Inside the Market’s roundup of some of today’s key analyst actions

After “exceptional” second-quarter results, Stifel analyst Martin Landry thinks Group Dynamite Inc.’s (GRGD-T) momentum appears to have continued into August, however he expects a “deceleration of growth and profitability” through the remainder of the fiscal year “to be conservative.”

Shares of the Montreal-based retailer, which operates under the Garage and Dynamite banners, jumped over 15 per cent on Wednesday after it reported quarterly comparable-store sales growth of 25.7 per cent year-over-year, blowing past Mr. Landry’s expectation of 12 per cent and consensus projection of 16.7 per cent “due to higher traffic as a result of the momentum in the brand and digital marketing effectiveness.” Adjusted fully diluted earnings per share increased 43.4 per cent to 57 cents, topping the analyst’s 42-cent estimate and the Street’s forecast of 44 cents.

“Shares moved higher despite being up 51 per cent in the last two months, highlighting the magnitude of the earnings beat,” he said in a note titled The busiest store at the mall. “Most investors had seen the outperformance of the company from spending surveys on credit/debit cards, but comparable sales growth of 25.7 per cent year-over-year blew past most expectations. Groupe Dynamite’s success comes from: (1) a trendy product offering, (2) rapid turnaround time from ideation to availability on shelves, (3) sexy and provocative marketing campaigns, pushing boundaries more than competitors, and (4) successful digital advertising, which resonates with customers.”

With sales momentum is continuing into third quarter at a similar pace, Mr. Landry thinks “there could be upside to the company’s guidance” as it raised its full-year comparable-store sales growth guidance to 17-19 per cent, from 7.5-9.0 per cent, previously.

“EBITDA margin should benefit over the next 12 months from financial efficiencies stemming from the new U.S. distribution center,” he added. “If the current China-U.S tariff rate remains unchanged, FY25 EBITDA margin could reach the higher end of the guidance. The removal of the De Minimis exemption rule for online shipments into the U.S. does not have a material impact for GRGD as a majority of the U.S. online orders were already fulfilled from the U.S. We have increased our H2FY25 EPS forecasts by 8 per cent vs previously.”

Maintaining his “buy” rating for Groupe Dynamite shares, Mr. Landry hiked his target to $53 from $27.50. The average target on the Street is $48.45, according to LSEG data.

“In the last 12 months, Groupe Dynamite’s operating profit increased by 30 per cent year-over-year, an impressive performance driven by (1) strong comparable sales growth of 15 per cent, and (3) scale benefits with SG&A as a percentage of sales down 250 basis points year-over-year,“ he said. ”We believe the company can continue to gain market share and grow much faster than the industry.”

Elsewhere, other analysts making target adjustments include:

* National Bank’s Vishal Shreedhar to $55 from $40 with an “outperform” rating.

“We maintain a favourable disposition on GRGD and Top Pick selection. Investment in GRGD is differentiated by strong financial metrics, with an EBITDA margin and ROIC that are among the highest in our coverage universe (F2024 EBITDA margin of 31.6 per cent and ROIC of 47.4 per cent),” said Mr. Shreedhar.

* TD Cowen’s Brian Morrison to $55 from $40 with a “buy” rating.

“Groupe Dynamite exceeded lofty expectations in Q2/F25, delivering another ‘beat and raise’ for its F2025 key guidance metrics. With a developing track record for sustained midterm growth that includes on-trend product driving SSSG/eCommerce, its real estate optimization strategy, and solid FCF/BS strength, we believe GDI warrants a valuation multiple toward the high-end of its peer group,” said Mr. Morrison.

* Desjardins’ Chris Li to $53 from $36 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). Momentum is expected to continue in 2H. While the very strong share price reaction likely reflects these positives, for long-term investors, our positive view is supported by double-digit EPS growth, solid FCF and a healthy balance sheet supporting a higher capital return,” said Mr. Li.

* RBC’s Irene Nattel to $58 from $43 with an “outperform” rating.

“Strong and accelerating momentum driving substantially better-than- expected KPIs, putting GRGD on the catwalk to meet/exceed revised F25 guidance and through our forecast period, and supportive of our OP rating. Combination of strong execution, sharply revised expectations/forecasts, execution on NCIB, and better flow of funds into small cap and discretionary names have driven multiple re- rating far more quickly than anticipated. In our view, as long as GRGD continues to deliver sector-leading results, re-rating should be sustained/enhanced. Reiterating GRGD as an attractive SMID-cap with sector-leading growth outlook, compelling optionality for FCF deployment/potential valuation expansion,” she said.

* Raymond James’ Michael Glen to $55 from $42 with an “outperform” rating.

T“he focal point for the quarter was the elevated SSSG of 28.6 per cent (up 25.7 per cent constant currency) which was well above our 20-per-cent forecast and showed a notable acceleration from F1Q at 13 per cent,” he said. “Driving of the comp were a combination pricing (up 12 per cent), successful product, and targeted marketing and social media spend, which actively engaged the customer. In the background rests a data-driven inventory management system, which tracks real-time what the customer wants and emphasizes availability on those products, colours and assortments. This removes ‘fashion-risk’ from the stores and the end result is a highly effective, inventory lean (GDI turns inventory 7.5-8 times) and low-markdown operating model.”

* BMO’s Stephen Macleod to $55 from $42 with an “outperform” rating.

* Barclays’ Adrienne Yih to $61 from $26 with an “overweight” rating.

* Canaccord Genuity’s Luke Hannan to $54 from $43 with a “buy” rating.

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National Bank Financial analyst John Shao thinks Kraken Robotics Inc.’s (PNG-X) “growth tailwind” just got “another boost” through a contract win for its biggest customer.

On Wednesday, the Royal Australian Navy announced it has awarded California’s Anduril Industries Inc. a $1.56-billion contract to deliver, develop and support a large fleet of Ghost Shark Extra Large Autonomous Underwater Vehicles over the next five years. St. John’s-based Kraken has been supplying critical subsea batteries to Anduril.

“Within three years, Anduril has turned prototype into fleet, which is a milestone for this defence company,” said Mr. Shao. “Due to the tight integration, we expect Anduril to carry forward its partnership with Kraken Robotics into this new contract, and thus we expect Kraken to remain as an important battery supplier for Anduril going forward.

“Capacity-wise, Anduril’s new AUV contract also is in sync with Kraken’s new battery facility in Halifax, Nova Scotia. This facility is on schedule to open in late September or early October with the initial battery production in late 2025. As a result, capacity limit does not seem to be an issue in our view.”

The analyst thinks the RAN contract win is “unlikely an isolated case” and now predicts similar contracts will follow.

“The Ghost Shark platform fills a growing demand among navies for affordable, autonomous undersea systems that can complement or substitute for crewed submarines,“ he explained. ”The rapid transition from prototype to program of record in just three years demonstrates scalability and operational credibility, making Ghost Shark an attractive option for allies facing similar challenges. Given that Anduril has already established partnerships in the U.S. and UK — and the AUKUS framework explicitly encourages technology sharing across member nations — it is highly plausible that other Western navies will follow Australia’s lead in procuring Ghost Shark. If that happens, it will substantially elevate Kraken’s growth trajectory.”

Keeping an “outperform” rating for Kraken shares, Mr. Shao raised his target to $5 from $4. The average target is $4.39.

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After “solid” second-quarter results, including “exceptional” same-store sales growth, Roots Corp.’s (ROOT-T) “growing brand strength outlines upside potential,” according to TD Cowen analyst Brian Morrison.

“While it remains ‘early days’, with marketing spend forecast to remain elevated in H2/F25, this raises our confidence for an improving earnings profile in F2026, as costs ease and drive sales/leverage,” he added.

The Toronto-based retailer rose 2.5 per cent after direct-to-consumer sales increased 12.7 per cent year-over-year, topping Mr. Morrison’s forecast by 6 per cent. He attributed the beat to “its product offering resonating/improved inventory position driving heightened full-price sell-through, resulting in outstanding SSSG [same-store sales growth of 17.8 per cent (forecast 10.0 per cent).”

“Management provided an update on the state of the consumer, that is trending ahead of expectations,” said the analyst. “It is seeing strong customer response to core products/positive uptake to its accelerated marketing efforts that supported market share gains year-to-date. We anticipate positive growth momentum to continue in the seasonally strong H2/F25.

“Marketing spend remains a focal point: Management plans for elevated marketing expenditures to continue in H2/F25, as it is achieving ‘great initial results’ from its efforts. With strong year-over-year sales aided by its ‘testing the waters’ marketing strategy, we are gaining comfort this should accelerate brand momentum/operating margin leverage as Roots returns to a normalized marketing cadence in F2026.”

Keeping a “buy” rating, Mr. Morrison, currently the lone analyst covering Roots, bumped his target for its shares to $4 from $3.75.

“We believe Roots marketing/product strategy is bearing fruit, and that an inflection point for its EPS profile has taken hold,” he explained. “Improving brand strength/product should accelerate sales growth and support earnings growth, especially upon a return to a normalized marketing spend as a percent of sales. This positive outlook and balance sheet strength supports a modest increase to our target multiple, an in turn our target price to $4.00.”

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TD Cowen analyst David Kwan thinks the upcoming quarters, including next week’s release of its results for the end of its 2025 fiscal year, will play a “critical role” in deciding the near-to-medium term trajectory of Sangoma Technologies Corp.’s (STC-T) stock.

“They should help investors gauge the success (or lack thereof) of the significant GTM changes implemented in recent years,” he added. “We still believe a sustained return to growth should help drive a re-rating.”

Mr. Kwan is currently projecting fourth-quarter revenue estimate of $58.7-million, falling in line with the consensus projection on the Street and implying a 4-per-cent year-over-year decline. However, it would be a rise of 1 per cent quarter-over-quarter, which would represent the first quarter of sequential growth in two years.

He also expects investor focus to be on the company’s guidance for fiscal 2026.

“We are forecasting F2026 revenue of $239.8-million, essentially in line with consensus at $241.6-million, and implying 2-per-cent organic growth,” said Mr. Kwan. Our F2026 Adjusted EBITDA forecast of $44.9-million is also in line with consensus ($44.4-million). We note that our forecasts/consensus do not include the impact of the sale of VoIP Supply (we estimate $15-$20-million in revenue and $1-million in Adjusted EBITDA).

“In particular, the F2026 guidance should help investors better assess management’s confidence in an expected rebound in the business and the magnitude of the impact of the changes it has implemented over the last two years.”

The analyst kept a “buy” rating and $11 target for the Markham, Ont.-based company’s shares. The average is $11.38.

“Although the near-term revenue growth outlook remains challenging, we expect a return to positive revenue growth in late C2025, aided by early benefits from its go-to-market strategy changes and easier year-over-year comps,” he said. “We expect continued margin improvements, particularly in F2026, as it begins to realize the benefits of its ERP migration that should allow leverage to continue trending downward and provide more flexibility on the capital-allocation front. Despite the strong rebound in the share price since the Q2/F24 release, the stock is still trading at the bottom end of the peer group and below its historical average, while offering a double-digit FCF yield. Accordingly, we believe the shares remain attractively valued.”

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In other analyst actions:

* BMO’s Fadi Chamoun raised his Bombardier Inc. (BBD.B-T) target to $190 from $185 with an “outperform” rating. The average is $172.54.

* JP Morgan’s John Royall cut his Cenovus Energy Inc. (CVE-T) target to $29 from $32 with an “overweight” rating. The average is $26.81.

* Morgan Stanley’s Toni Kaplan cut her Thomson Reuters Corp. (TRI-N, TRI-T) target to US$187 from US$197 with an “equal-weight” rating. The average on the Street is US$196.10.