” rating and $2 target, down from $2.50 and below the $3.44 average.
“We maintain our Outperform rating, which recognizes the large resource potential of the company’s two Canadian assets and discounted EV/oz and P/NAV based on preliminary studies. However, we maintain our cautious valuation approach as the market anticipates clarity on upcoming studies that may revise the geological model and engineering underpinning the prior studies,” he said.