Inside the Market\u2019s roundup of some of today\u2019s key analyst actions<\/p>\n
Heading into fourth-quarter earnings season for Canadian life insurance companies, National Bank Financial analyst Gabriel Dechaine thinks valuation \u201cisn\u2019t great, but it\u2019s not terrible either.\u201c <\/p>\n
\u201cP\/E and P\/B multiples are well above historical averages,\u201d he noted. \u201cIf anything, Lifeco valuations do not appear as \u2018stretched\u2019 as they do in the Big-6 bank sector. Both MFC and SLF still offer valuation multiple expansion potential if they can hit their medium-term ROE objectives. In our view, that positioning reflects market uncertainty vis-\u00e0-vis the achievement thereof.\u201d<\/p>\n
In a client report released before the bell, Mr. Dechaine noted lifecos underperformed the market as a group in 2025, but he emphasized that fact \u201coverlooks the wide performance disparity within that group.\u201d Both Great-West Lifeco Inc. (GWO-T<\/a>) and IA Financial Corp. Inc. (IAG-T<\/a>) outperformed the market (by 13 per cent and 5 per cent, respectively), while Manulife Financial Corp. (MFC-T<\/a>) and Sun Life Financial Inc. (SLF-T<\/a>) were \u201claggards\u201d (by 16 per cent and 28 per cent).<\/p>\n \u201cWe believe the performance disparity within the group is worth exploring,\u201d he said. \u201cFor starters, it illustrates that Lifeco performance wasn\u2019t simply the result of a \u2018banks vs. lifecos\u2019 trade outcome. Rather, it was a reflection of individual characteristics within the group that contributed to or were responsible for better growth and\/or ROE performance. The best example to highlight is GWO\u2019s massive outperformance relative to SLF\u2019s. It was achieved despite GWO delivering less ROE expansion than SLF did over the first three quarters, and EPS growth that was in-line (i.e., 11 per cent vs. 10 per cent). We argue that GWO outperformed SLF primarily due to \u201cthematic\u201d elements. Notably, it was unusually active with share repurchases (i.e., first time since 2019) and its U.S. business generated good growth. In contrast, SLF encountered regulatory and claims issues in its U.S. business that resulted in negative growth in this segment, which raised several concerns (e.g., management credibility, ROE target achievability). Looking ahead, a potential turnaround in SLF\u2019s U.S. operation could be one of the biggest stock performance drivers in the group this year.”<\/p>\n Mr. Dechaine also said an important theme over the past few years in the lifeco group has been \u201chow each company has raised the bar for their ROE objectives.\u201d <\/p>\n \u201cAnd in one case, IAG\u2019s, the bar already appears to have been set too low,\u201d he said.<\/p>\n \u201cEvery company has raised its ROE target over the past 1-2 years. Achieving these targets hinges largely on improving returns in operations outside of Canada. The market rewards progress on this front. Case in point, GWO\u2019s YTD ROE [year-to-date return on equity] has improved by less than SLF\u2019s so far in 2025 (i.e., +20 bps vs. +70 bps, respectively). Yet GWO has massively outperformed SLF. One potential argument is that GWO\u2019s U.S.\/Empower operation delivered strong earnings growth, whereas SLF\u2019s has struggled with regulatory\/political\/claims issues. If SLF\u2019s U.S. performance stabilizes and improves, the market could regain confidence in its 20-per-cent ROE target, which would clearly help the stock regain favour.\u201d<\/p>\n Also emphasizing buybacks are \u201ca default deployment option\u201d with each company having an active program, Mr. Dechaine adjusted his target prices for stocks in the group after revising his earnings expectations to reflect stronger-than-anticipated equity market performance.<\/p>\n His changes and themes to watch for each are: <\/p>\n * Great-West Lifeco (GWO-T<\/a>, \u201csector perform\u201d) to $65 from $59. The average target on the Street is $65.40, according to LSEG data.<\/p>\n Analyst: \u201c1) Buybacks have been driving more of GWO\u2019s traded volume; 2) Empower business continues to deliver; 3) Canadian Group business has been resilient.\u201d<\/p>\n * IA Financial (IAG-T<\/a>, \u201csector perform\u201d) to $190 from $178. Average: $172<\/p>\n Analyst: \u201c1) Wealth business should have another double-digit growth quarter; 2) Internal capital generation target likely exceeded; 3) Yield curve steepening should provide a boost.\u201d<\/p>\n * Manulife Financial (MFC-T<\/a>, \u201coutperform\u201d) to $56 from $53. Average: $55.66.<\/p>\n Analyst: \u201c1) Asia segment sales growth poised to slow; 2) Wealth segment will begin reflecting HKG regulatory changes; 3) Buybacks kept pace with plans.\u201d<\/p>\n * Sun Life Financial (SLF-T<\/a>, \u201csector perform\u201d) to $99 from $93. Average: $90.19.<\/p>\n Analyst: \u201c1) U.S. Stop Loss business results should improve; 2) Were MFS\u2019s Institutional inflows a one-off?; 3) Buyback activity accelerated.\u201d<\/p>\n * Sagicor Financial Co. Ltd. (SFC-T<\/a>, \u201coutperform\u201d) to $13 from $11. Average: $11.18.<\/p>\n Analyst: \u201c1) Fixed annuities outlook; 2) Caribbean reorganization; 3) RoE targets.\u201d<\/p>\n Desjardins Securities analyst Doug Young also upgraded his targets for Canadian lifeco shares in a quarterly earnings preview titled The more things change, the more they stay the same.<\/p>\n \u201cThe themes we are watching for in 4Q25 are the same. (1) Core EPS should benefit from several drivers including higher equity markets and share buybacks on a year-over-year basis. (2) We expect reported EPS to be slightly below core EPS for the group. (3) On a company basis, the focus is on: (i) US dental and US stop-loss results for SLF; (ii) Asia trends for MFC and SLF; (iii) US extended vehicle warranty trends for IAG and the actuarial review impact for IAG; and (iv) Empower for GWO,\u201d he said. <\/p>\n \u201cWe increased our target prices, maintained our ratings, and kept SLF and MFC as our top two picks.\u201d<\/p>\n Mr. Young\u2019s changes, in order of preference, are:<\/p>\n Sun Life Financial (SLF-T<\/a>, \u201cbuy\u201d) to $96 from $94. The average is $90.19.Manulife Financial (MFC-T<\/a>, \u201cbuy\u201d) to $58 from $55. Average: $55.66.Great-West Lifeco (GWO-T<\/a>, \u201chold\u201d) to $68 from $63. Average: $65.40.IA Financial (IAG-T<\/a>, \u201chold\u201d) to $183 from $170. Average: $172.<\/p>\n TD Cowen analyst Mario Mendonca sees the underperformance of shares of property and casualty insurance providers versus its life insurance peers providing a \u201cfavorable set-up\u201d for 2026.<\/p>\n \u201cWe expect: good underlying fundamentals, normalized CAT losses in Q4\/25 relative to 2024; personal lines firmness; and limited impact from pricing softness in large commercial property to support the group in 2026,\u201d he said.<\/p>\n In a client note previewing fourth-quarter 2025 earnings season in the industry, Mr. Mendonca emphasized P&C insurers have seen a recovery in their valuations from the previous quarter, noting \u201cinvestors looked past fears of personal lines softening.\u201d <\/p>\n \u201cWe believe personal lines markets remain firm (market is rebalancing, not moving towards intense competition), while softness<\/p>\n remains concentrated in large, commercial property cases (IFC\/DFY have limited exposure),” he said. \u201cFor DFY\u2019s TRV Canada acquisition, our estimates reflect gradual combined ratio improvement from expense-driven synergies.<\/p>\n \u201cWe do not expect meaningful CAT losses as IFC\/DFY have not pre-announced CATs for Q4\/25. However, following weather events in December, we expect higher sequential CAT losses. We believe DFY\u2019s business mix (greater share from personal auto) positions it better for relatively mild CAT losses.\u201d<\/p>\n The analyst raised his target for Definity Financial Corp. (DFY-T<\/a>) shares to $85 from $80, keeping a \u201cbuy\u201d rating. The average on the Street is $82.50.<\/p>\n Despite maintaining a \u201cbuy\u201d rating and $346 target for Intact Financial Corp. (IFC-T<\/a>), which exceeds the average of $336.13, Mr. Mendonca expressed a preference for its shares over Definity.<\/p>\n \u201cWhile valuations have returned to levels more consistent with historical averages, we continue to favor IFC over DFY, reflecting IFC\u2019s broader market reach geographically, exposure to Specialty, leading market position (and related scale advantages), track record of strong fundamental performance, and superior ROE profile,\u201d he explained.<\/p>\n \u201cWe are not comfortable assigning DFY a multiple in-line with IFC before DFY shows more progress on building its ROE profile, scaling its platform and successfully executing on the Travelers acquisition (which closed on Jan 02, 2026).\u201d<\/p>\n In the Specialty insurance space, Mr. Mendonca raised his target for Trisura Group Ltd. (TSU-T<\/a>) to $58 from $55 with a \u201cbuy\u201d rating. The average is $57.<\/p>\n ” TSU remains our top mid-cap name as we see ongoing strength in U.S. programs,” he said. \u201cOverall, we expect Q4\/25 to be a positive quarter for TSU, with a continuation of many of the growth trends from Q3\/25. The absence of exited lines charges, a better outlook on U.S. Programs, continued momentum in Surety (higher construction values, share gains, U.S. expansion) and Warranty (two most profitable lines), should drive further upside for TSU. A sustainable 17-per-cent ROE (and the book value growth this implies) comfortably support our 2.5-2.6x target P\/B. We continue to rate TSU BUY. <\/p>\n \u201cSimilar to last quarter, we continue to favour the P&C insurers over the banks. We expect the P&C industry to exhibit less asset risk (credit, write-downs) and greater top-line stability (inelastic demand characteristics) than the more economically sensitive banks. However, we believe relative valuation favors the life insurance companies over the P&C names at this time.\u201d<\/p>\n RBC Dominion Securities analyst Keith Mackey thinks it will be difficult for North American oil and gas services providers to \u201clive up to recent sentiment\u201d with their fourth-quarter results and outlooks, but he continues to \u201csee stable earnings trajectories and find valuations mostly attractive.\u201d<\/p>\n \u201cStocks in our coverage have rallied 12.6 per cent on average to start the year,\u201d he said. \u201cThe sharp rally will put pressure on firms to give positive updates, and we wouldn\u2019t be surprised if fundamental outlooks provided on Q4 calls do not live up to current sentiment. However, sector valuations, earnings trajectory, and recent earnings revisions help put the rally into perspective. Valuation multiples are 1.0 times below long-term averages while earnings are near long-term averages, with a slight bias higher from 2025-2027. The risk of negative earnings revisions also appears lower after the downward moves in mid-2025. <\/p>\n \u201cMinimal changes to industry forecasts. In North America, we expect steady rig activity through 2026 and into 2027. Internationally, we have increased our expectations for the Middle East and Latin America activity slightly, reflecting slight uptick in activity in 2H26. The International operators (FTI\/SUBC\/SPM\/ AKSO) ended the year on a strong note with record order intakes for the companies in 4Q and FY25. The companies\u2019 ability to continue on the trajectories for margin growth remains a key topic, with valuations and share prices close to highs.\u201d<\/p>\n In a client report released before the bell, he emphasized the turmoil in Venezuela continues to bring \u201cmore questions than answers\u201d across the sector.<\/p>\n \u201cThe potential re-opening of the Venezuela oil market to oilfield service firms has partly fueled the rally in international service firms. The Venezuela market has been historically important for OFS and a re-opening could drive incremental revenue for the sector; however, recent stock moves likely understate the long road ahead to returning to historical revenue generation norms. We expect to hear more about Venezuela from large cap OFS this reporting cycle. <\/p>\n \u201cIncreasing near-term estimates. We have increased our 4Q estimates by 3 per cent on average as industry activity generally did not slow down as sharply as feared into the holiday season. AESI, LBRT, and AKSO see the largest increases . Our revised 4Q EBITDA estimates are generally above the street, and we are most above the street for LBRT, AESI, and HAL.\u201d<\/p>\n With his revised forecast, Mr. Mackey made a series of target revisions to stocks in his coverage universe, including:<\/p>\n Calfrac Well Services Ltd. (CFW-T<\/a>, \u201csector perform\u201d) to $5.50 from $4. The average is $4.CES Energy Solutions Corp. (CEU-T<\/a>, \u201coutperform\u201d) to $14 from $13. Average: $13.33.Enerflex Ltd. (EFX-T<\/a>, \u201coutperform\u201d) to $20 from $17. Average: $22.90.Ensign Energy Services Inc. (ESI-T<\/a>, \u201csector perform\u201d) to $3.50 from $3. Average: $3.Precision Drilling Corp. (PD-T<\/a>, \u201coutperform\u201d) to $119 from $117. Average: $117.44.<\/p>\n \u201cOur 12-month price targets drive an average implied return of 17 per cent, with 70 per cent of implied returns driven by FCF\/buybacks and the remaining to growth and multiple expansion,\u201d he said.<\/p>\n \u201cOur preferred list across our global coverage is: SLB (SLB), Baker Hughes (BKR), TechnipFMC (FTI), Enerflex (EFXT), Trican Well Service (TCW), Patterson-UTI Energy (PTEN), Hunting (HTG) and CES Energy Solutions (CEU).\u201d<\/p>\n After hosting investor meetings with the management team from Groupe Dynamite Inc. (GRGD-T<\/a>) at the ICR Conference in Orlando, Stifel analyst Martin Landry sees it as \u201camong the best-managed companies in the apparel sector, with industry leading metrics such as inventory turnover, profitability and ROIC.\u201d<\/p>\n Ahead of the highly anticipated annual event, hosted by investor relations firm ICR and focused on retail and restaurant companies, the Montreal-based clothing retailer increased its full-year guidance and comparable sales were up 30.8 per cent year-over-year for the first nine weeks of its fourth-quarter of fiscal 2025, exceeding Mr. Landry\u2019s previous estimate of 24 per cent as well as the Street\u2019s expectation of 26 per cent.<\/p>\n \u201cManagement reiterated the color provided during the Q3FY25 earnings call, expecting 2026 comparable sales growth in the HSD [high single-digit] range, gross margin expansion year-over-year and SG&A leverage. GRGD plans to increase prices at twice the rate of inflation, which accounts for half of the anticipated high-single-digits growth for 2026,\u201d he said. \u201cThe remaining growth should come from volume and traffic driven by continued brand momentum. Our 2026 forecasts call for comparable sales growth of 7.7 per cent year-over-year, which looks attainable. <\/p>\n \u201cExpecting year-over-year margin expansion in 2026. Groupe Dynamite had to cope with very high tariffs last year which reached 145 per cent in spring 2025. These tariffs have since abated, which, combined with supplier concessions, cost-cutting measures and price increases should contribute to gross margin expansion in 2026. Our forecasts call for FY2026 gross margin expansion of 50bps year-over-year. Given GRGD experienced significant growth, fixed cost absorption should improve, and we model FY2026 SG&A expenses as a percentage of sales to decrease by 50bps year-over-year.\u201d<\/p>\n Mr. Landry pointed to several other factors to justify his bullish stance, including large employee ownership and \u201csignificantly\u201d improved retention, increasing brand awareness and an improved IT platform.<\/p>\n \u201cWe come away from the conference with a better appreciation of the company\u2019s strategy, better clarity on the potential upside for 2026 and increased conviction that brand momentum could continue. GRGD remains a relatively new story for international investors, and we believe that as investor awareness grows, this could lead to shares moving higher,\u201d he said.<\/p>\n Maintaining his \u201cbuy\u201d rating for its shares, the analyst increased his target to $102 from $96. The average is $98.20.<\/p>\n \u201cWe are increasing our forecasts for Q4FY25 and for FY26 to reflect the company\u2019s updated guidance,\u201d he explained. \u201cOur comparable sales growth increases to 30 per cent for Q4FY25, which has a spillover impact into FY26. Our FY26 EPS estimate increases by $0.14 to $2.74, driven by a slightly higher store count assumption, slightly higher SG&A leverage than previously modeled and a higher comparable store base in FY25.\u201d<\/p>\n While he lowered his forecast for Cineplex Inc. (CGX-T<\/a>) further to reflect weaker-than-anticipated box office results in December, National Bank Financial analyst Adam Shine thinks \u201coptimism persists for 2026\u2033 and believes \u201cmomentum will build\u201d after the first quarter.<\/p>\n \u201cGower Street Analytics expects the domestic box office (United States and Canada) to grow 11 per cent this year. We\u2019re at up 9 per cent,\u201d he said. \u201cThe Hollywood unions are gearing up for triennial negotiations with the studios, with the WGA (writers) contract to expire on May 1, while DGA (directors) and SAG-AFTRA (actors) contracts expire on June 30. We expect ongoing contention around AI, but see little chance of anyone striking. <\/p>\n \u201cCinema United, the trade group for movie exhibitors, published a report on Dec. 18 in which it highlighted that 1) number of habitual moviegoers (see at least 6 movies in a year) rose 8 per cent, 2) cinema loyalty programs grew subscriptions 15 per cent, 3) Gen Z increased movie frequency to 6.1 visits from 4.9, and 4) number of wide releases projected to increase to 115 in 2026 from 111 in 2025 and 94 in 2024. At least one caveat for 2026 is that movies from December 2025, especially the third Avatar which is tracking below its prior films, will provide less momentum at the start of this year, so expectations remain that traction will build post-Q1.”<\/p>\n On Tuesday, the Toronto-based entertainment company reported box office revenue for the fourth quarter of $140.7-million, down 4.7 per cent year-over-year and under both Mr. Shine\u2019s $153.6-million estimate and the Street\u2019s projection of $167.5-million. That led him to lower his earnings expectations for the full year.<\/p>\n \u201cWhile movie exhibition didn\u2019t face any big shocks following prior impacts from COVID and the writers\/actors strikes, 2025 got off to a slow start with a particularly weak March and also faced year-over-year declines in August, October, and November,\u201d he noted.<\/p>\n Keeping his \u201coutperform\u201d rating for Cineplex shares, Mr. Shine trimmed his target by 50 cents to $14. The average is $13.13.<\/p>\n In other analyst actions: <\/p>\n * In the firm\u2019s quarterly earnings preview for metal companies, Raymond James\u2019 Brian MacArthur downgraded Teck Resources Ltd. (TECK.B-T<\/a>) to \u201cmarket perform\u201d from \u201coutperform\u201d with a $70 target, up from $67, pointing to its recent share price performance and current valuation. The average is $66.17.<\/p>\n \u201cWe have updated our commodity price forecasts for the precious and base metals complex,\u201d the firm said. \u201cOn precious metals, we have increased our gold and silver price estimates in the near and long term with near-term increases reflecting continued economic\/political uncertainty. Long-term price forecasts were also increased on higher reserve\/resource pricing driving higher operating costs and incentive pricing as well as an uncertain economic\/political outlook. As a result of the gold and silver price forecast increases, we are broadly raising price targets across the precious metals producers under coverage (see below for details). In precious metals, we prefer AEM among the senior producers for its lower jurisdictional risk exposure and strong project pipeline and B for its potential re-rate on Fourmile and potential restructuring. Amongst the mid-tier producers, we prefer OGC on improving production into 2026 and its organic growth projects. We prefer FNV, WPM and OR among the royalty companies. We also recommend DSV, SKE and MAU.<\/p>\n \u201cOn base metals, we have adjusted our 2026 and long term copper price forecast given continuing supply challenges in the sector and inflationary pressures. We continue to favour copper in the base metals complex where we expect growing deficits in the medium to long term. We favor IVN and HBM amongst the base metals producers and believe both have near-to-medium term copper growth, long mine lives, and\/or potential catalysts. Finally, we remain constructive on the longer-term outlook for uranium and have increased our long term price from $85\/lb to US$90\/lb. We continue to recommend CCO, NXE, and DML.\u201d<\/p>\n * Expecting its organic growth to accelerate through 2026 and into 2027, Morgan Stanley\u2019s Chris Quintero upgraded Descartes Systems Group Inc. (DSGX-Q<\/a>, DSG-T<\/a>) to \u201coverweight\u201d from \u201cequalweight\u201d with a US$115 target, up from US$110 and above the US$112.80 average on the Street.<\/p>\n * Citi\u2019s Alexander Hacking hiked his target for Agnico Eagle Mines Ltd. (AEM-N<\/a>, AEM-T<\/a>) to a Street high of US$256 from US$198 with a \u201cbuy\u201d rating. The average target is US$188.11.<\/p>\n \u201cWe update our AEM model to reflect latest guidance & Citi\u2019s commodity price forecasts,\u201d said Mr. Hacking. \u201cCiti commodities team recently upgraded its gold price forecast to average $4,430\/oz in 2026 and raised long-term prices to $3,600\/oz. We expect 2025 attributable production to push into the upper bounds of FY25 guidance (3.3-3.5Moz) and 4Q25E to settle at around 840koz with sequential improvement at Detour Lake. Elevated gold prices support higher margins, but increased royalty costs (up $30-$40\/oz) will offset some of those gains. Updated FY26\/27 guidance will be released with results but previous production forecasts were set at 3.3-3.5Moz for both years. The project pipeline remains robust at AEM, with work continuing at Upper Beaver, while a new PFS is expected by end-26 at Hope Bay. We remain at Buy on AEM with FCF yield of 3-4 per cent expected on updated estimates, inline with historical performance.\u201d<\/p>\n \u201cAgnico is a top-notch company in our view, with high-quality assets and a strong operational track record. The company has demonstrated superior execution over the past decade. The acquisition of Kirkland Lake added low-cost ounces in good jurisdictions. We currently see more upside than downside in the stock.\u201d<\/p>\n * Scotia\u2019s John Zamparo raised his targets for Canadian Tire Corp. Ltd. (CTC.A-T<\/a>, \u201csector underperform\u201d) to $160 from $155, Loblaw Companies Ltd. (L-T<\/a>, \u201csector outperform\u201d) to $68 from $65 and Saputo Inc. (SAP-T<\/a>, \u201csector outperform\u201d) to $44 from $39. The averages are $187.59, $65.17 and $42.20, respectively.<\/p>\n \u201cWe approach 2026 with a mostly constructive view of North American consumers,\u201d he said. \u201cIn Canada, job creation and disposable income and retail sales growth have been sound. We\u2019re more bullish south of the border, where the data > sentiment theme also exists, though we layer in fiscal stimulus from OBBB, rate cuts and a continued wealth effect. A K-shaped economy may not be ideal, though it can carry sufficient growth. This year offers some impactful unknowns, especially the outcome on tariffs, and the ultimate fate of USMCA, though simply lapping initial tariffs should be helpful for consumer spending. In the past we\u2019ve paid a great deal of attention to sentiment scores. We\u2019re now willing to dismiss these, at least near-term, as they seem disconnected from predicting consumer behaviour.<\/p>\n \u201cAmong our top picks for 2026 are ATD, PBH and GRGD; the first two for stock-specific reasons; for GRGD, we see apparel as a top-performing category, partly from an absence of inflation. Further, we believe L and DOL, which lie at the intersection of multiple long-term drivers\u2014value-seeking, private label, health\/wellness\/beauty\u2014are well-positioned.\u201d<\/p>\n