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

TD Cowen analyst Michael Van Aelst thinks Canada Packers Inc. (CPKR-T) “offers modest long-term revenue growth, solid FCF in normal markets (positive throughout a normal cycle) and an attractive dividend yield.”

“As part of MFI, pork business was labeled as volatile and scorned. But past extreme margin moves are explained by highly unusual events and behind it, and fundamentals are now healthy,” he added.

In a research report released before the bell, Mr. Van Aelst initiated coverage of the spin-off of Maple Leaf Foods Inc.’s (MFI-T) legacy pork business ahead of its commencement of trading on the Toronto Stock Exchange on Thursday.

Maple Leaf Foods will keep a 16-per-cent stake in the new pork company – a name that dates back to 1927, when three of Canada’s largest meatpackers amalgamated into Canada Packers. The remaining shares will be distributed on a pro-rata basis to existing shareholders, with the executive chair at Maple Leaf Foods and Canada Packers Michael McCain keeping a 33-per-cent stake in the business.

“The spinoff of Canada Packers creates what we view as one of North America’s premier pureplay pork processing companies, with untapped growth potential (albeit modest annually), premium mix, and strong FCF generation,“ said Mr. Van Aelst. ”It frees CPKR to chart its own strategic course, with the main pillar being the optimization of plant utilization though a gradual increase in the number of hogs processed annually to reach capacity over the next 6-9 years. Many Maple Leaf investors appear fixated on the challenged profitability of CPKR’s business in recent years, but we argue that this was the result of three once-in-a-century events that had the company operating in an environment that was far from normal. With those events behind it, and a healthy outlook for pork markets for the next few years, if value investors step in, valuation could settle closer to its peer group average.”

While Mr. Van Aelst did not specify a rating for Canadian Packers shares, he was the first equity analyst on the Street to set a target for the newly minted company, settling at $20.

“Early trading is expected to be volatile, though once the initial selling is over, we think CPKR should trade at 5.0-5.5 times EV/EBITDA (at least until it has a longer track record) as this would place it slightly below its peer group average,” he explained. “We use the bottom of this range to start, getting us to our $20 PT 12 months out. It would also imply a current value of $16.40, supported by a FCF (before WC) yield of 17 per cent and dividend yield of 5.1 per cent. We would view the value as attractive below $18 and less attractive above that level.”

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RBC Dominion Securities analyst Matthew McKellar thinks Interfor Corp.’s (IFP-T) recently completed bought deal offering of $144-million has put it “on more solid footing to navigate challenging near-term conditions in the lumber market.”

“While issuing shares at the recent lows is somewhat painful, we also view the move as improving Interfor’s balance sheet and flexibility amid difficult market conditions, with the company noting weakened lumber markets and an expected non-cash duty expense of US$125-million with Q3 (which will reduce the company’s invested capital) as reasons for raising equity,” he said in a note titled Sowing seeds for what tomorrow may bring.

“With the actions taken on July 28 , Interfor still has a maximum ratio of net debt to invested capital of 50 per cent; however, over the next two years, it is able to increase its leverage level to ‘much closer to the 50-per-cent maximum’ before the EBITDA interest coverage ratio test (more than 2 times) is applied (previously applied at 42.5 per cent). With the equity offering, the company expects its pro forma net debt to capital ratio to be 35-36 per cent, which in our view provides headroom should poor conditions persist or impairments be necessary.”

While he adjusted his forecast to account for the equity issuance, Mr. McKellar also thinks lumber prices “could push higher from here.”

“After rising for 13 consecutive weeks, prices for W. SPF [Western spruce-pine-fir] 2x4s declined $124 per thousand board feet from early August to mid-September, which we think in part reflects a pull-forward of U.S. demand ahead of higher Canadian lumber duties, followed by a de-stocking of inventories,” he said. “Prices stabilized over the past two weeks, leading us to believe that de-stocking likely has concluded, and with the U.S. set to apply 10-per-cent Section 232 tariffs on all imports of softwood lumber from October 14 , we wonder if buyers will view this as the bottom and potentially push prices higher, particularly over the near term before tariffs take effect. While there is little indication of a meaningful demand-side inflection, we think the additional tariff pressure on Canadian lumber producers (who would largely be operating deeply below EBITDA breakeven today) along with an added degree of clarity from the announcement could potentially accelerate Canadian supply curtailments, supporting improved market tension and pricing into 2026.”

Maintaining his “outperform” rating for Interfor shares, Mr. McKellar lowered his target to $17 from $19. The average target is $16.33.

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While the third-quarter guidance update from Algoma Steel Group Inc. (ASTL-T) fell short of the Street’s expectations, RBC Dominion Securities analyst James McGarragle sees it “as neutral to sentiment given the recent weakness in the shares.”

“We lower our Q3 estimates to the mid-point of the guide and reduce 2026 estimates on the assumption that extended tariffs will pressure steel volumes through mid-2026,” he added. “That said, we expect the company’s accelerated transition to EAF [electric arc furnace] to enhance cost efficiency and flexibility in a challenging demand environment. Importantly, we believe the company has sufficient liquidity, supported by new loans, to navigate near-term headwinds until conditions improve.”

Algoma Steel pivots early to electric future after securing $500-million in government loans

Shares of the Sault Ste. Marie, Ont.-based company, which is now Canada’s last independent steelmaker, fell 4.3 per cent on Wednesday after it projected total steel shipments to be between 415K and 420K net tons and adjusted EBITDA in the range of a loss of $80-million to $90-million, below the consensus projection of a loss of $76-million, due to the ongoing tariff environment and an over supply of sheet in Canada.

“We extend our assumption of 50-per-cent tariffs into the first half of 2026, which we expect to pressure margins and sheet production, resulting in 2026 estimated EBITDA of $26-million (from $305-million),” said Mr. McGarragle. “Our 2027E remains largely unchanged and reflects a return to a more normalized trade relationship between Canada and the U.S.; although we reflect heightened risk surrounding this in our target multiple.”

He did emphasize government loans and an increase to its asset-based revolving credit facility have ease liquidity concerns in the medium term.

“Algoma recently announced $500-million in low interest government loans and an ABL upsize of $100-milion which we see significantly bolstering its liquidity position, allowing the company to address tariff- related challenges,” he said. “These actions enhance financial flexibility, and we now estimate Algoma’s liquidity to be $800-million. With an anticipated cash burn of $275-million for the remainder of the year, we see the backstop providing liquidity well into 2027.

“EAF acceleration a positive to switch to lower cost, flexible production . We view the decision to fast-track the EAF transition as a strategic move to control costs, despite an incremental $70-million increase in project costs, and flag production will likely decrease due to the lower shipments to the US. Collectively, these recent measures should position Algoma for improved financial resilience and long-term operational stability.”

Maintaining his “sector perform” rating for Algoma shares, Mr. McGarragle cut his target to $6 from $8 following the reductions to his 2026 and 2027 forecasts. The average is $8.25.

“Our price target moves to $6 (from $8), as we roll our valuation year to 2027, and lower our target multiple to 5 times (from 6.5 times) to account for the weaker macro environment and continued tariff uncertainty, which continues to pressure steel pricing and broader industrial demand. Additionally, we assign a Speculative Risk rating to account for the heightened uncertainty associated with a prolonged tariff scenario,” he explained.

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National Bank Financial analyst Mohamed Sidibé thinks Lithium Americas Corp.’s (LAC-N, LAC-T) agreement with the U.S. government for a 5-per-cent equity stake as well as a separate 5-per-cent stake in the company’s Thacker Pass joint venture with General Motors “reinforces the strategic nature of the project” and increases its “overall financial and offtake flexibility.”

“We anticipated a direct government equity layer at the parent level with better repayment structure and the project level,” he said. “The agreement also provides for more flexibility around the GM offtakes, allowing LAC to enter into third-party offtakes on any volumes not purchased by GM. However, the agreement also does require LAC to fund the reserve account with an additional $120-million, which we expect to be raised in equity, specifically following the meaningful share price increase over the past week.

“As a result of this agreement, we reduced LAC’s ownership in Thacker Pass to 59 per cent from 62 per cent, assumed the U.S. DOE’s execution of the warrants, fine-tuned our DOE loan amortization and lowered our project discount rate to 8 per cent from 10 per cent to reflect reduced construction period risk from the Government backing.”

Mr. Sidibé did emphasize the deal, which sent the Vancouver-based company’s already soaring shares higher by 23.4 per cent, did fall “short” of the deal between the Trump Administration and rare earths producer MP Materials Corp. (MP-N) in which the government invested $400-million in equity through the purchase of preferred shares and signed an offtake with a price floor for important magnetic materials over 10 years.

“Our NAV increases 108 per cent to $8.96 per share from $4.95 with the lower project discount rate offset by equity dilution and lower ownership interest in the project,” he added. “We additionally raised our multiple to 1.1 times from 1.0 times to reflect the U.S. critical minerals premium now ascribed to LAC.”

Keeping his “sector perform” rating for Lithium America’s TSX-listed shares, the analyst doubled his target to a Street-high of $10 (from $5). The average is $8.25.

Elsewhere, Canaccord Genuity’s Katie Lachapelle downgraded Lithium Americas to “sell” from “speculative buy” with a $6.25 target.

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Precious metals analysts at Canaccord Genuity raised target prices for stocks in their coverage universe on Thursday following positive revisions to their commodity price forecasts.

However, Carey MacRury downgraded a trio of companies:

Franco-Nevada Corp. (FNV-T) to “hold” from “buy” with a $322 target, up from $270. The average is $258.26.OR Royalties Inc. (OR-T) to “hold” from “buy” with a $56 target, up from $44. Average: $43.72.Triple Flag Precious Metals Corp. (TFPM-T) to “hold” from “buy” with a $42 target, up from $37.50. Average: $39.85.

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In other analyst actions:

* Barclays’ Brandon Oglenski cut his targets for Canadian National Railway Co. (CNI-N, CNR-T) to US$97 from US$99 with an “equal-weight” rating and Canadian Pacific Kansas City Ltd. (CP-N, CP-T) to US$90 from US$91 with an “overweight” rating. The averages are US$113.47 and US$88.29, respectively.

* CIBC’s Kevin Chiang cut his GFL Environmental Inc. (GFL-T) target to $79 from $81, keeping an “outperformer” rating. The average is $74.29.