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

Heading into third quarter earnings season for Canadian banks, National Bank Financial analyst Gabriel Dechaine sees the sector “still expensive in the current context.”

“Big-6 bank stocks have outperformed the market by approximately 100 basis points (or underperformed by 300 bps excluding TD) so far this year,” he said. “This performance, which has resulted in a forward P/E multiple of 12.2 times (15 per cent above the historical average) for the group. In our view, this combination is at odds with what has traditionally been a bad thing for bank stocks: weak domestic GDP growth and rising unemployment.

“One narrative we keep hearing is that the market is ‘looking ahead to 2027′, ostensibly when economic growth has improved and as we are on the other side of the current credit cycle. That may very well be the scenario that materializes. However, until we gain confidence that the current credit cycle has stabilized (i.e., ‘peak PCLs’ timing has been pushed out three times over the past two years), then we remain neutral on the sector, at best. Our top pick is BMO, as we believe the ongoing turnaround of its credit performance and the revival of U.S. commercial loan growth are positive stock drivers (though we do not believe the second component will be evident this quarter).”

In a report released before the bell, Mr. Dechaine pointed to three key themes for investors to watch during earnings season, which kicks off later this month with Bank of Montreal (BMO-T) reporting on Aug. 26:

* Credit: “No news is good news”

Analyst: “The credit outlook is the primary source of forecast uncertainty for Big-6 bank stocks, in our view. In the wake of ‘Liberation Day’, banks added a collective $1.8-billion (16 bps) to performing provisions during Q2/25. A debate ensued over whether last quarter’s provisioning would be a ‘one and done’ event, or part of a multi-quarter trend. While the outlook remains highly uncertain and while rising Canadian unemployment bodes poorly for future credit performance, we do not believe a single event during Q3/25 would spur another period of elevated performing provisions. As a result, we have trimmed our performing PCL forecast to 5 bps from 7 bps, previously. We have, however, left our impaired PCL forecasts largely unchanged.”

* Net interest margins: “Mix shift is a tailwind.”

Analyst: “After reporting 2 basis points of sequential NIM expansion (all-bank, excl. trading) during Q2/25, banks guided to stable margin performance. However, with the ongoing benefit of higher securities re-investment yields, deceleration of low margin mortgage origination volumes and a favourable trend of deposit inflows should lead to better than guidance margin performance. As a result, we have increased our all-bank NIM forecasts, in line with last quarter’s performance.”

* Regulatory capital: “A coiled spring.”

Analyst: “CET 1 ratios were flattish quarter-over-quarter during Q2/25 (excluding TD SCHW sale impact). On average, internal capital generation (up 26 bps) was consumed by RWA growth (down 19 bps) and buybacks (down 11 bps). We expect a similar outcome this time around, especially considering banks were more active with buybacks this quarter (i.e., with the exception of TD). With organic growth limited and the regulatory burden potentially lessening, buybacks are a default option for banks looking to reduce the burden of excess capital.”

For most of the Big 6 banks, Mr. Dechaine raised his estimates to “reflect: 1) higher trading revenue forecasts; 2) higher all-bank NIM; 3) lower PCLs, mainly in the performing category; and 4) offset by higher expenses, including higher variable compensation.”

“We note that BMO and TD estimates also included the negative impact of weaker USD translation, along with TD’s pre-announced cat losses in its P&C business,” he added. “For EQB, we have reduced our forecasts more substantially to account for weaker NIM, higher expenses and another quarter of elevated PCLs (i.e., on par with Q2/25’s 25 bps ratio, compared to our previous forecast of 18 bps).”

With those adjustments, Mr. Dechaine tweaked his target prices for the banks’ shares. They are now:

Bank of Montreal (BMO-T, “outperform”) to $161 from $160. The average on the Street is $158.21, according to LSEG data.Bank of Nova Scotia (BNS-T, “sector perform”) to $73 from $72. Average: $80.36.Canadian Imperial Bank of Commerce (CM-T, “sector perform”) to $99 from $98. Average: $103.34.EQB Inc. (EQB-T “sector perform”) to $104 from $106. Average: $113.20.Laurentian Bank of Canada (LB-T, “underperform”) to $27 from $28. Average: $29.50.Royal Bank of Canada (RY-T, “sector perform”) to $180 from $177. Average: $192.86.Toronto-Dominion Bank (TD-T, “sector perform”) to $99 from $98. Average: $99.73.

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National Bank analyst Maxim Sytchev thinks a “profitability reset needs to take place” for North American Construction Group Ltd. (NOA-T)

“This was a tough quarter; with materially lowered forward EBITDA margin projections (by 400 basis points in 2026E), the NAV compression is commensurate in nature,” he said. “Perhaps this is too much, but at this point, we are flying blind around the clean run-rate. Yes, the equity value is more than backstopped by equipment, but as we have seen in other situations, low valuations can stay as such for longer than expected; the stock cannot work until earnings revisions stabilize; with growing AUS business, valuable equipment on the company’s balance sheet, and material upside to our target price, even on today’s cut, we are loath to throw in the towel. We have seen periods when NOA shares declined by close to 80 per cent (between 2014 and 2016) only to return much stronger; we are hopeful for a repeat here.”

After the bell on Wednesday, the Acheson, Alta.-based company reported second-quarter revenue of $321-million, up 16 per cent year-over-year but 4 per cent below the Street’s expectation of $335-million. Adjusted EBITDA fell 8 per cent from the same period a year ago to $80-million, missing the consensus of $94-milion by 15 per cent. The miss was attributed to weaker-than-anticipated margins due to a temporary oil sands shutdown in Canada and higher labour costs in Australia.

“In line with management’s commentary and de-rated guidance, we lowered the forward margin profile given work disruptions in the oil sands, cost increases at Fargo, and labour headwinds in Australia, to reflect what we think is an appropriate run-rate for the consolidated business (75 per cent of earnings expected from Australia/25 per cent from Canada),” said Mr. Sytchev. “EPS is disproportionally reset by depreciation in Australia. We also adjusted cadence around SBC given share price reaction this morning – admittedly difficult to forecast – in addition to CapEx timing for 2026E. Revenue growth for next year is modeled at 2 per cent year-over-year, but this number could be conservative as the company has highlighted strong backlog growth in Australia with the recent $2.0-billion win which provides full top-line visibility to 2029E at current levels.”

With his reduced forecast, Mr. Sytchev dropped his target for NOA shares to $28 from $40, reiterating an “outperform” rating. The average is $36.07.

Separately, Mr. Sytchev trimmed his target for Bird Construction Inc. (BDT-T) to $26 from $28 with an “outperform” rating. The average is $33.25.

“A 15-per-cent downdraft [on Thursday] does feel aggressive, but going from a 10-per-cent CAGR [compound annual growth rate] to an 11-per-cent organic decline in Q2/25 and generally subdued revenue language for the remainder of 2025E is appropriate to us; while backlog additions are of course encouraging, some are being added to already delayed projects, negating somewhat the funnel of immediate revenue dynamic,“ he said. ”We are impressed by the company’s EBITDA performance (construction peers could only dream of that predictability) and track record of allocating capital, but we would like to see the full cycling through of consensus expectations. A random tweet could further tip the risk / reward skew on a downdraft.”

Mr. Sytchev raised his Stantec Inc. (STN-T) target to $164 from $162 with an “outperform” rating. The average is $162.18.

“We are buyers of [Thursday’s] downdraft (bizarrely, shares gapped down 8 per cent at the open) as management on the call was specific that it is seeing an acceleration of growth in the U.S. in July,“ he said. ”Yes, the shares are up 29 per cent year-to-date (STN was our top idea in consulting this year), but when layering on still predictable growth, the fear of DOGE receding, water market remaining robust in the U.S./UK, Germany contributing double-digit growth (off a low base, albeit down 2 per cent plus), data centre momentum (2- 3 per cent of the top line), better than expected margins, and an active M&A backdrop leads up to believe that investors should remain committed to STN; we certainly are.”

Elsewhere, others making Stantec changes include:

* RBC’s Sabahat Khan to $153 from $150 with an “outperform” rating.

“Although Stantec lowered its U.S. organic growth guide to the bottom- end of the previous range, the company expects an acceleration in H2, which we view positively given concerns over government spending heading into Q2 reporting (i.e., acceleration implies the slower U.S. backdrop is not structural). Overall, we continue to like Stantec here given the company’s supportive outlook (mid-to-high-single-digits 2025 organic growth outlook reiterated) and clean B/S (leverage of 1.1 times, positioned for potential M&A),” said Mr. Khan.

* Desjardins Securities’ Benoit Poirier to $158 from $153 with a “buy” rating.

“In our view, STN management did a good job on the 2Q call addressing investor concerns about U.S. organic growth, framing the weakness as a temporary blip vs a structural issue. Our long-term US thesis remains intact, supported by the IIJA (less than 40 per cent of funds deployed), upcoming OBBB stimulus, increased defence spending, aging infrastructure and strong double-digit growth in STN’s water business. Additionally, positive commentary on upcoming M&A targets suggests a potential deal catalyst on the horizon,” said Mr. Poirier.

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In a report released late Thursday titled We’ve Seen This Story Before (And It Has a Happy Ending), Scotia Capital analyst Jonathan Goldman said investors shouldn’t be overly surprised by the 4.8-per-cent drop in shares of TerraVest Industries Inc. (TVK-T) following Thursday’s release of its third-quarter results, emphasizing “volatility around results is just par for the course with TVK as an illiquid small cap with low institutional ownership.”

“Moreover, when TVK missed in F4Q24 and F1Q25, shares declined 8 per cent and 10 per cent respectively before recovering 15 per cent and 40 per cent over the next four months,” he noted. “While F3Q25 EBITDA missed consensus by $3-million, or 4 per cent, we believe there were some one-times in the quarter that would have made it closer to in line. We have lowered our 2025 by 5 per cent to reflect softer trailer market conditions but left our 2026 unchanged, which may prove conservative given it implies no industry recovery. For context, ACT Research is forecasting trailer deliveries of 200k in 2025, the lowest level in 10 years and 30 per cent below mid-cycle.”

The Toronto-based company reported revenue of $406-million, up 70.4 per cent year-over-year but below Mr. Goldman’s $435-million estimate and the consensus of $421-million. Adjusted earnings per share of 53 cents also fell short of expectations (88 cents and 91 cents, respectively).

“Consensus estimates will likely get rebased, derisking forward quarters,“ the analyst said. ”The ramp of the military contract in 2HF26 is another catalyst. At full ramp, we estimate the contract could contribute $30-million EBITDA annually, which is not in our numbers. But the main reason to own TVK is the capital allocation story. The company is still at a sweet spot where there are sufficient targets (hundreds) at attractive multiples (lo- single-digits to mid-single-digits) that it can self-fund double-digits EBITDA/share for the next five years at least. TVK shares trade at 11.8 times EV/EBITDA on our 2026E, compared to the peer group of SMID-cap compounders at 12.0 times despite what we view as better growth prospects. The recent selloff does not reflect any fundamental change in the outlook, in our view, and represents a buying opportunity.”

Maintaining his “sector outperform” rating, Mr. Goldman cut his target to $176 from $180. The average target is $180.17.

Elsewhere, other changes include:

* National Bank’s Zachary Evershed to $185 from $200 with an “outperform” rating.

“We modestly trim our forecasts for the business, while leaving the rest of the Compressed Gas segment largely intact,” he said. “While we already reduced our ETI estimates ahead of the quarter on the back of negative readthroughs from channel check, fresh data from CASS notes widening year-over-year declines sequentially with the expectation that back-half North American Class 8 production is expected to fall more than 25 per cent from H1/25. We are therefore still more cautious on ETI’s economic sensitivity in the short term, but note that the same cyclicality provides robust upside once customers begin to reinvest in their fleets, supported by pent-up replacement demand. We also flag we conservatively model contributions from the military contract starting out in Q4/26.”

* Desjardins Securities’ Gary Ho to $175 from $185 with a “buy” rating.

“TVK posted softer-than-expected 3Q results, driven by EnTrans and the base Compressed Gas (CG) segment. While sluggish trailer demand dynamics likely persist through 2H, we view that as a temporary deferral rather than a secular trend. As a result, our FY27 estimates are only modestly lower. … We see the share price weakness as an attractive buying opportunity; patient investors should be rewarded,” said Mr. Ho.

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With his near-term outlook for Minto Apartment Real Estate Investment Trust (MI.UN-T) having “waned” recently, Desjardins Securities analyst Kyle Stanley lowered his recommendation for its units to “hold” from “buy” previously.

He made the revision even though the Ottawa-based REIT reported second-quarter results that largely fell in line with expectations, seeing “the outlook for the apartment sector, particularly at the upper end where MI’s portfolio has more exposure, has not improved, with stabilization likely to be prolonged. ”

“The historically stronger summer leasing season has continued to be a grind for MI as it has been aggressively deploying incentives to hold occupancy—quarter-end same-propery occupancy was unchanged at 96.0 per cent,“ he said. ”The downward trend in gross new leasing spreads persisted in 2Q (4.7 per cent vs 5.4 per cent in 1Q), while on a net basis, which captures 1–1.5 months of free rent (on average), MI noted that new leasing spreads were largely flat. With challenges related to elevated competition from supply deliveries, softened demand from slower population growth and impaired consumer confidence resulting in a 12–18-month market stabilization period, we do not see a near-term catalyst to drive outperformance. That said, we see FFOPU [funds from operations per unit growth picking up in 2026 to 6 per cent, driven by solid progress on the commercial leasing front translating into a 3-per-cent SP NOI growth print, assisted by a favourable year-over-year comparison.

“Where we could be wrong. MI, along with the peer group, has given back most of the upside realized post the IIP privatization announcement (7-per-cent return; 8 per cent off the July peak). Consequently, the relative valuation has returned to deeply discounted levels, with MI’s 5.7-per-cent implied cap rate sitting 90bps above the 4.8-per-cent cap rate implied by the IIP privatization bid and its 13.7 times FTM [forward 12-month] FFO multiple sitting five turns below LTA. Additionally, while privatization is not our base-case scenario for MI, its high-quality, well-located portfolio trading at a steep discount to private market values would likely be attractive to a potential suitor; however, we believe the presence of the 40-per-cent unitholder adds a layer of complexity to this being a catalyst.”

While reducing his financial expectations through fiscal 2026, Mr. Stanley kept a $14.50 target for Minto units. The current average is $15.80.

Elsewhere, other adjustments include:

* Raymond James’ Brad Sturges to $14.75 from $16 with a “market perform” rating.

“We maintain our expectations for Minto to generate relatively stable SP-NOI and AFFO/unit results in a tougher operating environment in the next 12 months. We continue to expect near-term potential operating headwinds given Minto’s above-average exposure to Canadian urban MFR markets such as Toronto and Calgary that are expected to experience greater leasing competition from new purpose-built rental and shadow condo supply deliveries and possibly greater affordability challenges within the higher-end segment of its MFR portfolio. While we highlight that Minto’s unit price remains very deeply discounted to the REIT’s estimated NAV/unit, we suggest that potential near-term positive catalysts for Minto may appear to be more limited,” said Mr. Sturges.

* Scotia’s Mario Saric to $15.25 from $15.50 with a “sector perform” rating

“We think Minto will look increasingly appealing in 2026 as year-over-year FFOPU growth returns (6th-highest acceleration in our coverage) on a stabilizing Toronto market (driving improved SSREV growth) and year-to-date commercial leasing,” said Mr. Saric. “Notwithstanding unsolicited inquiries on specific assets supporting IFRS NAVPU (~$23) , we don’t expect privatization prior to the unit price response to the aforementioned catalysts. As a result, we think MI will remain near-term relatively cheap, with limited imminent catalysts amid tough Apartment sentiment.”

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National Bank Financial analyst Alex Terentiew sees Versamet Royalties Corp. (VMET-X) as “one of the best near-term growth stories in the junior royalty universe,” pointing to its portfolio of cash flowing and growing royalties and streams.

“Relative to its closest peers, we forecast Versamet to have the largest, yet potentially lowest risk cash flow growth in the near term (2025 & 2026), warranting a premium valuation and positioning the company to make accretive acquisitions to build out its portfolio of royalties,” he said.

In a research report released Friday, Mr. Terentiew initiated coverage of the Vancouver-based mid-tier precious metals royalty company, which began trading on the TSX Venture Exchange on May 20, with an “outperform” rating, touting its discounted valuation with “room for upside.”

“Based on our forecasts, as well as a regression analysis of the royalty & streaming peer group, we estimate that based on our 2026 GEO [gold equivalent ounce] sales forecast for Versamet, the implied valuation is $2.34 per share, 63 per cent higher than the current share price,” he explained.

“In our view, the discount can be attributed to 1) market unfamiliarity, given that the company only went public on May 20, 2025 without a new equity offering; 2) small public float of only 17 per cent; 3) significant cash flow growth coming from Kiaka and Toega (combined 26 per cent of asset NAV), which are located in Burkina Faso, potentially increasing the market’s perceived risk to the company’s cash flow; and 4) M&A uncertainty, with Versamet better positioned in our view to make an acquisition given its strong near-term cash flow.”

The analyst also predicted its “significant” near-term GEO growth is likely to help “drive investor awareness and a higher valuation.

“We view 2025 and 2026 as transformational years for Versamet as the company begins to generate significant GEO growth mainly through its Kiaka and Toega NSR royalties, with the newly acquired Kolpa stream contributing as of May 1, 2025,” he said. “Based on our current estimates, we anticipate Versamet to grow GEO production from 5.1k GEOs in 2024 to 8.2k GEOs in 2025 and 15.0k GEOs in 2026, as Kiaka ramps up to commercial production in 2H25 and Toega comes online in early 2026. With its peer-leading near-term growth and relative unfamiliarity with investors, we expect Versamet to outperform its peers over the coming year as investor awareness increases and cash flow growth strengthens the balance sheet, positioning the company for accretive acquisitions.”

Mr. Terentiew set a target of $2, matching the average on the Street and implying an estimate total return of almost 40 per cent.

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In other analyst actions:

* Scotia’s Ben Isaacson upgraded Chemtrade Logistics Income Fund (CHE.UN-T) to “sector outperform” from “sector perform” with a $15 target, rising from $13.50. The average is $14.71.

“Why: (1) at first glance, we like everything about the Polytec acquisition; (2) CHE continues to beat/raise, with 2H EBITDA poised to move slightly higher; (3) the balance between capital allocation and managing the B/S is perhaps the best we’ve seen in several years; (4) the valuation upside is also the most compelling we’ve seen in some time; and (5) we generally like the move out of ag/ferts and into slightly more cyclical chemical exposure, especially one as well diversified as CHE. We think investors should build a position in CHE,” said Mr. Isaacson.

* RBC’s Sabahat Khan raised his target for AutoCanada Inc. (ACQ-T) to $33 from $27 with a “sector perform” rating. The average is $33.73.

“AutoCanada reported strong Q2 results, supported by its transformation initiatives,” said Mr. Khan. “Most notably, Adjusted EBITDA margin was 4.8 per cent (up 239 basis points year-over-year), while the company’s cost-saving target was increased to $115-million for the year (vs. $100-million previously). Further, the company outlined that it expects an additional $32-47-million of net proceeds from the sale of its 4 remaining U.S. dealerships, which we view positively. Overall, AutoCanada has made steady progress on its transformation, and leverage is now at more manageable levels exiting Q2. That said, we remain on the sidelines given the uncertain tariff/macro backdrop.”

* National Bank’s Ahmed Abdullah increased his target for CCL Industries Inc. (CCL.B-T) to $96 from $94 with an “outperform” rating. The average target on the Street is $92.30.

“CCL’s 3Q outlook commentary comes off a robust start to 2025 for its primary segments (solid order backlog going into 3Q, with orders stable),” said Mr. Abdullah. “Despite a sluggish FMCG [fast-moving consumer goods] backdrop, CCL segment backfilled some of the softness with new business wins as it gains share across its different verticals given the macro uncertainty as customers revisit sourcing options. Avery’s back-to-school season remains a risk, as profits are likely to hold or improve, but revs are expected to be lower (softer revs/better profits in July, August recovery unlikely to offset June dip). Checkpoint’s apparel volumes expected to pick up in busy Aug.-Nov. seasons as customers work through sourcing strategies. Innovia’s expected to maintain its momentum with German plant start-up costs expected to continue in 2H. Capex in 2025 to be $485M. FX modest tailwind at current rates.”

* National Bank’s Mohamed Sidibé moved his Equinox Gold Corp. (EQX-T) target to $12 from $11, which is the current average, with an “outperform” rating.

“Overall, with the positive progress on mining and throughput rate at Greenstone and the delivery on the cost front, the company has positioned itself to generate positive FCF into H2/25 and 2026. Management’s priorities are focused on delivering on its commitments, operational excellence, advancing high-quality organic growth, rationalizing the portfolio and disciplined capital allocation,” said Mr. Sidibé.

* RBC’s Jimmy Shan raised his H&R REIT (HR.UN-T) target to $13.50 from $11.50 with an “outperform” rating. The average is $13.42.

“e believe there is a good probability of a takeout deal here. HR has previously confirmed that a strategic review is underway to consider various proposals received by its Special Committee. Since then, we think its actions point to a deal happening, including large asset write down this quarter. Our NAV estimate is $15.50 vs. HR’s revised NAV of $18.86. We raise our TP to $13.50, based on 15% discount to forward NAV. We see downside risk to $10 if the board concludes on status quo, a low probability scenario in our view,” said Mr. Shan.

* TD Cowen’s Derek Lessard increased his K-Bro Linen Inc. (KBL-T) target to $55, exceeding the $50.67 average, from $50 with a “buy” rating.

“KBL shares are up 4 per cent following the strong Q2 results and improved margin outlook,” he said. “However, the stock is still significantly undervalued at 8.1 times forward consensus EBTDA (less than 5-year average of 8.7 times) in our view, considering the normalized operating environment, steady demand in both Healthcare and Hospitality, and potential upside stemming from product expansion and new bidding opportunities.”

* National Bank’s Shane Nagle bumped his target for Metalla Royalty and Streaming Ltd. (MTA-X) to $7.50 from $7.25. The average is $8.10.

“Our OP rating is supported by Metalla’s diversified portfolio consisting of a mixture of cash flowing and soon-to-be producing assets, along with numerous long-dated, potentially large-scale mining projects in the hands of Senior/Intermediate counterparties enhancing the long-term option value of the portfolio. With the market currently focused on FCF generation at elevated gold prices, MTA’s valuation is impacted by its development-heavy portfolio, with most of its NAV in development/exploration stage, including six projects expected to begin producing within the next year,” said Mr. Nagle.

* National Bank’s Matt Kornack raised his PRO REIT (PRV.UN-T) target to $6.25, exceeding the $6.09 average, from $6 with a “sector perform” rating, while Desjardins Securities’ Kyle Stanley bumped his target to $6 from $5.75 with a “hold” rating.

“PRO’s Q2 results came in ahead of us on key KPIs including occupancy and rent spreads, driving better organic growth which was multiplied from an earnings standpoint as a result of constrained below the line costs. Management remains constructive on their core industrial markets and has reached the conclusion of its capital recycling program. A known non-renewal in Montreal will temper growth in Q4 but represents upside on re-leasing given below market rents on the expiring tenant. We are taking our target slightly higher to account for strong operating performance and a reduced discount,” said Mr. Kornack.

* Scotia’s Mike Rizvanovic moved his Sagicor Financial Co. Ltd. (SFC-T) target to $11 from $10 with a “sector outperform” rating. The average is $10.63.

“SFC’s results were very strong on a core basis with every operating segment beating our forecasts, with particular strength in the Caribbean (both Sagicor Life and Sagicor Jamaica), the US segment putting up impressive new business production again this quarter, running above management’s targets, and the Canadian business reporting a solid 7-per-cent quarter-over-quarter increase in its CSM. And while the quarter was outsized in terms of positive experience gains that are not likely to be sustainable going forward, and somewhat tainted by the quarterly loss on reported earnings, it’s important to note that the divergence between core and reported results does tend to even out over the course of several quarters. With SFC still trading at a sizable discount to its peers, we continue to see strong relative upside for its shares as it progresses towards its targeted 13.0-per-cent plus ROE, which was an outsized 18.6 per cent in Q2 on a core basis, and has averaged 13.4 per cent over the past 12-month period,” he said.