Inside the Market’s roundup of some of today’s key analyst actions
Barclays’ Brian Morrison expects fourth-quarter earnings for Canadian banks to “see seasonal headwinds, and the impact from lower rates though asset management should help fee revenue.”
In a report released Thursday, the equity upgraded two banks and downgraded two others.
He raised his ratings for:
* Royal Bank of Canada (RY-T) to “overweight” from “equal weight” and hiked his target to $180 from $150. The average is $172.33.
* Bank of Nova Scotia (BNS-T) to “equal weight” from “underweight” with a $81 target, up from $71. Average: $77.40.
Conversely, he lowered his ratings for:
* National Bank of Canada (NA-T) to “equal weight” from “overweight” with a $140 target, up from $130. Average: $135.08.
* Toronto-Dominion Bank (TD-T) to “underweight” from “equal weight” and trimmed his target to $79 from $80. Average: $84.75.
Mr. Morrison also increased his targets for Bank of Montreal (BMO-T, “overweight”) to $143 from $126 and Canadian Imperial Bank of Commerce (CM-T, “underweight”) to $85 from $77. The averages are $129.53 and $87.12, respectively.
=====
With market conditions “still tough” and a tariff risk that “cannot be ignored,” National Bank Financial analyst Cameron Doerksen is remaining cautious on BRP Inc. (DOO-T) ahead of the Dec. 5 release of its third-quarter fiscal 2025 financial results.
“As has been the case for much of the year, end market conditions in the powersports industry remain challenging with many of BRP’s publicly traded peers reporting soft calendar Q3 results along with muted near to medium-term outlooks,” he said. “Recent industry news also points to difficult market conditions for powersports OEMs persisting.”
“The return of the Trump Administration has again heightened the risk of tariffs impacting BRP as essentially all of its manufacturing is outside the U.S. with 75 per cent of units made in Mexico. About 60 per cent of all BRP sales are into the U.S., so new tariffs would dampen demand and potentially put BRP at a competitive disadvantage to OEMs with larger U.S. manufacturing presences. However, all of BRP’s competitors would also be impacted by tariffs to some degree, noting that Polaris has a large plant in Mexico and also has non-U.S. suppliers that could increase production costs.”
In a research report released Thursday, Mr. Doerksen reduced his full-year 2025 and 2026 earnings per share expectations for the Valcourt, Que.-based manufacturer to $2.73 and $4.56, respectively, from $2.92 and $6.08 after similar cuts to his revenue forecast to reflect the “ongoing market softness”
“The midpoint of BRP’s current F2025 guidance is for EPS of $3.00, but in October, the company announced it will pursue the sale of its Marine segment, which is a $1.50 EPS headwind this year, so for F2026, the starting point for EPS is $4.50 (F2025 guide midpoint plus the elimination of Marine losses),” he said. “We were assuming some modest rebound in the underlying business, but we now believe an end market recovery will take longer and assume further dealer inventory de-stocking in F2026.”
While he thinks the “challenging” powersports end market conditions are already priced into BRP’s shares and he continues to expect its current fiscal year to be the trough earnings period, particularly if it is “successful in divesting its money-losing Marine segment,” the analyst emphasized he is cautious on the stock in the near-to-mid-term, pointing to two reasons: “(1) lower interest rates will be positive for both powersports consumers, and especially for dealers, but the pace of rate reductions in the key U.S. market is unlikely to result in a significant market improvement in calendar 2025. We therefore expect dealer inventories will need to be reduced further, which will be an ongoing headwind for BRP; (2) with the return of the Trump Administration, the risk of tariffs on powersports imports into the U.S. market has risen materially with BRP potentially vulnerable. The uncertainty on this issue is likely to weigh on investor sentiment in the coming quarters.”
Reiterating a “sector perform” recommendation for BRP, Mr. Doerksen lowered his target to $84 from $93 The average target on the Street is $92.33, according to LSEG data.
“In spite of our near-term caution, we believe the current share price largely reflects a weak powersports market through next fiscal year as well as the risks around tariffs, and we therefore see limited downside for the stock.” he concluded. “On our updated F2026 estimates, which we consider to be trough-like, BRP shares are trading at 7.1 times EV/EBITDA and 14.7 times P/E versus the historical (10-year) forward averages of 7.9 times and 14.4 times, respectively (the closest peer Polaris trades at 8.2 times EV/EBITDA and 17.1 times P/E based on 2025 forecasts). One would normally expect to see higher than average trading multiples on trough earnings. The last major downturn for the powersports industry was the 2008-10 timeframe, and while BRP was not a publicly traded company at that time, we note that Polaris shares traded up to 10 times plus on forward EV/EBITDA and close to 20 times on P/E as the industry returned to healthier growth. As such, as powersports markets begin to recover, we expect to see multiple expansion for BRP, but this may only manifest later in calendar 2025 given the still challenging end markets and the added trade/tariff uncertainty.”
=====
RBC Dominion Securities analyst Andrew Wong thinks Cameco Corp. (CCO-T) is “well-positioned to benefit from [a] nuclear revival and tight uranium markets.”
“We remain positive on Cameco given strong nuclear energy tailwinds, a tight uranium market that should support higher prices, and top tier assets across the nuclear industry in mining, fuel fabrication, nuclear servicing, and reactor technology,” he said. “We think Cameco’s pole position within a growing nuclear industry with potential upside justifies the company’s premium valuation.”
Mr. Wong expects uranium to be in short-supply through the late 2020s and very vulnerable to supply shocks, especially in Western markets “as demonstrated with recent news Russia will be temporarily suspending exports to the U.S..
“Into 2025, supply-side risks will likely remain while contracting activity may pick up given only moderate volumes secured in 2024 despite an increasingly uncertain supply outlook,” the analyst said, raising his long-term uranium price projection to US$100 per pound from US$75 in a report titled Nuclear revival is going to need a lot more uranium.
With those turbulent conditions, Mr. Wong said Saskatoon-based Cameco’s Canadian assets are “operating well with untapped capacity” and emphasized its Kazakh Inkai JV with Kazatomprom “remains a key asset.”
“Cameco’s Canadian operations continue to operate well, with Cigar Lake producing at nameplate while McArthur River is producing better than expected with 2024 production guidance revised higher to 19Mlbs (100-per-cent basis), up from 18Mlbs, benefiting from automation and optimization implemented while the Key Lake mill was on care-and-maintenance (2018-2022),” he said. “We think better operations at McArthur raises the potential for increasing production without need to spend significant additional capex. Given our revised long-term price outlook, we are adding Rabbit Lake and U.S. ISR re-start production to our post-2035 forecasts, which mostly offset long- term depletion at Cigar. We also see development options at Millennium, exploration upside at Dawn Lake, and potential to leverage its expertise to acquire and advance undeveloped projects.”
“Cameco recently published an updated Inkai JV technical report that raised operating costs to $12.66 per pound from $9.55 per pound in the prior 2018 technical report. The technical report also highlighted increased taxes, with a 6-per-cent mineral extraction tax in 2023, rising to 9 per cent in 2025 and to more than 15 per cent by 2026 (depending on uranium price and production). Kazakh Inkai production has also been impacted by logistics and access to sulphuric acid due to Cameco’s stated policy to not conduct business with Russia. While the Kazakh Inkai JV continues to struggle with logistics and has seen increased costs, we do not see risk of non-delivery and still view the assets favourably given the large resource and bottom- quartile costs.”
Maintaining an “outperform” rating for Cameco shares, Mr. Wong increased his target to $90 from $75 due to “higher forecasted uranium prices, increased production, and strong nuclear growth prospects.” The average target is $80.53.
=====
In a separate report, Mr. Wong called NexGen Energy Ltd.’s (NXE-T) Rook 1 underground mine in the southwestern Athabasca Basin of northern Saskatchewan “a critical asset to meet [the] coming uranium deficit.”
“We continue to see Rook I as a world-class uranium project with a large and high-quality resource, exploration upside, and geopolitically stable location in Canada,” he said.
The analyst said he’s “encouraged” by ongoing permitting progress and sees the potential for Federal approval in 2025 “as a possible catalyst for strategic options (i.e. takeout, strategic partnership).”
“NexGen has completed the EIS Federal Technical review, a major milestone in the permitting process,” he explained. “The next step will require NexGen to submit the Final EIS package which will undergo a 30-day review by the CNSC. After the Final EIS has been accepted by the CNSC, a public hearing date will be set, followed by a final permit decision within 60-days. A mid-2025 approval is possible, which would support a timeline for first production by 2029 if construction goes according to plan. We conservatively assume an H2/25 approval followed by construction start in 2026 and first production by 2031 to account for typical delays with new projects.”
Pointing to “higher forecasted prices and increased multiple to account for exploration upside and permitting progress,” Mr. Wong increased his NexGen target to $15 from $10 with an “outperform” rating. The average is $13.95.
=====
Touting its “industry-leading growth and liquidity,” TD Cowen analyst Derick Ma named Wheaton Precious Metals Corp. (WPM-N, WPM-T) to the firm’s “Best Ideas 2025″ list on Thursday, reiterating it as his top pick.
“WPM is the best positioned amongst the precious metal royalty companies to take advantage of the elevated gold price and strong deal environment, in our view,” he said. “The company has the best gold equivalent ounce growth profile amongst its peer group and a proven management team armed with the highest amount of available liquidity in the sector to deploy towards future growth.”
Mr. Ma sees the Vancouver-based company “primed for acquisition growth,” seeing it possessing the highest available liquidity in the sector at US$2.7-billion. He’s also forecasting the generation of more than US$1-billion of cash flow from operations in 2025.
“Management has a strong track record of acquisition success,” he said. “Over the past 5 years, WPM has committed more than $2.9-billion on 11 streaming transactions (approximately 50 per cent of total committed capital by its peers under our coverage). On those transactions, we calculate WPM achieved a weighted average pre-tax IRR of 5.6 per cent (vs. the peer group mean of 4.8 per cent). In our view, WPM has methodically layered streams on development staged assets into its portfolio, some of which are now on the cusp of delivering first GEO contributions in 2025.”
Believing “WPM’s role as a leader and innovator in the royalty sector is often underappreciated,” Mr. Ma reiterating a “buy” rating and US$75 target for Wheaton shares. The average is US$72.80.
“WPM has a better GEO growth profile over the next several years relative to its closest peer, Franco-Nevada. By 2028, we anticipate that WPM will increase annual GEO production by more than 40 per cent. The company has a strong balance sheet with zero debt and available liquidity of greater than $2-billion,” he conclude.
=====
TD Cowen analyst Tim James sees Cargojet Inc. (CJT-T) set to face greater pressure from heightened wage cost pressures, warning “heightened overtime and training costs will continue through early 2025, followed by a need to increase wages to align with industry rates in H2/25, both of which should weigh on margin.”
“The volume and pricing outlook remains strong across business lines,” he said. “Management sounded optimistic on Q3/24 cc re: peak season (despite acknowledging modest pull forward into Q3) and early 2025. Recent industry pilot wage inflation expected to necessitate catch-up contract with CJT pilots during 2025 in order to remain competitive in attracting and retaining pilots.
“In the interim, we believe CJT will continue to incur heightened overtime and pilot related costs. This is expected to limit margins in 2025/2026. TD forecast 32.6 per cent/32.7 per cent adj EBITDA margin in 2025/2026 vs. 33.6 per cent in 2024. Q3/24 adj. EBITDA of $82.2 million, up 17 per cent year-over-year. Results were strong when considering economic environment and results of key trucking comps. CJT’s 15 per cent/17 per cent rev/EBITDA growth compares to a comp group (SAIA, ODFL, TFI, AND, MTL) which generated average Q3/24 rev/EBITDA growth of 5 per cent /7 per cent.”
With a reduction to his financial forecast for the Mississauga-based company, Mr. James said he’s also “monitoring risk related to Trump Presidency and impact of tariffs and/or de minimus import exemptions which could impact air cargo markets. At this time, we don’t factor in a material impact.”
Keeping a “buy” rating for its shares, he trimmed his target to $165 from $167. The average on the Street is $160.73.
“Our 10.0 times multiple reflects the historical premium/discount of CJT to comp groups of 1) LTL’s, 2) freight and courier companies, and 3) rails. It also reflects its own historical and current valuation multiples,” he said. “We believe multiple expansion to 10.0 times (current fwd 8.3 times) over the next 12-months will result from earnings growth, deleveraging, buy-backs, anticipation of cost pressure normalization in 2026, and growing appreciation by the market for the value in the company’s competitive position in Canada and relationships with Canadian/ global air freight/e-commerce heavyweights (DHL, Amazon, UPS, Great Vision).”
=====
Following Open Text Corp.’s (OTEX-Q, OTEX-T) annual user conference earlier this week, Eight Capital analyst Adhir Kadve said he likes certain aspects of its priorities, particularly returning capital to shareholders, However, he sees “other parts (such as accelerating organic revenue growth) as requiring meticulous execution prior to seeing a rerating in shares.”
“The event provided no financial updates on F25 or F27 targets, which were reiterated and clearly emphasized OpenText’s near-term focus,” he said. “To that end, the company will be focusing on 1) achieving organic revenue growth in F25, led by cloud, 2) bolstering its efficiency to continue to drive margin expansion and 3) its capital allocation program which prioritizes shareholder returns as opposed to any M&A activity (which was clearly communicated as not a near-term priority). Another focus was on the company’s AI suite of products called Aviator which are now being embedded across the product suite (OpenText has expanded its suite to 15 Aviator products).”
Reiterating a “buy” rating for Open Text shares, Mr. Kadve cut his target to US$35 from US$42. The average is currently US$37.
“We are ... decreasing our target price to US$35.00/share (from US$42.00) based on 8.0 times calendar 2025 estimated EV/EBITDA (from 9.0 times). “OpenText currently trades at 7.1 times versus enterprise software peers at 18.5 times. Key risks to our target include an uptick in macro uncertainty, a pullback in IT spend, and tightening competitive dynamics.”
=====
Scotia Capital analyst Tanya Jakusconek raised her gold and silver price projections on Thursday to reflect the firm’s forecast for interest rates, inflation, U.S. dollar expectations and to “incorporate the strong buying of gold from the official sector.”
“Looking at 2024-2025, we believe the gold price will continue to be driven by the macro call, particularly as it pertains to interest rate cuts affecting both nominal and real rates (including inflation) and the U.S. dollar (USD). This should further be supported by global above-average debt levels, geopolitical risk, and strong central bank buying,” she said in her quarterly gold report.
For 2024, her estimates for both metals rose by 9 per cent with gold up US$100 per ounce to US$2,400 and silver rising US$1.50 to US$28.50. She also raised her assumptions for 2025 through 2027.
With those changes, she adjusted her target prices for most of the stocks in her coverage universe.
For senior gold stocks, Ms. Jakusconek made these changes:
- Agnico Eagle Mines Ltd. (AEM-N/AEM-T, “sector outperform”) to US$103 from US$94. The average is US$95.67.
- Kinross Gold Corp. (KGC-N/K-T, “sector outperform”) to US$13 from US$11. Average: US$12.
- Newmont Corp. (NEM-N/NGT-T, “sector perform”) to US$52 from US$55. Average: US$59.38.
“We still see, on average, 20-per-cent upside for the group to target prices. Our top picks are AEM, KGC, GOLD in the operators and WPM and TFPM in the streamers, with the operators preferred to the streamers,” she said.
=====
In other analyst actions:
* National Bank’s Don DeMarco cut his Aris Mining Corp. (ARIS-T) target to $8.50 from $9 with an “outperform” rating. The average is $10.92.
* Mr. DeMarco also lowered his target for Aya Gold & Silver Inc. (AYA-T) to $21.75 from $23 with an “outperform” recommendation. The average is $21.94.
* Desjardins Securities’ Allison Carson trimmed her Ascot Resources Ltd. (AOT-T) target to 80 cents from $1.10 with a “buy” rating. The average is 48 cents.
“We are off restriction after Ascot closed its funding package of $52-million, which was completed to support the restart of the Premier Gold mine,” she said. “We view this as a positive milestone for the company as it offers the liquidity needed to complete development work at PNL and Big Missouri, along with the restart of the mill. We have updated our model to reflect the financing, required development work and 2Q25 restart of the mine.”
* JP Morgan’s Jeremy Tonet hiked his target for Enbridge Inc. (ENB-T) to $66 from $60, above the $59.69 average, with an “overweight” rating.
* CIBC’s Mark Petrie raised his Metro Inc. (MRU-T) target to $91, exceeding the $90.44 average, from $86 with a “neutral” rating, while Scotia’s John Zamparo increased his target to $98 from $95 with a “sector outperform” recommendation.
“Though it took an unexpected path, the stock’s up 1-per-cent close was a reasonable reaction to a mostly solid quarter, in our view,” said Mr. Zamparo. “[Wednesday’s] commentary should appropriately set expectations for stronger EPS growth through F25, as duplicate costs roll off and efficiencies from the new DCs are captured. A 27-per-cent year-to-date performance may set the bar higher in future quarters for the stock to continue to work. We’re willing to take that risk given Metro’s track record on earnings growth and execution, as well as exposure to what we consider to be the industry’s most important near-term drivers (pharma and discount food).”
* Scotia’s Maher Yaghi cut his Rogers Communications Inc. (RCI.B-T) target to $69 from $71.60 with a “sector outperform” rating. The average is $68.10.
“There are two goals that drove Rogers to consolidate control over MLS,” said Mr. Yaghi. “The first is to surface value of its sports franchises and real estate (Jays, stadium and ownership in MLSE). The second is to generate a positive cash return on invested capital over time. The playbook that will best deliver on those two objectives will require consolidating the Jays within MLSE, generating the needed cost and revenue synergies, and bringing the entity public. In this report, we analyzed how this playbook will affect leverage and the required revenue and cost synergies to generate a return on those investments that would be better for the company than having simply allocated the capital spent to buy BCE’s MLSE stake towards stock buybacks or debt reduction. Having done the analysis, we believe there is a path forward to achieving a positive NPV but this will require strong operational execution. In other words, if the playbook is run properly, the company could end up surfacing around $9/share over time. Finally, given the slower expected growth in wireless due to pricing pressure and lower gross adds, we have lowered our wireless EBITDA multiple by 0.5 times down to 7 times in our NAV.”
* RBC’s Pammi Bir bumped his SmartCentres REIT (SRU.UN-T) target to $28 from $27 with an “outperform” rating. The average is $26.81.
“Post good Q3 results, we believe SRU is well-placed to navigate a slowing economy. Operationally, its defensive Walmart anchored portfolio is firing on all cylinders. While the upper end of its SP NOI [same-property net operating income] growth target seems like a stretch, there’s gas in the tank for good momentum to carry through 2025. We’re also encouraged that asset sales remain a priority, as deleveraging is a critical step on the path to a stronger valuation, in our view. Bottom line, we see good value here,” he said.