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

With shares of Lululemon Athletica Inc. (LULU-Q) tumbling almost 18 per cent in premarket trading on Friday, Citi’s Paul Lejuez sees the Vancouver-based athletic wear manufacturer now at a “balanced risk/reward.”

He was one of several equity analysts on the Street to cut their forecast in response to its second-quarter results and decision to slash its annual profit and sales forecasts. The company now expects annual profit per share between US$12.77 and US$12.97, down from US$14.58 to US$14.78 earlier.

Lululemon shares tumble on weak U.S. demand, tariff woes

“2Q comps up 1 per cent [year-over-year] were below consensus at up 3 per cent, driven by weaker Americas (down 3 per cent vs cons down 2 per cent),“ said Mr. Lejuez. ”Management lowered F25 sales guidance from 7-8 per cent (ex-53rd week) to 4-6 per cent, driven mainly by weaker Americas growth and moderately weaker China growth.

“Management called out broader athletic apparel industry headwinds and weakness in casual/lounge (approximately 40 per cent of sales) where they’ve mis-executed (driving higher markdowns in 2H). While management’s proposed changes to fix the assortment make sense, that will be F26 at the earliest, and given recent underperformance, will likely be viewed skeptically. Tariffs/de-minimis were an even bigger negative surprise, with an incremental 280 basis points headwind expected in F26 on top of 220bps in F25 (much worse than mkt view). This points to F26 EBIT margins in the mid-to high-teens (F24 23.7 per cent) and EPS between $10.00-11.00 (cons $15.26).”

In a research note titled A Little Cyclical, A Little Structural, A Lot of F25/F26 Headwinds, Mr. Lejuez lowered his fiscal 2025 and 2026 earnings per share projections to US$12.92 and US$10.45, respectively, from US$14.47 and US$14.40, pointing to lower sales and margins trends.

That prompted him to reduce his target for Lululemon shares to US$190 from US$220, maintaining a “neutral” recommendation. The average target on the Street is US$235.78, according to LSEG data.

“After years of benefitting from outsized growth in active apparel, trends in the category have slowed in F24 with data in Yoga & Active apparel pointing to a further deceleration 2Q quarter-to-date vs 1Q (which was a big deceleration vs F23),” he said.  “This dynamic, coupled with LULU’s execution issues (lackluster product assortment/lack of color/sizing) leave LULU more susceptible to increased competition and promotional pressures in 2H24/F25. We believe category weakness and a tougher macro backdrop makes it unlikely LULU sees a reacceleration in U.S. trends in 2H. Additionally, while LULU has performed extremely well in China over several years, incremental weakening of the China consumer environment is an added risk to the stock (as expectations remain high on China growth).”

Elsewhere, Oppenheimer’s Brian Nagel downgraded the Vancouver-based company to “perform” from “outperform” with a US$500 target.

Other analysts making target adjustments include:

* Barclays’ Adrienne Yih to US$180 from US$209 with an “equal-weight” rating.

* Piper Sandler’s Anna Andreeva to US$165 from US$200 with a “neutral” rating.

* JP Morgan’s Matthew Boss to US$191 from US$224 with a “neutral” rating.

* Needham’s Tom Nikic to US$192 from US$238 with a “buy” rating.

* TD Cowen’s John Kernan to US$220 from US$298 with a “buy” rating.

* Wells Fargo’s Ike Boruchow to US$160 from US$205 with an “equal-weight” rating.

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In a research report released Friday reviewing earnings season for Canadian banks, CIBC World Markets analyst Paul Holden raised his recommendation for Bank of Montreal (BMO-T) to “outperformer” from “neutral” and increased his target for its shares to $180 from $173. The average target on the Street is $173.

Conversely, Mr. Holden downgraded Royal Bank of Canada (RY-T) to “neutral” from “outperformer” with a $208 target (unchanged), which falls below the $210.54 consensus.

He made these other target price adjustments:

* Bank of Nova Scotia (BNS-T, “neutral”) to $93 from $90. Average: $87.77.

* National Bank of Canada (NA-T, “neutral”) to $154 from $151. Average: $151.42.

* Toronto-Dominion Bank (TD-T) to $112 from $109. Average: $103.85.

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Citi analyst Spiro Dounis added a “upside 90-day short-term view” to his investment recommendation for TC Energy Corp. (TRP-T), expecting it to upgrade its EBITDA expectation for 2027 and provide an expanded multi-year outlook with earnings in November.

“While TRP left the ’27 EBITDA outlook unchanged, the ’25 guidance upgrade and management commentary indicates this outlook is likely conservative,” he explained. “We believe TRP is also approaching a period of accelerated commercial activity in 2H25 and into ’26, which could result in a growing backlog of high-return growth projects. Accordingly, we expect a ’27 guidance upgrade, expanded outlook, and commercialization to drive a positive reaction.”

Mr. Dounis has a “neutral” recommendation and $75 target for the Calgary-based company’s shares. The average target on the Street is $73.09.

“TRP uniquely offers among the purest exposure to two of the fastest growing segments in the energy markets: natural gas and power,” he added. “We expect these secular macro tailwinds to drive mid-single digit growth in the future. While these tailwinds are highly constructive for growth, elevated leverage and slightly slower growth than peers partially deflates. At a premium to peers we believe TRP is largely receiving credit for its peer leading low volatility and exposure to strong, multi-decade tailwinds.”

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While National Bank Financial analyst Michael Doumet sees shares of Nutrien Ltd. (NTR-N, NTR-T) as “inexpensive” currently, he sees “limited visibility into a re-rate,” leading him to initiate coverage with a “sector perform” recommendation.

“NTR’s share price is essentially flat vs. its post-merger price (in 2018) as its $7.2 billion of equity ‘build-up’ (buybacks + M&A – debt increase) has been offset by a approximately 1.5 times EV/EBITDA de-rate (NTR trades at 6.3 times EV/ EBITDA on our 2026 estimates vs. a historical average of 7.5 times),” said Mr. Doumet. “For the shares to re-rate, we believe one of three catalysts need to play out: (i) sufficient debt paydown to more fully unlock counter-cyclical optionality, (ii) enhanced visibility into more consistent/faster Retail growth and (iii) structurally higher fertilizer prices.

“On NPK, we think risks to current prices are balanced (if not skewed to downside). On Retail, while we believe the business commands a premium valuation multiple, we question whether it is performing well enough (yet) to aid in a broader NTR re-rate. And regarding optionality, we estimate NTR will need to pay down debt more than $2-billion to unlock a greater level of counter-cyclical capital deployment (buybacks/M&A) in downturns (which would support the through-the-cycle trading multiple, in our view). Currently, we estimate investors receive a 7-per-cent FCF yield and a 3-per-cent ‘structural growth yield’ for a ‘total return’ of 10 per cent, assuming no multiple expansion. Our thought is: why not instead ‘wait’ for more debt paydown, more evidence of structural Retail enhancement, or a better entry point (vis-à-vis our views on fertilizer prices)?”

In a research report released Friday titled Early in the Harvest, the analyst said he sees the Saskatoon-based agricultural giant “optimizing yield” and “doing more with less” with its refocused strategy on “asset optimization and FCF harvesting.”

“NTR provides investors with exposure to all three nutrients, nitrogen (N), phosphate (P) and potash (K), and the largest agricultural global retail network,“ he explained ”It has the bottom-of-the-cost-curve potash assets, nitrogen assets being debottlenecked and optimized and a retail network on route to achieving higher-structural margins. Following a five-year period of elevated crop/fertilizer price volatility, NTR is (now) pursuing a straightforward strategy consisting of (i) optimizing upstream assets, (ii) enhancing and expanding downstream assets and (iii) maximizing FCF (and return of capital). Underpinning the NTR narrative is a more selective approach to growth, a desire to operate and own the ‘best’ assets and an intentional focus on structurally expanding cash flows, which corresponds well to its low-cost position (in K + N), high-capital-cost requirements for greenfields and the low-single-digit industry volume growth dynamic.“

However, he warned of a “glass half full” scenario with crop prices continuing to bring a degree of uncertainty financially and cloudy the company’s investment proposition.

“NPK prices have risen more year-to-date than most would have expected at the start of 2025. Potash prices ran higher on strong demand and urea prices remain elevated on healthy demand, limited Chinese exports and regional bottlenecks. While U.S. farmer incomes are expected to bounce from 2024-lows, tempered crop prices may limit the recovery. Given the reduced affordability for fertilizers, we qualify sentiment on NPK prices as ‘glass half full’ – i.e., despite the price momentum, we see risks in the next 12 to 18 months. Our estimates reflect an earnings recovery versus 2024: our 2025E/26E EBITDA of $6.07 billion/$6.35 billion (up 0.4 per cent/up 5.8 per cent vs. the Street) vs. $5.31 billion in 2024. That said, we view our 2026E EBITDA as above our midcycle (MC) estimate, such that, on balance, we are less willing to fully ‘pay’ for 2026E.”

Mr. Doumet set a target for Nutrien’s NYSE-listed shares of US$64, pointing to estimated total return of 14.9 per cent. The average on the Street is US$66.18.

“Given NTR’s flat share price performance since 2018, its accrued $7.2 billion of equity ‘build-up’ (share repurchases and M&A less its debt) has effectively been offset by a multiple de-rate of 1.5 times EV/EBITDA,” he said. “The flat share price performance (and its correlation to corn prices) suggests to us that NTR may be viewed as a ‘trading stock’. While that was the last five years, we believe management is making the necessary adjustments to put NTR in a position to compound earnings as it focuses on FCF optimization, a leaner portfolio of assets and counter-cyclical investment optionality.”

“The following would get us more bullish on NTR: (i) sufficient debt paydown to more fully unlock countercyclical optionality, (ii) enhanced visibility into more consistent/faster Retail growth and (iii) structurally higher fertilizer prices. On NPK prices, we think risks to current prices are balanced (if not skewed to downside). On Retail, while we believe it should command a premium multiple, we question whether it is performing well enough (yet) to aid in a broader re-rate. And regarding balance sheet optionality, we view NTR’s net leverage as moderately elevated, such that we think debt repayments may absorb a decent portion of its excess FCF (we think over $2 billion) in the next few years (beyond the dividend and the ratable buybacks) and limit optionality (i.e. a material increase in buybacks through downturns). ”

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Calling it an “industry leader poised for infrastructure spending expansion,” TD Cowen analyst Tim James initiate coverage of Badger Infrastructure Solutions Ltd. (BDGI-T) with a “buy” rating.

“We view Badger as a great opportunity to invest in a North American infrastructure services company that provides niche excavation services using a process with market share growth potential,” he said. “Badger trades at the lower-end of its historical valuation range relative to comps despite our expectation for strong growth and improving returns on capital.”

In a report released Friday, Mr. James said the Calgary-based company’s emphasis on hydrovac services “presents a secular growth driver that distinguishes it from comparable investments.”

“Badger is the largest non-destructive hydrovac excavation service provider in North America,” he added. “Badger has competitive advantages within the hydrovac excavation services market. These include vertical integration, record of safety and implications for customer access, largest fleet of hydrovacs in North America, and ability to service large national accounts.

“Long-term and short-term industry outlook is positive. Short-term indicators include 41 per cent year-over-year rise in the Dodge Construction Network Momentum Index in July and record backlogs for a group of North American construction firms.”

The analyst also believes Badger’s M&A strategy “at some point in the future could provide long-term growth and a positive response from the equity market.”

“Badger’s financial leverage is significantly lower than comparables, and provides acquisition capacity should the company’s strategy move in that direction. Historical growth has been entirely organic.

“Our outlook includes strong EBITDA growth, improving FCF conversion, and declining leverage that could facilitate future acquisitions. We forecast revenue will increase at a 10.0-per-cent CAGR [compound annual growth rate] from 2024-2027 based on pricing, volume growth from utilities and transportation projects and the benefits of a 7-per-cent CAGR in its hydrovac fleet. This combined with 280 bps of margin expansion is expected to generate a 14-per-cent CAGR in adj. EBITDA. FCF conversion (EBITDA) is forecast to improve from 19 per cent (2024) to 29 per cent (2027 estimate) while maintaining low financial leverage that is currently below average comparable leverage.”

Mr. James set a Street-high target of $70 per share. The current average is $56.63.

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National Bank Financial analyst Don DeMarco sees Pan American Silver Corp.’s (PAAS-T) $2.1-billion acquisition of MAG Silver Corp. as “prescient” and emphasized the deal “lifts silver reserves and high-margin silver production in a constructive silver tape against a backdrop of diminishing remaining silver M&A targets while adding compelling exploration opportunity.”

He reaffirmed his “outperform” recommendation for Pan American Silver shares upon resuming coverage off a research restriction following the close of the stock-and-cash deal, which was announced in mid-May.

“This transaction transfers possession of the 44-per-cent JV Juanicipio silver mine in Mexico, whole ownership of the Larder exploration project in Ontario, and a 100-per-cent earn-in interest in the Deer Trail exploration project in Utah,” said Mr. DeMarco. Liquidity remains robust as only $500-million of $1.081-billion cash & cash equivalents was used in the transaction.”

“Catalysts on Deck: MRE update (superseding June 30, 2024), continued strategic asset dispositions; updates on exploration, engineering and JV partner discussions at the La Colorada Skarn; executing on FY25 consolidated guidance reiterated with Q2/25 financials.”

He raised his target for Pan American Silver shares to $62 from $52.50. The average on the Street is $52.26.

Elsewhere, Scotia Capital’s Ovais Habib trimmed his target to US$36 from US$36.50 with a “sector outperform” rating.

“This acquisition strengthens PAAS’s position as a top-tier silver producer, adding 6 Moz of attributable silver production annually (9 Moz AgEq) and 112 Moz of attributable silver to its R&R base. At spot, the deal also marginally increases PAAS’s silver pro forma revenue exposure from 24 per cent to 26 per cent in 2026, enhancing its leverage to spot silver prices. With Fresnillo continuing as operator of Juanicipio, we expect a smooth integration process. We believe the partnership between PAAS and Fresnillo could unlock further upside, given both companies’ deep operational expertise,” said Mr. Habib.

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In other analyst actions:

* Canaccord Genuity’s Matthew Lee raised his Bank of Montreal (BMO-T) target to $185 from $180, keeping a “buy” rating. The average is $170.15.