Inside the Market’s roundup of some of today’s key analyst actions
Pointing to data centre growth opportunities, Canaccord Genuity analyst Aravinda Galappatthige upgraded BCE Inc. (BCE-T) to “buy” from “hold” after hosting recent investor meetings with the Montreal-based telecommunications giant.
“A central theme was the upside to the model represented by Bell AI Fabric, especially in light of Bell’s recent announcement of its intention to add a further 900MW,” he said. “Based on management comments, we see a path to $800-million in adj. EBITDA by 2028E, with just under half of its planned data centre deployment of 1,273MW. This is ahead of the prior expectation of $550-million. Additionally, comments from leadership suggest a sequential and meaningful improvement in wireless and internet pricing, which could potentially set the stage for stronger service revenue growth in F2027.
“Factoring in the above, as well as the recent sell-off driven by rising rates and the 5.5 -per-cent decline on Friday related to satellite fears, we have opted to opportunistically upgrade the stock to BUY from Hold. Our work on the threat to Canadian Telecom posed by satellite services suggests a muted impact on wireless. While the impact on wireline could be relatively more pronounced, we believe Bell’s extensive fibre network offers a strong defence.”
In a client note released Monday before the bell, Mr. Galappatthige said the “underlying economics improving in wireless and internet,” but sees Bell AI Fabric “leading [the] investment thesis.”
“Bell is making substantial strides in its data centre efforts, with the recent 900MW announcement setting the stage to sharply outstrip its Investor Day guidance. We now see the prospect of $800-million in adj. EBITDA here, as Halls 5 and 6 of the Saskatchewan facility (recall Halls 1-4 cover the initial 300MW) could potentially come online by 2028 or earlier as portions of the incremental 900MW piece are deployed,” he said.
“Critically, while it remains early days in this initiative, management appears open to value-creating structures that could crystallize the underlying value of Bell AI Fabric, particularly in light of public comparable companies trading at around 20 times EV/EBITDA. This remains a genuine medium-term catalyst for the stock, in our view.”
Mr. Galappatthige kept a $32 target for BCE shares, expecting “fairly flat” third-quarter results. The average target on the Street is $37.23.
RBC’s Head of Global Energy Research Greg Pardy sees Canada’s energy majors “printing money,” and he does not “recall ever having seen this degree of collective balance sheet strength.”
“Fueled by elevated oil prices and unprecedented downstream conditions catalyzed by the Iran and Russia-Ukraine conflicts, we estimate that Canada’s majors—Canadian Natural Resources, Suncor Energy, Cenovus Energy and Imperial Oil—will generate collective third-quarter free funds flow (before dividends, including A&D) of $13.5-billion,” he added. “This after paying some $6.7-billion in Crown royalties and $4.5-billion in current taxes to all jurisdictions. Against the backdrop of $6.5-billion of share buybacks across the big four in the third-quarter, what stands out most in our analysis is that net debt levels fell an estimated $5.2-billion—and appear poised to turn negative (i.e. net cash) for select producers by year-end 2026.
In a earnings preview report released Tuesday, Mr. Pardy said oil-weighted producers are in “the best positioned we have seen in decades,” pointing to “the tri-lateral MOU (aimed at a 1 million bbl/d west coast bitumen pipeline and oil sands decarbonization) amongst the Pathways Alliance and governments of Canada and Alberta moving toward defined agreements.”
“We remain mindful that elevated oil pricing conditions have been caused by geopolitically driven output limitations (as opposed to demand pull), but the balance sheet improvements we estimate are very real and perhaps underappreciated by the market,” he added. “We do not envision any major dislocation from the reengineered producer model of free cash generation and shareholder returns which emerged following the pandemic, but upstream growth will likely play a bigger role in 2027+.”
After updating his 2026 and 2027 operating earnings and funds from operations estimates to reflect third-quarter 2026 actual commodity prices, his updated commodity price outlook, disclosed share buybacks, Mr. Pardy raised his targets for many of the stocks in his coverage universe to reflect the conditions alongside the release of his 2028 annual estimates under a mid-cycle price outlook.
He made one rating revision, downgrading Cardinal Energy Inc. (CJ-T) to “sector perform” from “outperform” with a $14.50 target, up from $14 but remaining below the average target on the Street of $14.80.
“Cardinal’s Reford 1 SAGD project continues to produce solid results, with available public production data pointing towards volumes of 6,184 bbl/d through July-August, inclusive of 7 days of unplanned downtime at the CPF in early-August,” he said. “The company also continues its build-out of Reford 2 with its expansion to 6,000 bbl/d announced in September. Our third-quarter outlook for Cardinal points towards equivalent production of about 24,887 boe/d (92-per-cent oil & liquids) (vs. 25,183 boe/d prior), including 6,287 bbl/d of thermal production from Reford 1, 7,600 bbl/d of light oil & NGLs production, and 9,000 bbl/d of medium & heavy oil production. We peg the company’s overall oil & liquids realization at about $99/bbl amid approximately $22/bbl in operating costs and a 17.3-per-=cent royalty rate.
“Also included in our third-quarter outlook is about $31.6 million in dividends paid. All said, our third-quarter outlook pegs Cardinal’s adjusted funds flow (AFF) at about $112.6 million ($0.63 per share) amid gross capital expenditure (exploration & evaluation + development) of $67.4 million. We peg Cardinal’s net debt (total debt less net-working capital) at approximately $172.7 million as of September 30, almost flat sequentially from the end of the second-quarter.”
For his favourite stocks, Mr. Pardy’s targets are now:
* Integrated: Suncor Energy Inc. (SU-T, “outperform”) with a $110 target, up from $100. The average is $108.61.
Analyst: “Our third-quarter outlook for Suncor includes corporate production of 842,240 bbl/d (vs. 867,200 bbl/d previously) after inter-asset transfers and internal consumption, inclusive of a turnaround at Syncrude (circa 35,000 bbl/d quarterly impact, net to Suncor). We estimate Suncor’s Base oil sands (excluding Syncrude and Fort Hills) produce 535,000 bbl/d (vs. 500,000 bbl/d previously) in the third-quarter (before inter-asset transfers & internal consumption) but have increased our inter-asset transfers & consumption estimate to 116,000 bbl/d (vs. 76,000 bbl/d previously). At Syncrude (58.74-per-cent wi), we peg Suncor’s third-quarter production at 175,000 bbl/d of SCO (vs. 195,000 bbl/d previously), in addition to Fort Hills (100-per-cent wi) bitumen production of 186,200 bbl/d (unchanged) (before inter-asset transfers & internal consumption)”
* Senior producer: Canadian Natural Resources Ltd. (CNQ-T) with a $86 target, up from $79. The average is $73.72.
Analyst: “Our third-quarter outlook for CNQ includes production of about 1.63 million boe/d (previously 1.66 million boe/d). Our estimates include SCO production from CNQ’s Horizon/AOSP segment of 545,740 bbl/d (vs. 570,713 bbl/d previously) amid a 35-day (29,000 bbl/d impact) planned turnaround at Horizon (that went very well we understand), which commenced September 8 and has since been completed. Also included in our third-quarter outlook for the company’s mining segment are realizations of $117.40/bbl, operating costs of $24.31/bbl (vs. $22.80/bbl prior), and an elevated royalty rate of about 25 per cent (reflecting some catch-up given oil price escalation). Our thirdquarter outlook also factors in Canadian oil & liquids volumes (excluding mining) of 637,410 bbl/d and Canadian natural gas volumes of circa 2.6 bcf/d (both unchanged). Also included in our outlook are cash taxes of $753-million, gross capital spending of around $1.74 billion, and share repurchases of $1.55-billion. All said, we peg CNQ’s third-quarter adjusted FFO (excluding circa $282-million in abandonment expenditures) at $5.26 billion ($2.55 per share) and free funds flow (before estimated dividends of about $1.30-billion and working capital movements, including abandonment expenditures and A&D) at about $3.24-billion.”
* Other: Ovintiv Inc. (OVV-N/OVV-T) with a $90 target, up from US$85. The average is US$74.60.
Analyst: “In our view, Ovintiv affords an inexpensive avenue by which to gain exposure to the liquids-rich Montney inventory depth and top-tier Permian performance. We anticipate solid operating/financial performance to continue in the third-quarter for Ovintiv, with our outlook including production of 625,000 boe/d (unchanged) amid oil & liquids production of 282,500 bbl/d (including about 77,500 bbl/d of NGLs) and natural gas volumes of 2.01 bcf/d. Our estimates include oil & liquids rates of 172,000 bbl/d in the US and 110,500 bbl/d in Canada, where condensate volumes were impacted by CSV Midstream Solutions’ ongoing Albright facility outage as previously highlighted. Our third-quarter outlook also includes organic capital investment (excluding M&A) of US$575-million, cash taxes of US$56-million, and realized hedging losses of about US$25-million. Under our outlook, Ovintiv’s net debt (company definition) sits at US$2.97-billion as of September 30, inclusive of an assumed US$209-million of bolt-on acquisitions from the company’s Permian and Montney ground game.”
National Bank Financial analyst Baltej Sidhu came away from a recent tour of Hammond Power Solutions Inc.’s (HPA.A-T) facility in Monterrey, Mexico with “increased conviction in management’s ability to scale efficiently, leverage its deep relationships and capitalize on strong end-market opportunities.”
“Against a backdrop of sustained infrastructure investment, we believe HPS has a long runway for growth and is poised to continue compounding shareholder value as it evolves from a transformer manufacturer into a broader power platform,” he said in a report titled Built to Scale, Positioned to Compound.
Mr. Sidhu emphasized the Mexican operations of Guelph, Ont.-based manufacturer “stood out as well run and executing smoothly.”
“In a region with numerous global OEMs and fierce competition for talent, HPS has differentiated itself as an employer of choice through sustained investment in its workforce, including a central Technical Training Facility, which is building a skilled workforce and reducing turnover,” he added. “Its emphasis on development and accountability fosters a culture of ownership, supporting consistent execution as capacity scales.”
He said the visit “reinforced” his view that Hammond is “executing well against a robust end market backdrop, with the recently announced Fort Worth expansion providing tangible evidence of sustained demand.”
“The key share price catalyst/KPI remains continued backlog growth and conversion,” said Mr. Sidhu. “Historically, HPS’ ability to convert demand was constrained by capacity with what we believe to be currently operating at $1.4-billion revenue capacity (ex-AEG), and the Fort Worth expansion (incl. efficiency initiatives) expected to lift run-rate capacity more than $1.7-billion, initially adding $250-million and expandable to $400-million. The bottleneck is easing, and with the pro forma capacity could support roughly 2 times adjustedEBITDA (vs. 2025A) growth, before any contribution from AEG.
With that, any period of slower growth or sequential decline in backlog could pressure the shares, even if driven by increased throughput Monterrey 4 operating at critical mass, order timing and a lumpier mix of larger project awards rather than weaker end market demand, which we are not seeing. We will also look for further colour on AEG integration in the Q3/26 results, which will include a full quarter of contribution. However, the recent BAR filing highlights near-term risk related to AEG’s exposure to the Middle East disruption. While we expect quarterly volatility in backlog, we believe the underlying trajectory remains positive as capacity scales and orders convert into revenue. Net-net, the direction of travel is clear and continues to support a long runway for growth and value creation as HPS evolves from a transformer manufacturer into a broader power platform."
With changes to his medium-term forecast to reflect the company’s new capital spending plan, Mr. Sidhu raised his target for Hammond shares to $380 from $355, maintaining his “outperform” rating. The average on the Street is $383.29.
National Bank Financial analyst Ahmed Abdullah has raised his third-quarter forecast for Winpak Ltd. (WPK-T) to more accurately reflect “the improving volume and pricing trajectory as [its] commercial pipeline increasingly translates into production.”
Ahead of the release of its financial report on Oct. 22, he is now projecting a 9.7-per-cent year-over-year rise in revenue to US$310.5-million, up from US$299.6-million previously but remaining below the Street’s expectation of US$322.7-million. His earnings per share estimate remains 62 US cents, which is 2 US cents below the consensus but up 2 US cents from the same period a year ago.
“Despite the stronger top line, we expect EBITDA to decline modestly year-over-year as margins fall 217 bps to 19.5 per cent,” said Mr. Abdullah. “Street EBITDA estimates look too high as temporary operating inefficiencies, including elevated waste, summer vacation coverage and tight capacity requiring production through less-efficient work centres, are delaying the near-term conversion of stronger volumes into EBITDA. Importantly, these temporary pressures appear more operational/seasonal than demand related. Conditions should improve in 4Q.”
“Volume expectations in line with guidance commentary. WPK’s July guidance commentary was cautiously optimistic with a focus on MAP expanded extrusion capacity as a key growth catalyst that is expected to begin contributing in 2H. We believe management’s commercial pipeline is increasingly translating into actual orders, with both Flexible and Rigid expected to post healthy growth. Pricing remains supportive as contractual/index resets catch up with prior movements in raw materials. While PP and PE prices have declined materially from peaks, lagged contract mechanics are producing positive year-over-year selling-price comparisons, including an improvement in Flexible Packaging where pricing had previously been a headwind.”
Mr. Abdullah said the Winnipeg-based company, which manufactures and distributes packaging materials and related packaging machines, has a net cash position, however its working capital “needs easing.”
“At 2Q, net cash was $342-million,” he said. “We now see $44-million of working capital investment in 2026E (was $100-million) as PP [Polypropylen] and PE [Polyethylene] prices retreated. WPK is actively evaluating M&A opportunities in the healthcare and food segments.”
Reaffirming his “sector perform” rating for Winpak shares, Mr. Abdullah raised his target by $1 to $50. The average target is $48.33.
While MTY Food Group Inc.’s (MTY-T) third-quarter same-store sales and earnings results fell short of expectations, National Bank Financial analyst Vishal Shreedhar views its new initiatives to create value “positively, particularly in light of MTY’s discounted valuation, although benefits will take time to materialize.”
On Friday, the Montreal-based company announced it has ended a strategic review without finding a buyer for the restaurant franchisor, which operates a series of chains that includes Thai Express, Manchu Wok and Mr. Sub, however it said it is undertaking initiatives to transform the business with the potential to shed some of its 80 brands.
“The investment case now largely rests on the standalone plan of closing underperforming corporate stores (benefits annual EBITDA by more than $10-million), asset sales, efficiency initiatives and share repurchases (MTY largely did not quantify benefits),” said Mr. Shreedhar. “If executed well and swiftly, the plan should generate value. Note MTY is a combination of brands, mostly franchised, some of which are growing, and would command a premium above MTY’s current valuation.
“MTY’s valuation is at near all-time lows, trading at 8.3 times NTM [next 12-month] EPS, 5.7 times NTM EV/EBITDA and generates FCF yield above 15 per cent. We see upside/downside risk to be skewed favourably.”
In a client report released before the bell, the analyst said MTY is poised to benefit with industry trends “modestly improving.”
“MTY noted that Canada sales were resilient in September, helped by a strong holiday weekend. U.S. sales similarly benefited, but softened in the last two weeks of September,” he explained. “The key arguments against MTY are a lack of visibility into franchise health (rising costs and declining sales) and a history of tepid organic growth.
“Our EBITDA estimates are largely unchanged: our F26E EBITDA goes to $236-million from $239-million, and F27E goes to $245-million from $242-million.”
He reduced his target for MTY shares to $37 from $40 to reflect “lower estimates and a lower blended multiple (no longer reflects 30-per-cent acquisition probability),” keeping a “sector perform” rating. The average is $41.17.
Elsewhere, other target adjustments include:
* TD Cowen’s Cheryl Zhang to $32 from $38 with a “hold” rating.
“MTY shares rose 3 per cent Friday after its strategic review concluded with no sale, but a renewed focus on returning capital to shareholders. Consumer spending remains soft and price competition intense, while elevated gas prices and borrowing costs (U.S.) add further pressure. Against this backdrop, we see few catalysts for a meaningful near-term valuation rerating,” said Ms. Zhang.
* Raymond James’ Michael Barth to $35 from $40 with a “market perform” rating.
“While we acknowledge there is some disappointment that no “transaction” was announced in conjunction with the conclusion of the review, we ultimately believe the best course of action for the company is to pursue a long-term strategy focused on returning capital to shareholders via more aggressive share repurchases and ongoing dividends,“ said Mr. Barth. ”Given current leverage (2.2 times), macro-level uncertainty, and the current rising rate environment, we believe share repurchases should be executed in tandem with free-cash generation. We would be hesitant to pursue a large substantial issuer bid at this time, which would seemingly move leverage closer to 3x and put the balance sheet at a higher risk level. To accelerate share repurchases, MTY could look to divest some of its smaller/less-profitable brands. At the end of F3Q, MTY owned over 80 different restaurant brands. We ultimately believe that the majority of value is being assigned to the top 10–15 brands, which would include Cold Stone, Wetzel, Thai Express, Mucho Burrito, and a handful of others. A divestment strategy would help free up capital and resources, and allow for streamlining of operations as per strategic objective #3. We would note that the company is in the process of de-emphasizing its corporate restaurant portfolio, which we believe will improve profitability and support free-cash generation. In the near-term however, absent any specific store divestiture, we believe that investors may see a faster pace of store closures."
In other analyst actions:
* Following last week’s quarterly report, Jefferies’ Corey Tarlowe downgraded Aritzia Inc. (ATZ-T) to “hold” from “buy” with a $160 target, below the $185 average.
“Following another strong report and significant share appreciation, we believe investors are underwriting many of the growth drivers, including sustained U.S. market share gains, continued digital acceleration, additional margin expansion, and an attractive LT unit growth algorithm,” said Mr. Tarlowe.
* In response to a “strong” recent share price performance, Scotia Capital’s Orest Wowkodaw downgraded Ero Copper Corp. (ERO-T) to “sector perform” from “sector outperform” with a $55 target (unchanged) in a client report previewing third-quarter earnings season for base metals miners. The average is $53.71.
“We anticipate the copper (Cu) miners to post stronger Q3/26 results (EBITDA up an average of 18 per cent quarter-over-quarter and 85 per cent year-over-year) as markedly higher commodity prices are likely to more than offset the impact of elevated energy costs (namely diesel) and negative F/X translation impacts,” said Mr. Wowkodaw and colleagues Alfonso Salazar and Eric Winmill. “Although our estimates appear somewhat mixed relative to current consensus, expectations are still likely to materially change over the next two weeks. We see few obvious catalysts, but we anticipate several more miners to formally increase 2026 cost guidance, in line with our higher estimates. Based solely on our Q3 estimates relative to consensus and potential guidance risks, we recommend exposure to FCX and TECK heading into the print. We believe CCO, CIA, ERO, HBM, IVN, and VALE have the greatest risk of possible disappointment relative to expectations. We have made several commodity price changes, including an upward revision to multi-year Cu prices; however, updated 12-month price targets are mixed, especially for Fe/U3O8 miners.”
“We are also making one rating change, as we are lowering ERO to Sector Perform (from Sector Outperform) based on the shares’ strong relative outperformance over the past few months, resulting in a modest implied return of only 2 per cent to our unchanged 12-month target of $55.00 per share. Although the shares’ near-term EV/EBITDA multiples and FCF yields remain relatively attractive vs. peers, no doubt buoyed by the ongoing sale of windfall Au concentrates in 2026-2027 (stockpile expected to be exhausted by year-end 2027), valuation now appears more in line on both a P/NAV and implied Cu price basis. We also see potential downside risks to 2027 operating guidance.”
* Updating his forecast for Cenovus Energy Inc. (CVE-T) under the assumption its acquisition of Athabasca Oil will close, TD Cowen’s Menno Hulshof raised his target for its shares by $1 to $50 with a “buy” rating. The average is $50.46.
“while price and capital allocation are common investor pushbacks, we believe the long-term strategic fit is clear,” he said. “ATH adds material resource depth & growth optionality, while CVE’s expertise/infra provide a credible path to improved economics, lower breakevens, & accelerated activity. We believe strong execution will ultimately justify the fuller price. We expect more detail at the Jan. 11 Investor Day.”
* BMO’s Thanos Moschopoulos increased his Descartes Systems Group Inc. (DSGX-Q, DSG-T) to US$90 from US$82 with a “market perform” rating. The average is US$98.
“We remain Market Perform on DSGX and have raised our target price following our attendance at last week’s user conference, at which the company provided more color on its AI roadmap and announced an early-access launch of its Agent Control Plane,” he said.
“While early days from a monetization perspective, we believe DSGX’s agentic strategy has the potential to drive incremental organic growth—as logistics is an area ripe for AI automation, and as AI may allow DSGX to better-capitalize on the breadth of its product portfolio, customer base, and data.
* ATB Cormark’s Jeff Fenwick raised his Dexterra Group Inc. (DXT-T) target to $25 from $19.50, exceeding the $19.25 average, with an “outperform” rating.
“When our coverage of DXT was launched in June 2026, we saw an attractive setup of (1) visible organic growth (durable/non-cyclical + cyclical components), (2) multiple sources of organic and acquired forecast upside for both core business platforms (urban facility management and remote camp rentals/services), and (3) a sizable runway for a valuation re-rate triggered by a business mix shift that is under the radar of most investors. In the context of this investment setup, we have been observing quarterly performance, digesting messaging from recent marketing/calls, and absorbing sector-wide demand headlines. Our observations indicate it’s time to start moving our forecast and valuation higher,” said Mr. Fenwick.
* Following site visits to its Springpole and Duparquet gold projects, Ventum Financial’s Robin Kozar bumped his First Mining Gold Corp. (FF-T) target to $1.60 from $1.40 with a “buy” rating. The average is $1.68.
“First Mining is advancing and de-risking two of Canada’s largest open-pit gold projects. These are development-stage assets, and we walked away from the tour confident that they will get built. Current valuations point to a disconnect between market perceptions, the current stage of development, and the inherent value of these projects. We see a slate of upcoming milestones over the next 12–18 months that will provide the catalysts to help close this gap. We are increasing our target multiple from 0.5 times to 0.6 times NAV to reflect advancement and de-risking of these assets. ... We think investors will be rewarded for buying the shares at current levels,” he said.
* After large unitholder RBC Global Asset Management said it will vote against a proposed takeover by GO Residential Real Estate Investment Trust, RBC’s Jimmy Shan lowered his H&R REIT (HR.UN-T) target to $11.50 from $13, keeping an “outperform” rating. The average is $11.83.
" Post Circular review, we struggle to see how HR unitholders will approve the deal: 1) At GO’s current price, consideration is $10.51, not too different than unaffected price; 2) Near term, GO/HR multiple re-rate does not seem more likely than HR as-is; 3) We believe Board’s insistence for an en-bloc transaction led to suboptimal outcome; 4) Disproportionate residual value transfer to CRAL; 5) Material tax hit; 6) Overshadowed by the Arrangement is Caledon lands sale, which if redeployed to unit buyback to benefit all HR unitholders, can drive strong low- risk accretion," said Mr. Shan.
* Reassessing Rockpoint Gas Storage Inc. (RGSI-T) one year after its initial public offering, TD Cowen’s Aaron MacNeil lowered his target to $25 from $28 with a “hold” rating. The average is $32.31.
“One year post-IPO, our deep dive reinforces strong near-term economics, but provides less support for several elements of the original growth proposition. With less visibility to incremental growth, the investment case increasingly leans on returning capital to shareholders, while complexity and market exposure warrant a more conservative valuation,” he said.
* Following a visit to its Florence development project in Arizona, National Bank’s Shane Nagle raised his target for Trekor Metals Ltd. (TKO-T), formerly known as Taseko Mines, to $14.50, matching the average, from $13.50, maintaining an “outperform” rating.
“We came away from the site with confidence in the operations ability to produce high quality copper cathode from the in situ leach process and see several opportunities to optimize project economics in the future as Bellfield expansion remains on track for full scale production in H1/27 (in line with NBCCM Estimates),” said Mr. Nagle.