Monday’s analyst upgrades and downgrades

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

Following third-quarter earnings season, Desjardins Securities analyst Chris MacCulloch now sees “clear evidence of multiple expansion in recent months, stemming in part from investor perception of an improved Canadian regulatory environment and renewed focus on resource depth as U.S. shale producers struggle with drilling inventory constraints.”

“The resiliency of the Canadian oil & gas sector was on full display with 3Q25 financial results which overwhelmingly exceeded consensus expectations from a cash flow perspective while production closely aligned with forecasts,” he said. “Despite softening commodity prices, producers recognized improvements in operational execution and cash costs, a reflection in part of synergies from recent sector consolidation. For natural gas–weighted producers, 3Q results benefited from stronger price realizations, a function of voluntary curtailments and the acquisition of volumes at negative prices on the open market to fulfill pipeline commitments. The reporting season also included an initial look at 2026 capital budgets, albeit with limited surprises to the extent that most producers have adopted disciplined, multi-year development plans. Meanwhile, Canadian oil & gas equities have been red hot, with the S&P/TSX Capped Energy Index outperforming the S&P/TSX Capped Composite Index by 11 per cent over the past month and commodity prices more broadly, resulting in multiple expansion.”

In a client report released before the bell on Monday titled “Is this the real life? Is this just fantasy?”, Mr. MacCulloch made “minor” revisions to his commodity price deck, primarily reflecting his expectation for stronger global crack spreads which supported target price increases for integrated producers.

“Beyond marking our commodity price deck to market for realized 4Q25 prices to date, we have maintained our forecast with the notable exception of a US$2.50/bbl increase in our New York Harbor 3-2-1 crack spread assumption for 2026–27,“ he noted. “Although numerous factors have contributed to strengthening crack spreads, including relatively soft benchmark oil prices, the primary driver of increased tightness in global product markets has been Ukrainian drone strikes on Russian refineries curtailing fuel exports from the country. We maintain our bifurcated view on oil prices, as reflected in our US$55/bbl and US$70/bbl WTI forecasts for 2026–27, respectively, reflecting our expectation for continued softness moving into the winter months as OPEC+ supply additions are paired with subdued demand before the market begins tightening next summer. On natural gas, we have seen clear evidence of improving market fundamentals with the recent arrival of colder temperatures amplified by record LNG exports, particularly in Canada where pipeline egress constraints have also moderated.”

With his changes, Mr. MacCulloch made a trio of rating revisions to stocks in his coverage universe.

He downgraded Canadian Natural Resources Inc. (CNQ-T) to “hold” from “buy” to reflect a decreased return to his target of $52 per share. The average target on the Street is $53.07, according to Bloomberg data.

“We are downgrading CNQ … reflecting limited return profile to our $52.00 target, which implies an unchanged 6.5 times EV/DACF [enterprise value to debt-adjusted cash flow] (2027E) multiple on a hedge-adjusted basis, or a 10.0-per-cent FCF yield,” said Mr. MacCulloch. “Notably, our multiple would expand to 8.3 times based on current strip prices while our FCF yield would contract to 7.1 per cent. For reference, since our October 2024 discussion of the stock on the heels of its acquisition of AOSP working interests and Duvernay assets from Chevron Canada Limited, CNQ has delivered a negative 3.8-per-cent return, slightly underperforming the S&P/TSX Capped Energy Index return of 6.9 per cent (excluding dividends).

“Although we continue to support the strategic rationale and industrial logic of the transaction, it has materially increased the company’s financial leverage while weighing on capital returns through a reduced 60-per-cent FCF allocation to share buybacks (from 100 per cent previously) after funding dividends. At the time, CNQ highlighted that the temporary moderation in FCF allocation would not materially impact capital returns given transaction synergies. However, based on our high-level analysis, we estimate that share buybacks would have been $1.0–1.5-billion higher between 1Q25 and 3Q25 in the absence of the transaction (vs the $1.2-billion realized). Unfortunately, we see limited prospects for near-term improvement on that front, with achievement of the interim $15-billion net debt target now appearing to be an early 2028 event based on current strip prices, a timeline that could be further delayed if CNQ sanctions additional growth projects outlined at the 2025 investor open house. Given our cautious outlook on 2026 oil prices and increased bullishness on crack spreads, we see more attractive opportunities in the Canadian large-cap space from producers with downstream integration to help backfill moderating upstream cash flows.”

Conversely, he upgraded these stocks:

* Peyto Exploration & Development Corp. (PEY-T) to “buy” from “hold” with a $24.50 target, rising from $23.50 and above the average of $22.82.

“For reference, since our July 2023 note, PEY has delivered a colossal 87.0-per-cent return, significantly outperforming the S&P/TSX Capped Energy Index return of 29.0 per cent (excluding dividends),” he said. “Simply put, we got this call wrong and we believe there’s no better time to get off a bad call than the present! Our initial bearish thesis stemmed from balance sheet sustainability concerns, specifically the company’s ability to moderate debt levels while funding the large dividend commitment in a softer natural gas price environment. However, the acquisition of Repsol Canada has proven to be a gamechanger for PEY by unlocking synergies through the successful integration and optimization of the expanded asset base. Furthermore, we underappreciated the cash flow stability provided by the company’s mechanical hedging program which supported the balance sheet during a period when contango in the AECO natural gas curve consistently failed to materialize. Going forward, we see natural gas market fundamentals rapidly improving and we believe PEY is poised to benefit, despite its active hedge book, as the second-largest dry gas producer in the Canadian oil & gas sector. Moreover, the company appears to be pursuing opportunities to further expand its asset base through Repsol-lookalike transactions, including the potential acquisition of CVE’s Deep Basin assets which would further differentiate the story vs its small/mid-cap Canadian natural gas–weighted peers.”

* Tourmaline Oil Corp. (TOU-T) to “buy” from “hold” with a $68 target (unchanged). The average is $72.25.

“For context, the stock has materially lagged since our March 18 note, delivering a negative 7.4-per-cent return vs the S&P/TSX Capped Energy Index of 16.6 per cent (excluding dividends) as the worst performing stock in the Desjardins E&P coverage universe,” he explained. “Negative equity performance primarily stems from the updated multi-year development plan which introduced ambitious long-term production growth targets that were front-loaded by intensive capital spending to fund the infrastructure buildout, resulting in a significant contraction of FCF generation. While limited FCF remains a point of caution for us, we believe that disappointing news flow is largely behind the story at this point and more than priced into the stock, with the narrative shifting to positive catalysts. First and foremost, natural gas fundamentals are rapidly improving moving into the winter heating season, from both a macro North American and a micro western Canadian perspective. Importantly, TOU remains a key beneficiary of strengthening natural gas prices in the Canadian oil & gas sector given its scale as the largest producer in the WCSB and its heightened exposure to spot prices, which we expect to drive funds flow into the stock. Finally, we believe the sale of the Peace River High assets could attract upwards of $0.75–1.0-billion of proceeds in the current environment which would help fund infrastructure capital spending in the B.C. Montney.”

Mr. MacCulloch also made these target revisions

Athabasca Oil Corp. (ATH-T, “hold”) to $8.50 from $8. The average is $7.50.Cenovus Energy Inc. (CVE-T, “buy”) to $33 from $31.50. Average: $29.33.Headwater Exploration Inc. (HWX-T, “hold”) to $8.75 from $8. Average: $9.17.Imperial Oil Ltd. (IMO-T, “sell”) to $120 from $114. Average: $113.61.Spartan Delta Corp. (SDE-T, “hold”) to $8 from $7. Average: $7.65.Suncor Energy Inc. (SU-T, “buy”) to $73 from $71. Average: $66.03.Tamarack Valley Energy Ltd. (TVE-T, “buy”) to $8.50 from $7.75. Average: $8.10.Vermilion Energy Inc. (VET-T, “hold”) to $13 from $12.50. Average: $12.56.

“We remain biased toward integrated and natural gas producers offering superior downside protection to our near-term expectation for softening oil prices. We highlight CVE and SU as top picks,” said Mr. MacCulloch.

=====

Citing rising gold prices and seeing an attractive valuation, Bank of America Global Research analyst Lawson Winder upgraded Barrick Mining Corp. (B-N, ABX-T) to a “buy” recommendation from “hold” previously.

Mr. Winder noted Barrick has been focusing more on capital return and now possesses an enticing valuation compared to peers.

He sees potential catalysts from “a strategic redirection” of the business to developed its market beyond emerging market jurisdictions, and predicts an improvement in Nevada Gold Mines’ 2026 unit costs as well as still under-appreciated upside from the Fourmile joint-venture project in Nevada.

The analyst also emphasized the potential for gold prices to continue to rise as macro drivers remain supportive and bullion remains under invested, according to Bloomberg.

=====

National Bank Financial analyst Maxim Sytchev thinks the recent decline in share price for RB Global Inc. (RBA-N, RBA-T) “presents an opportunity” for investors, pointing to several encouraging trends across the industrial space.

Upgrading his recommendation to “outperform” from “sector perform” previously, he emphasized market share gains for the company, also known as Ritchie Bros. Auctioneers and legally domiciled in Canada with headquarters now in Westchester, Ill., is “hard to deny” with momentum “long-term in nature.”

“Despite Copart [CPRT-Q] beating slightly on the bottom line for FQ1/26, revenues were soft as volumes were weighed down by industry-wide factors including more uninsured drivers, less comprehensive insurance coverage, and far lower CAT activity,“ he explained. “These are, of course, legitimate factors, but hardly justify the diverging unit growth rate vs. RBA. Market share shifts and loss rates among insurers naturally ebb and flow over time, but these are more subtle and long-term in nature and we do not think they are a (sufficient) explanatory factor.

“As such, we believe RBA’s market share has now definitely inflected (after bottoming out at about ½ that of Copart in North America), helped by recent wins with Suncorp in Australia and Direct Line in the UK, which are still ramping up to full run-rates, attributed to strong execution and a focus on service improvements. Given the complex logistics and contracted nature of underlying operations, we believe these gains will persist for the foreseeable future.”

In a client report released before the bell, Mr. Sytchev said he “cannot fathom a (realistic) scenario whereby policy uncertainty lasts into 2026E and 2027.” He also noted industry bellwether Caterpillar Inc.’s (CAT-N) year-over-year inventory has grown positive, which he calls “the best leading indicator that we have found so far” and “portending a better CC&T outlook with a delay of 6 to 9 months.”

“Confirmation around IAA regaining some market share appears to have been solidified in multiple consecutive prints vs. Copart,” he added. “One concern that we do need to express explicitly is for how long can RBA/Copart co-exist without damaging themselves by engaging in price competition; note for example that the Purple Wave deal came AFTER RBA had acquired IAA, an interesting time to go after the construction market on the part of CPRT; the latter has AUS$5-billion war chest and could elect to accelerate M&A in CC&T. There is also an uncomfortable (but most likely much delayed) dynamic of autonomous vehicles and how that could impact the terminal multiple for this business.

“While we fully acknowledge the above risks, in a somewhat all of a sudden wobbly market, having a countercyclical name at an uncharacteristic discount does not sound like the worst idea to us.”

After refreshing his estimates and valuation for RBA, Mr. Sytchev raised his target for the company’s shares to US$124 from US$111. The average target on the Street is US$123.30, representing a potential return of 28.1 per cent.

“The market share dynamic appears to have been digested by CPRT investors, as the company’s NTM P/E [next 12-month price-to-earnings] has contracted from close to 40 times at the start of the year to under 24 times today, as earnings expectations have remained largely static in recent quarters,” he said. “In a duopolistic context, one would expect Copart’s loss to be RBA’s gain, but this has not been the case as the latter’s valuation has also fallen significantly to well below post-2017 averages (we do acknowledge RBA adds back SBC and material restructuring expenses post-IAA). As such, we expect the divergence in earnings expectation that has materialized over the last two years to persist going forward as RBA continues to claw back market share, rationalize its cost base, and pay down debt to further improve optionality (leverage now at only 1.4 times) and enable growth (including M&A, such as the recent Smith Broughton acquisition). The backdrop is of course not picture perfect … but that is hardly ever the case. While we expect a tougher set of comps in Q4/25E, we are nevertheless encouraged by management’s execution and accompanying increase in the stability and magnitude of pro-forma EPS growth.”

“We downgraded RBA shares in late May 2025 on concerns around lacklustre GTV growth; since then, share have declined 10 per cent vs. the S&P TSX moving up 17 per cent. We were initially surprised by the post Q2/25 jump on what we viewed as a guide down and the current outlook (0-1 per cent consolidated GTV advance for 2025E) does imply that the construction backdrop has become more challenging, not less (while we have also seen less hurricane activity). At the same time, we are fully cognizant of the fact that the intermittent times of inactivity are generally transient as fleets age and velocity of equipment improves over time.”

=====

National Bank Financial analyst Vishal Shreedhar is expecting Groupe Dynamite Inc. (GRGD-T) to display “exceptional” same-store sales growth when it reports its fiscal third-quarter financial results on Dec. 9, reaffirming the Montreal-based clothing retailer as his “top pick” in the industry.

“GRGD indicated that performance for the first 5.5 weeks of Q3/F25, was in line with Q2/F25 sssg of 28.6 per cent,” he said. “Our analysis of Bloomberg’s ALTD sales trends suggest that momentum subsequently accelerated (U.S. data). Accordingly, our estimates are above GRGD’s current F2025 sssg guidance of 17-19 per cent (NBCM is 22.7 per cent). Assuming Q3/F25 sssg trends continue into Q4/F25, we estimate additional upside of more than 10 per cent to our Q4/F25 EPS (NBCM models Q4/F25 sssg of 17.0 per cent).

“Recall that GRGD’s EBITDA margin guidance (at the upper half) is based on tariff rates that are consistent with September 2025. Currently, among other trade policies, heightened China tariffs have been suspended until November 2026 (base reciprocal tariff remains), and the 20-per-cent tariff rate (executive order 14228) has been lowered to 10 per cent (effective November 2025 to 2026). Our understanding is that the net China tariff rate has slightly moderated, which suggests EBITDA margin guidance (at the upper end) is achievable.”

Mr. Shreedhar is now is now forecasting earnings per share for Groupe Dynamite of 57 cents, which is 4 cents higher than the consensus projection on the Street and up from 41 cents during the same period a year ago with same-store sales growth jumping to 30 per cent (from 10.1 per cent in fiscal 2024).

“Our expectation of 41.3-per-cent EPS growth year-over-year largely reflects double-digit sales growth (double-digit sssg and net new store openings in the last 12 months) and SG&A leverage, partly offset by gross margin contraction (tariff headwind and higher occupancy costs partly offset by benefits from the gradual ramp up of the U.S. DC), higher D&A, and higher interest expense,” he explained.

The analyst said his review of apparel retailer commentary suggests “ongoing consumer resilience despite an uncertain macroeconomic backdrop.”

“Select retailers have expressed improving demand trends and/or favourable pricing trends, which we view to be encouraging,” he added.

Expecting a raise to its guidance alongside an earnings beat, Mr. Shreedhar reaffirmed his bullish investment thesis and increased his target for its shares to $73 from $66 with an “outperform” rating to reflect a higher valuation multiple and estimate increases. The current average is $64.42.

“We maintain a favourable disposition on GRGD,” he said. “Investment in GRGD is differentiated by strong financial metrics, with an EBITDA margin and ROIC that is amongst the highest in our coverage universe (F2024 EBITDA margin of 31.6 per cent and ROIC of 47.4 per cent,” he said.

=====

In a research report released Monday titled Hitting a stronger stride, RBC Dominion Securities analyst Pammi Bir said he sees Sienna Senior Living Inc. (SIA-T) as “well-equipped to capitalize on robust seniors housing fundamentals” following the release of third-quarter results that narrowly topped his forecast.

“Organic growth accelerated across segments, with 2026 shaping up to be another strong year on further advances in occupancy and margins,” he said. “An active pace of capital deployment should also drive incremental earnings growth. Net-net, we see its premium valuation as well-supported but would ideally prefer a better entry point.”

On Nov. 11, the Markham, Ont.-based seniors’ living provider reported same-property net operating income rose 9.7 per cent year-over-year and now sits 8.8 per cent higher year-to-date, driven by “strong advances” in long-term care (up 6.7 per cent year-over-year) and retirement (up 13.2 per cent).

“With stable anticipated LTC occupancy and more moderate growth in govt funding, we expect LTC organic growth to settle in the low-single-digit percentage range in 2026,” said Mr. Bir. “In retirement, the combination of strong demand and effective local sales/marketing strategies pushed Q3 SP occupancy up a sizeable 200 basis points quarter-over-quarter to 94.1 per cent (up 230 bps year-over-year), with October rising to 94.7 per cent.

“In short, SIA’s 95-per-cent target by year-end is within spitting distance, along with its target NOI margin improvements (up 200-250 bps year-over-year; 39.5 per cent year-to-date). With minimal new supply and sustained demand, we forecast total occupancy at more than 94 per cent by Q4/26 (vs. 91.6 per cent at Q3/25). Combined with SIA’s target 4-5-per-cent rent growth, higher care revenue, and 3-4-per-cent operating cost growth, we see high-single to low-double-digit percentage retirement organic NOI growth as achievable in 2026 (vs. 13-14 per cent in 2025).”

Already a “busy” year for capital deployment, Mr. Bir expects more ahead of Sienna, which should further bolster its position in the industry.

“In Q3, SIA acquired Credit River Retirement for $60-million (5.8-per-cent cap rate), followed by Cawthra Gardens LTC in Oct. for $33-million (6.8 per cent),” he said. “A further $161-million of ON retirement acquisitions should close in the next couple months ($93-million Hygate and $67-million LaSalle Park), lifting completed and announced 2025 acquisitions to $595-million (6.2-per-cent cap rate). Combined with Q3 development completions in North Bay ($78-million LTC) and Brantford ($140-million LTC/ retirement campus) at attractive 8-per-cent stabilized yields, the significant investment activity should provide an incremental source of earnings and NAV upside. With improved govt funding, SIA expects to start 1-2 additional LTC redevelopments in the GTA next year. We expect acquisitions will also remain active as SIA leverages its improved cost of capital.”

Predicting growth will improve, the analyst raised his funds from operations expectations through 2027, leading him to increase his target for Sienna shares by $2 to $22 with a “sector perform” recommendation. The average is $22.06.

“PT raised .. on the increase in our FWD NAV [forward net asset value,” he said. “SIA trades at 8-per-cent P/NAV (16 times 2026E AFFO/6.6-per-cent implied cap rate), below its seniors housing comp (16-per-cent P/NAV) but significantly ahead of our universe (down 14 per cent). From our perspective, valuation is well-supported by its improving growth trajectory, portfolio composition, and strong balance sheet.”

=====

In a separate report, Mr. Bir said NorthWest Healthcare Properties REIT’(NWH.UN-T) is “making encouraging strategic progress” even though its third-quarter results fell short of expectations.

“Vital’s buyout of NWH’s management contract yields multiple benefits, including deleveraging with minimal earnings dilution,” he said. “Combined with potential sales of European assets, the process of simplifying the business and strengthening the balance sheet should advance through 2026. Still, uncertainty surrounding HSO continues to create some downside risks to earnings. Net-net, valuation seems reasonable.”

In a client note released before the bell, Mr. Bir emphasized the Toronto-based REIT, which now possesses healthcare infrastructure assets in North America, Australasia, Brazil, and Europe, is seeing an acceleration in organic growth, while he warned a resolution to the sale process for Healthscope Pty Ltd, which is now its second-largest client, remains uncertain.

“NWH reported Q3/25 FFOPU [funds from operations per unit] of $0.11 vs. $0.06 last year, below our $0.12, but in line with the Street’s $0.11,” he said. “The $0.01/unit shortfall to us was mainly from higher G&A (some of which we believe is one-time) and higher interest costs in the corporate segment. Though neutral to our outlook, we’re encouraged by plans to further simplify the business. Of note, organic growth accelerated. NWH also announced that it’s exploring alternatives for its European portfolio as it works to streamline operations. Combined with $150-million of anticipated net proceeds from the buyout of its management contract by Vital, NWH estimates total net proceeds from these initiatives of more than $300-million. Management intends to redeploy the capital into North America, including debt reduction, new investments, and buybacks of its units & convertible debentures through NCIBs. The receiver-led sale process of HSO continues

“[Same-property net operating income] rose a strong 4.4 per cent year-over-year (up 4.3 per cent year-to-date) from inflationary rent bumps, improved recoveries, and rents on capital spent,” he added. “Supported by stable occupancy (96.9 per cent at Q3, up 30 basis points quarter-over-quarter) and long term leases (more than 13 years), our forecasts reflect organic growth in the 2-per-cent-range through 2026. However, downside risks remain as the receiver-led sale process of HSO (S0.09/unit; 20 per cent of 2025E FFOPU) continues. As HSO’s rent coverage ratio has not materially improved (1.7 times vs. 2-2.5 times target), we believe a rent reduction remains possible (every $2-million = $0.01/unit). With final bids for HSO due later this month, clarity may surface soon.”

Mr. Bir made a modest reduction to his forecast for NWH to reflect a higher net operating income assumption, however he reaffirmed his “sector perform” rating and $5.50 target for its units. The average on the Street is $5.94.

“NWH trades at negative 29-per-cent P/NAV (12 times 2026 estimated AFFO/8.3-per-cent implied cap), well below our universe (negative 15-per-cent P/NAV). From our lens, current levels reasonably capture the uncertainty surrounding HSO, progress on strategic initiatives, and work still to do on the balance sheet,” he said.

=====

In other analyst actions:

* In a research report on global lithium producers, Canaccord Genuity’s Katie Lachapelle upgraded Lithium Americas Corp. (LAC-T) to “hold” from “sell” with a $6.50 target (unchanged). The average on the Street is $8.56.

“Demand’s in charge now (Jul’25), we posited that continued demand growth driven by EV’s and BESS would outstrip slowing supply growth and bring the market back to balance,“ the firm’s research group said. ”We lift our expectations to account for much stronger growth in the Battery Energy Storage Systems (BESS) market. This brings forward expectations for deficit markets and a continued recovery in lithium pricing. We think the improving outlook for the sector will continue to support equities and suggest investors continue to reassess sector exposure.”

“Lithium Americas is progressing on schedule with its 62-per-cent-owned Thacker Pass lithium mine and processing plant in Nevada, targeting 40ktpa of battery-grade lithium carbonate in Phase 1. As of Q3 2025, $720-million of the $2.9-billion total capex has been spent, with detailed engineering over 80-per-cent complete. Mechanical completion is expected by late 2027, followed by 6-12 months of ramp-up, with 2029 as the first full production year. On-site workforce has grown to 700 people, targeting 1,000 by year-end. Long-lead equipment commitments total $430 million, with most deliveries expected through Q1 2026. Target price of $6.50 remains unchanged, but our recommendation moves from Sell to HOLD.”

* Following a site visit to its flagship Séguéla Mine in Côte d’Ivoire, which represents 42 per cent of his net asset value assumption, Scotia Capital’s Eric Winmill raised his recommendation for Fortuna Mining Corp. (FSM-N, FVI-T) to “sector outperform” from “sector perform” with a target of US$11, rising from US$10.50. The average on the Street is US$13.69.

“Overall the visit showcased the growth plan for the asset and exploration potential, together with a discussion on Fortuna’s next growth project, Diamba Sud in Senegal (24 per cent of NAV),” he said. “Fortuna is targeting consolidated annual production of 500koz Au within three years and we see a catalyst-rich outlook in the coming quarters as outlined below. With a forecast of strong free cash flow next year (FCF yield 17 per cent 2026 estimates) and reasonable valuation (trading at spot 0.61times P/NAV5-per-cent vs. peers at 0.71 times) we see additional upside potential for FSM shares. As a result, with this note we are upgrading our rating to SO (from SP) with a US$11.00PT (from US$10.50).Separately, FSM also released updated reserves and resource for Séguéla.”

* Stifel’s Cole McGill raised his Montage Gold Corp. (MAU-T) target to $9.25 from $9 with a “buy” rating. The average is $8.98.

“We recently visited MAU’s Koné project, with our main takeaways as follows: i) impressive construction progress on site with strong potential to pull forward production versus 2Q27 guide via early oxide production and a highly experienced construction team, which would lower peak funding/working capital requirements and increasing leverage to current gold price, and ii) fed by the Kone 5MMoz engine, strong district scale upside, unlocked by an exploration team laser focused on discovering grade (Petit Yao) across one of the largest contiguous land packages in West Africa, hosting 72km of prospective structure. Led by an ex-EDV [Endeavour Mining PLC] team with significant in country experience and backed by the right register, we think the current gold price accentuates Koné as a company builder, with a string of strategic transactions year-to-date (and forecast clean balance sheet post first pour) intimating the currently viewed Koné is just the start,” said Mr. McGill.