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

Seeing a “solid entry point for a high-quality name,” National Bank Financial analyst Travis Wood upgraded PrairieSky Royalty Ltd. (PSK-T) to an “outperform” recommendation from “sector perform” previously following the late Monday’s release of in-line third-quarter financial results.

“A combination of expected growth out of high-quality assets, which are expected to ramp over the next year, and reasonable valuation following lagging performance over the last 12 months are the key drivers for our upgrade,” he said in a client note.

“Surprisingly, PSK has been one of the weakest energy performers over the last year (down 12 per cent vs. the XEG up 4 per cent and our royalty coverage down 6 per cent). Looking ahead and despite the softer oil price outlook, we revised our growth forecast modestly higher (from contraction). This growth, coupled with indirect capital exposure and further opportunistic buybacks at reasonable value presents attractive upside based on our $33 target price (36-per-cent total return).”

After the bell, the Calgary-based company reported average royalty production of 25,687 barrels of oil equivalent per day, down 3 per cent from the second quarter but up 5 per cent year-over-year and in line with both Mr. Wood’s estimate of 25,700 barrels and the consensus expectation of 25,600 barrels. Cash flow per share of 38 cents was a sequential drop up 7 per cent and a year-over-year decline of 1 per cent but also matched forecasts (38 cents and 37 cents, respectively). Cash flow of $90-million was used to fund $60.5-million in dividends, equating to a 67-per-cent payout ratio.

“Overall, 201 wells were spud on PSK lands during the quarter (up 78 per cent quarter-over-quarter; down 19 per cent year-over-year), with sequential activity up on account of spring breakup,” said Mr. Wood. “A total of 183 oil wells were spud in Q3, comprised of 57 Clearwater, 46 Mannville light and heavy oil wells, 33 Viking wells, 18 Mississippian wells, 11 Duvernay wells and 18 additional oil wells across various plays. The heavy portfolio continues to garner a healthy dose of interest, with another 105 multilaterals drilled in the quarter (this includes 57 wells in the Clearwater and 20 in the Mannville Stack). So far this year, multilats represent 40 per cent of the total spuds on PrairieSky lands.”

Despite minor reductions to his full-year 2025 and 2026 cash flow projections, the analyst raised his target for PrairieSky shares by $1 to $33. The average target on the Street is $30.18, according to LSEG data.

=====

When Saputo Inc. (SAP-T) reports its second-quarter fiscal 2026 financial results on Nov. 6 after markets closed, National Bank Financial analyst Vishal Shreedhar is expecting it announce 24-per-cent year-over-year earnings per share growth driven largely by gains south of the border.

“Several factors [are] contributing to improving results,” he said. “In USA, we expect EBITDA margin to expand by 180 basis points year-over-year (at 8.3 per cent), largely reflecting better efficiency, favourable product mix, slightly favourable F/X, and operating leverage partly offset by a negative milk-cheese spread (albeit the new USDA milk pricing formula is expected to be favourable), and higher marketing/promotions. In Canada, we forecast EBITDA margin expansion of 35 basis points year-over-year (at 12.9 per cent), largely reflecting operating leverage, favourable product mix, higher pricing and SG&A cost optimization, etc.

“In International, we expect lower sales volumes, partly offset by favourable product mix, higher international dairy ingredient market prices and milk availability in Argentina. We expect an unfavourable relationship between ARS devaluation and inflation (albeit improving sequentially). In Europe, we expect an unfavourable product mix, offset by a favourable relation between selling prices and input costs.”

Mr. Shreedhar is currently projecting quarterly revenue for the Quebec-based dairy giant of $4.590-billion, down from $4.708-billion a year ago and under the consensus estimate of $4.787-billion. However, his EBITDA and earnings per share forecasts of $435-million and 46 cents represent notable increases from a year ago ($389-million and 37 cents) and fall in line with the Street ($432-million and 46 cents).

“We model EBITDA growth of 12 per cent year-over-year in F2026, reflecting efficiency initiatives, moderation in duplicate costs, modest recovery in Argentina and modest growth, in addition to other factors,” he explained.

Maintaining his “outperform” rating for Saputo shares, Mr. Shreedhar raised his target by $1 to $36. The average on the Street is $35.89.

“We believe that Saputo will benefit from a variety of initiatives/factors that will benefit profitability more fulsomely in F2026+, including efficiency initiatives, improved commodities backdrop, lower capex/costs, in addition to attractive valuation with 6-per-cent FCF yield in F2026,” he said. “Additionally, we are constructive on share buybacks, and a focus on organic growth vs. M&A, for now.

“Saputo is trading at 16.8 times our NTM [next 12-month] EPS vs. the five-year average of 17.3 times.”

=====

In a client report previewing earnings season for North American renewable energy companies titled No More Sitting on the Fence, Citi analyst Vikram Bagri downgraded Canadian Solar Inc. (CSIQ-Q) to a “sell” rating from “neutral” previously, seeing the Guelph, Ont.-based company “facing multiple challenges in the near term that … are not fully reflected in the stock price which is up more than 30 per cent year-to-date.”

“These include: 1) Potential penalties from the US Court of International Trade; 2) FEOC restrictions starting January 2026; 3) Section 232 investigation on Polysilicon; 4) Relatively high leverage in the project development business; and 5) Significant dependency on the U.S. market to sustain operations within CSI Solar segment,” he explained.

“Each one of these risks poses a significant threat to the company’s business. For instance, the potential penalties from Court of International Trade could be high enough to pose an existential crisis for the company. Loss of U.S. business due to FEOC/Section 232 could also destabilize the CSI Solar segment. Notably, U.S. is the only large and profitable market for CSIQ’s PV panels business. Finally, the development business (Recurrent Energy) has minimal EBITDA and consumes significant cash to be a standalone publicly traded entity. Longer term, if Recurrent achieves its targeted installs and successfully contracts them at market prices, the implied leverage in that business would be approximately 4 times (excluding non-recourse debt) and 10 times (excl non-recourse), which appears relatively high.”

Mr. Bagri thinks the new U.S. federal “Foreign Entity of Concern” (FEOC) rules will likely have a significant impact new bookings and business operations for Canadian Solar, while he also emphasized the potential damage brought on by retroactive tariffs.

“CSIQ faces FEOC restrictions through two channels: 1) ownership/control tests which could disqualify it or its customers from claiming credits; and 2) ‘material assistance’ sourcing tests that require non‑FEOC content,” he said. “We examine each of these in turn. First, CSIQ’s Chinese subsidiary, CSI Solar, is responsible for US manufacturing with investments in Mesquite, TX (PV module assembly facility), Jeffersonville, IA (PV cell facility), and Shelbyville, KY (battery storage facility). Per the ownership restriction, taxpayers claiming credits must not be a prohibited foreign entity (PFE) or under “effective control” by a PFE. Treasury guidance on what constitutes effective control is yet to be released, however, previously issued guidance used a 25-per-cent threshold to determine control, which could inform forthcoming guidance. Until CSIQ meets this threshold, it and/or its customers could be prevented from claiming 45X and 48E credits, respectively. While the company is confident about meeting FEOC compliance including via ownership changes, PV and storage bookings could still be negatively impacted. Furthermore, Treasury guidance on FEOC may not be fully resolved until sometime next year. For CSIQ, the options appear limited to decreasing or eliminating CSI Solar’s ownership stake in the facilities. However, the US is only profitable market for its PV modules except for small volumes in Japan. Recurrent Energy has also historically sourced modules from CSI Solar.”

“In August, the U.S. Court of International Trade ruled that tariffs must be retroactively collected on PV modules and cells imported during the 2022-2024 tariff exemption period. We estimate CSIQ imported 9-10GW of modules to the US during the moratorium period, predominantly from Thailand. Assuming a $25¢/W declared value, the impacted imports are worth $2.5-billion, we estimate. CSIQ has until October 2026 to contest the decision, and we understand that it plans to do so. While the importer of record could potentially cease operations, this could have repercussions for doing business in the U.S. in the future.”

Emphasizing the U.S. is a key market for the company with roughly 50 per cent of the revenues generated in the country, Mr. Bagri maintained his target for the company’s shares of US$11, which is below the consensus on the Street of US$12.03.

=====

RBC Dominion Securities analyst Douglas Miehm sees DRI Healthcare Trust’s (DHT.UN-T) acquisition of a royalty interest in U.S. net sales of Viridian Therapeutics Inc.’s (VRDN-Q) thyroid eye disease franchise for a total purchase price of up to US$300-million as “attractive” and finds the limited upfront payment of US$55-million and built-in downside protections on the unapproved assets “to be appealing.”

Shares of Toronto-based DRI jumped 5.9 per cent on Monday in response to the premarket announcement of its second pre-approval deal, following last year’s acquisition of royalties on Ekterly, a oral on-demand therapy for hereditary angioedema developed by KalVista Pharmaceuticals.

“The royalty acquisition of another pre-approval asset does not come as a surprise to us and aligns with management’s commentary during the Q2 earnings call in mid-August, where increasing competition from alternative fixed income players for simpler transactions was highlighted,” said Mr. Miehm.“ Such competition has driven down returns in traditional royalty deals, prompting DRI to shift focus toward more complex, structured opportunities including pre-approval assets.”

“The upfront payment of $55-million represents only 18 per cent of the total transaction value ($300-million), with additional payments contingent on achieving specific clinical, regulatory, or sales-based milestones. Importantly, the transaction includes designated timelines (not disclosed) by which these milestones must be met. This ensures that DRI’s exposure is limited in the event of regulatory or clinical delays. With regard to the VRDN-003 asset, where Ph3 clinical readouts are expected in H1/26, if marketing approval for VRDN-003 is not granted by a specified date, the royalty rate on the first tranche (up to $600-million) could increase from 7.5 per cent to the low double digits for both drugs.”

Reaffirming his “outperform” rating for DRI units, the analyst raised his target to $21 from $19. The average is $19.69.

Elsewhere, CIBC World Markets’ Scott Fletcher increased his target to $19 from $17.50 with an “outperformer” rating.

=====

Ahead of third-quarter earnings season for Canada’s diversified financial firms, RBC Dominion Securities analyst Bart Dziarski named Brookfield Corp. (BN-N, BN-T) his “top” investment idea.

“For Q3/25 our primary focus is on: i) Brookfield entities (BN/BAM/BBU) – fundraising/deployment/ monetization environment and Brookfield’s view on private credit, including Oaktree’s track record of disciplined capital deployment, in light of recent “cracks” (e.g. Tricolor and First Brands bankruptcies, Zions Bank writedown, BDC weakness); ii) P&C insurance (DFY, FFH, IFC, TSU) – benefits from a benign CAT loss season and premium growth outlook, particularly in commercial; iii) TMX – impacts of AI on TMX’s Trayport business and whether AI is a net opportunity or risk for the business longer-term (in our view AI represents an opportunity) and iv) EFN – new customer wins and service revenue outlook,” he said.

For Brookfield, Mr. Dziarski reaffirmed an “outperform” rating and US$57 target. The average on the Street is US$50.56.

“We believe current valuation provides an attractive entry point into a leading franchise set to benefit from increasing carried interest realizations and its growing Wealth Solutions business,” he said. “A controlling position in BAM, one of the world’s largest, differentiated alternative asset managers, contributes further to NAV growth.”

The analyst called Element Fleet Management Corp. (EFN-T) his “top growth pick” with an “outperform” rating and $47 target, exceeding the $43.26 average.

“Element is entering what we view as the 5th stage in its evolution with expected 15-per-cent-plus EPS growth over the near term, ROE expansion from mid-teens to high-teens driven by a growing portion of capital-light revenue, all in our view while continuing to provide counter-cyclical upside and defensive attributes underpinned by a lower-risk business model with a sticky client base,” he said.

Fairfax Financial Holdings Ltd. (FFH-T) is his “top value pick” with an “outperform” rating and US$2,200 target. The average is $2,896.82 (Canadian).

“We expect Fairfax’s underwriting results to remain strong in a favourable (albeit slowing) pricing environment where Fairfax has a historical track record of opportunistic growth. Fairfax’s investment portfolio has been re-positioned to take advantage of the current interest rate environment driving improving investment results, which we expect to continue,” he said. “We expect the valuation discount vs. peers to narrow as Fairfax continues to deliver solid operating results.”

=====

In other analyst actions:

* Seeing a compelling investing opportunity following a 16-per-cent drop in its share price since the July release of “arguably strong” second-quarter results, Jefferies’ John Aiken upgraded Intact Financial Corp. (IFC-T) to “buy” from “hold” and moved his target to $317 from $316. The average target on the Street is $326.77.

* In response to an updated pre-feasibility study on its Cactus project, TD Cowen’s Derick Ma raised his Arizona Sonoran Copper Co. Inc. (ASCU-T) target to $6.50 from $4 with a “buy” rating. The average is $4.47.

“The updated Cactus PFS envisions a simplified mine plan with additional scale while remaining first quartile capital intensity. We highlight 3 project characteristics which we believe uniquely position the project for eventual development and/or additional strategic interest: (i) a mine plan focused entirely on copper cathode production for U.S. domestic consumption, (ii) first quartile capital intensity with relatively a low life-of-mine cash cost profile, and (iii) state-level permitting with land acquisition completed,” said Mr. Ma.

* Mr. Ma also increased his Faraday Copper Corp. (FDY-T) target to $2.25 from $1.50 with a “buy” rating to reflect his updated copper price deck as well as his assumed resource growth and project upside expectations. The average is $2.04.

“Copper Creek has been granted status as a FAST-41 Transparency project in the U.S. Federal Permitting dashboard. In our view, the designation positions Copper Creek as a U.S. domestic critical minerals project of potential significance, increases accountability and creates an opportunity for future elevation to ‘covered’ project status, in our view,” he said.

* CIBC World Markets’ Mark Jarvi raised his targets for Emera Inc. (EMA-T, “neutral”) to $71 from $68, Fortis Inc. (FTS-T, “outperformer”) to $74 from $72 and Hydro One Ltd. (H-T, “neutral”) to $54 from $52. The averages are $67.21, $71.31 and $50.73, respectively.