Inside the Market’s roundup of some of today’s key analyst actions
Alimentation Couche-Tard Inc.’s (ATD-T) decision to withdraw its proposal to acquire Seven & i due to a lack of constructive engagement with the Japanese company didn’t surprise most analysts. Neither did the jump in its share price this morning.
The withdrawal of Couche-Tard’s offer removes a huge uncertainty for the stock, which rocketed up more than 10 per cent at today’s open following the announcement late Wednesday.
Analysts believe Couche-Tard is now likely to pursue share buybacks instead of the expensive acquisition that would have piled on debt.
The average price target on Couche-Tard is C$83.66, according to LSEG data, implying analysts believe there’s plenty more upside even after today’s rally.
Desjardins Securities analyst Chris Li affirmed a “buy” rating and C$80 price target.
“We expect the removal of the equity overhang from a deal and resumption of share buybacks to be a catalyst. Considering management’s view that ATD’s valuation is attractive, supported by compelling long-term growth (organic and M&A), as well as its strong free cash flow and balance sheet, we believe ATD has the capacity to deploy about US$2.5b of capital for share buybacks in the current fiscal year (ending around April 2026). Based on the current share price, we estimate this represents 5% of shares outstanding and would take its leverage to its target of about 2.25x (from 2x).”
He thinks the next catalyst should be an improvement in U.S. merchandise same-store sales growth.
Stifel analyst Martin Landry also expressed little surprise by the withdrawn offer, as Couche-Tard’s frustrations during the process were well-known.
“Shares of Couche-Tard should react well today as this transaction, given its size, was considered risky due to the large debt levels needed to finance this acquisition. We believe Couche-Tard will resume its share buyback, which should be well received by investors and could bring some momentum to the company’s stock price. The company should also continue its successful strategy of consolidating the convenience store industry, looking at smaller acquisitions. This strategy has created significant value for shareholders over the last 25 years, and we believe it can still be successful,” Mr. Landry said in a note.
Mr. Landry reiterated a “buy” rating and C$81 price target.
Canaccord Genuity analyst Luke Hannan affirmed a “buy” rating and C$80 price target.
“Though the proposed deal still makes financial and strategic sense to Couche-Tard (at the previously proposed price and assuming realistic synergies/equity stub, we estimate >low-teens EPS accretion), based on our conversations with investors, the removal of the potential overhang from an equity issuance related to the deal will be well received. We recognize that it is possible Couche-Tard is withdrawing its bid in an attempt to raise the pressure on 7&i management, but for now we assume Couche-Tard will instead direct its attention towards other active M&A opportunities within its pipeline,” Mr. Hannan said.
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Raymond James analyst Steve Hansen upgraded Canadian National Railway (CNR-T) to “outperform” from “market perform” while raising his price target to C$162 from C$150.
He notes that rail traffic has been diverging between Canada’s two major railways and macro trends in tariffs and the economy should start to benefit CN.
“Despite widespread uncertainty associated with U.S. tariff policy, Canadian rail traffic fared better-than-expected in 2Q25, with both CN and CPKC modestly exceeding our volume estimates,” Mr. Hansen said in a note to clients.
“Growth proved highly divergent between the two carriers, with CPKC’s hefty outperformance underpinned by several unique tailwinds (Coal, Potash, Auto, Intermodal), while CN struggled across all major categories ex-Grain. Unfortunately, the incremental volume upside was more than offset by stiff forex & yield-related headwinds. Looking forward, our macro view has tilted incrementally more upbeat. While trade/macro uncertainty lingers, we regard initial U.S. trade deals and new legislation as key milestones that portend an improved economic outlook. Stacked against easy back-half comps (wildfires, strikes), we expect CN traffic to accelerate and CPKC traffic to remain elevated through 2H25,” he said.
He termed his upgrade of CN as “probationary.”
“Our decision to upgrade CN was admittedly difficult given the underwhelming traffic performance YTD, the risk of another guidance cut, and, more broadly, the company’s lackluster operating/earnings performance over the past two years. Our call is primarily based upon the view CN will enjoy accelerating traffic growth through 2H25 as macro conditions improve, trade normalizes, and last year’s major network disruptions are lapped. While the latter-most issue is clearly temporary, we still believe conditions will be right for CN to deliver accelerating top-line growth, improved network fluidity, and, most importantly, incremental operating leverage. If CN management can deliver, we see the prospect for healthy earnings growth to resume & multiple expansion to accrue (CN is currently the cheapest Class 1 rail), a potential double win for investors,” he said.
His price target on Canadian Pacific Kansas City (CP-T) was also raised, to C$120 from $C115, and he is maintaining an “outperform” rating.
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Raymond James analyst Brad Sturges changed ratings on two stocks in the Canadian real estate sector.
Crombie Real Estate Investment Trust (CRR-UN-T) was upgraded to “strong buy” from “outperform”. His price target is C$17.25.
He thinks valuations are attractive and investors may see a hike in its distributions later this year.
“After significantly outperforming the broader sector in the first few months of the year, Crombie’s relative outperformance versus the Canadian REIT/REOC sector unweighted average has narrowed in recent weeks. Supported by the defensive nature of Crombie’s long-term duration, high credit-quality cash flows, we still believe Crombie is attractively valued, trading at a below average P/AFFO multiple valuation versus its Canadian retail peers, and could remain an attractive investment opportunity for those income investors seeking to maintain a defensive posture in an uncertain macroeconomic environment. We believe Crombie could be a distribution increase candidate at some point later this year given its 2025E AFFO payout ratio is forecasted to be trending below 80%,” Mr. Sturges said.
Dream Industrial REIT (DIR-UN-T) was downgraded to “outperform” from “strong buy”, mostly because of its recent strong price performance. He increased his price target to C$13.75 from C$13.
He commented: “DIR’s total return performance has rebounded in recent weeks, after DIR relatively underperformed earlier in the year. That said, we argue that DIR still screens well given its: 1) strong balance sheet metrics including low financial leverage ratios; 2) diversified tenant base resulting from a strategic focus on small-to mid-bay urban infill industrial real estate can benefit from resilient leasing demand trends; 3) above-average AFFO/unit CAGR (‘24A-’26E) of +8%; and 4) discount valuation as illustrated by a historically low 2025E P/AFFO multiple. We also believe that a new CAD-US free trade agreement could support a recovery in DIR’s P/AFFO multiple valuation, while other potential positive catalysts could include DIR’s external asset manager, Dream Unlimited (DRM), securing a new JV partnership within Europe that could validate about 36% of DIR’s global industrial portfolio fair value.”
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Raymond James analyst Frederic Bastien made a bunch of rating and price target changes on industrial stocks he follows ahead of the second-quarter earnings season.
Among them: Brookfield Renewable Partners L.P. (BEP-N) was downgraded to “outperform” from “strong buy”, with an unchanged price target of US$33.
Mr. Bastien commented: “Our positive stance on BEP is reaffirmed after the renewable power play agreed to collaborate with Google on the delivery of up to 3,000 MW of hydroelectric capacity across the US. This deal not only dovetails with last year’s framework agreement to deliver over 10 GW of renewable power to Microsoft, but also underscores Brookfield’s position as a partner of choice to the largest buyers of clean power globally. With its well-diversified portfolio 90% contracted for an average 14 years, strong uptake from corporate buyers and near limitless access to capital, we are confident BEP can continue to extend its leadership position in a rapidly changing landscape for renewable energy. …We have reason to believe 2Q25 results benefited from healthy hydro reservoirs, newly commissioned capacity and growing demand for Westinghouse’s nuclear services. That said, our funds from operations per unit forecast of US$0.56 sits US$0.02 below the consensus estimate, mainly reflecting our expectations for lower solar PPA pricing following Neoen’s acquisition. Given this risk to the quarter, the lack of imminent catalyst for BEP and the units’ 17% gain year-to-date (versus 6% for the S&P 500), we are downgrading them a notch to outperform.”
And Bird Construction Inc. (BDT-T) was also downgraded to “outperform” from “strong buy”, with an unchanged price target of C$35. Like Brookfield Renewable, share price appreciation was the main motivation.
He commented: “We don’t like flip-flopping between recommendations, but Bird’s 47% ascent since our Apr-22-25 upgrade is forcing our hand. While we are taking our stock recommendation from Strong Buy to Outperform, we remain distinctly bullish on the contractor, keeping its rock-solid balance sheet, record backlog of low-risk projects and strong positioning for a potential nation-building exercise in mind. With the recent acquisition of Jacob Bros. providing additional avenues into Western Canada’s non-discretionary infrastructure market and a healthy backlog of its own, we believe the contractor has what it takes to weather macro uncertainty in style.”
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National Bank Financial analyst Giuliano Thornhill initiated coverage on Extendicare Inc. (EXE-T) with an “outperform” rating and C$15.40 price target.
Mr. Thornhill believes Extendicare now has significantly improved business model, offered at a reasonable valuation.
Extendicare is undergoing a strategic shift from its Class C long-term health-care assets to a capital-light approach aimed at increasing its exposure to home healthcare and management services.
“This internally funded pivot (spearheaded by its Axium joint venture structure) enables EXE to dispose of its Class C excess real estate and improve the returns associated with these homes,” Mr. Thornhill said. “Supported by favourable demographic and structural trends, EXE is well-positioned to benefit from sustained demand for both institutional and home-based care.”
“EXE offers defensive, government-backed cash flows alongside a proven capital deployment channel. EXE retains optionality from its Class C program and its low leverage levels,” he added. “Continued execution and realization of key catalysts could support further upside. We maintain a positive outlook for the seniors’ operators like EXE/SIA/CSH, as all stand to benefit from the near-term supply/demand imbalance.”
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TD analyst Aaron MacNeil downgraded Superior Plus Corp. (SPB-T) to a “hold” from a “buy” rating, noting that the company has two tough quarters ahead of it, and shares have already risen 28% year to date.
His price target was cut to C$8.50 from C$9.50.
“While we continue to have high conviction in management’s ability to achieve the synergies associated with its ‘Superior Delivers’ initiative ($70 million), Superior has experienced multiple expansion (+10%) in recent quarters, partly due to the success of its recent investor day. We now believe there are larger downside risks to the share price than upside potential, given the potential for weakness at Certarus in the near term,” Mr. MacNeil said in a note to clients.
Superior Plus acquired Certarus, a low carbon business, in 2023 for C$1.05 billion. But the company now faces exposure to a weakened drilling and completions outlook those those operations. “Superior’s 2025 guidance assumes 5-10% y/y growth in Certarus, a goal we believe will be challenging, given prevailing activity levels,” the TD analyst said.
Mr. MacNeil also expressed other concerns in connection with the downgrade, including a limited outlook for near-term share buybacks and likely soft demand in the second quarter, as cold temperatures in the first three months of the year likely resulted in earlier-than-normal customer refills of propane.
Superior’s second-quarter results will be released Aug. 12.
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BMO analyst John Gibson substantially raised his price target on NFI Group Inc. (NFI-T) to C$23 from C$14 and upgraded his rating to “outperform” from “market perform”.
“Our large target increase reflects an upcoming inflection point in earnings during 2H/25 and 2026 as seat supplier issues ease, which should help move the company closer to its historical multiple range of 8-10x EV/EBITDA (currently sitting closer to about 7x),” Mr. Gibson said in a note to clients.
NFI is set to report second quarter earnings on July 31.
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Analysts are tweaking their price targets on Cogeco Communications Inc. (CCA-T) in the wake of the company’s earnings this week and news that it has launched a wireless product in Canada.
Scotiabank analyst Maher Yaghi cut his price target by 50 cents to C$75 while reiterating a “sector perform” rating.
Mr. Yaghi thinks shares in Cogeco will need a “revenue growth path” in other to gain much traction.
“Cogeco continues to operate in very competitive markets both in Canada and the US. While we believe the Canadian business should support the current revenue run rate, in the US, FWA (fixed wireless access) competition is expected to continue to pressure subscriber levels and lead to downward pressure on revenues. We have seen a down-tick in pricing growth in the last year as the company reposition its offering to better compete against FWA however, and as similar to Comcast, turning around subscriber trends will take time,” the Scotiabank analyst said.
He also thinks regulatory headwinds could inhibit longer-term growth for the company even as it launches the first major wireless rollout in over a decade in Canada.
“While this wireless initiative supports Cogeco’s broader growth strategy alongside its network expansion in Canada, the CRTC’s recent FTTH (Fiber to the Home) decision in continuing to allow incumbents to resell high speed internet out of home could pose competitive challenges for smaller players like Cogeco,” he said.
Elsewhere, BMO cut its price target on Cogeco Communications to C$75 from C$80.
And RBC cut its target to C$74 from C$75, with analyst Drew McReynolds describing Cogeco’s latest financial results as “mixed, with lower revenue growth offset by higher margins.”
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Stifel analyst Martin Landry thinks investors should buy shares of Gildan Activewear (GIL-N) ahead of its second quarter results on July 31.
“We believe Gildan has gained market share on continued momentum from American Apparel and Comfort Colors. Our channel checks point to improving industry conditions in H2/25, potentially better than originally expected by Gildan,” Mr. Landry said. “Hence, we believe investors should buy ahead of the quarter as we expect a potential upward revision to the low end of Gildan’s 2025 EPS guidance.”
“Gildan’s shares have not rebounded as much as other discretionary names in Canada, trading 10% lower than their highs of $55 seen in February, while the S&P TSX Discretionary Index trades 2% lower than its 52-week high,” he added.
Mr. Landry has a US$65 price target on Gildan.
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Canaccord Genuity analyst Luke Hannan reiterated a “buy” rating and raised his price target to C$32 from C$28 on Autocanada Inc (ACQ-T) after news late Wednesday that the company has sold 13 of its U.S. dealerships for $82.7 million.
The company continues to be actively engaged in selling the remaining four dealerships it owns in the U.S.
“A sale of the U.S. business was the biggest catalyst we identified for ACQ shares over the next 6-12 months,” Mr. Hannan said in a note. “We estimate on a pro forma basis, the company will take net funded debt/TTM EBITDA from its current about 5x to about 3x, without considering potential proceeds for the remaining four dealerships.”
“Though we believe the company remains focused on driving out costs through its ACX Operating Method, and will look to complete the program before investing more heavily in growth, investors should gain comfort that the business and the story have become increasingly less complex, which should ultimately manifest itself in a higher trading multiple, in our view,” Mr. Hannan added.
Elsewhere, CIBC raised its target price to C$27.5 from C$23.
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In other analyst actions:
Linamar Corp (LNR-T): CIBC raises target price to C$68 from C$57
Starbucks (SBUX-Q): Jefferies cuts to “underperform” from “hold”. Price target remains US$76. Jefferies sees little upside in the stock given the company has already exceeded reasonable expectations in improving its fundamentals.
More to come