Inside the Market\u2019s roundup of some of today\u2019s key analyst actions<\/p>\n
Scotia Capital analyst Mike Rizvanovic thinks Canada\u2019s large banks showed their \u201cresilience yet again\u201d during the recently completed second-quarter earnings season.<\/p>\n
He says their performance came \u201cin the face of mounting macroeconomic headwinds, with an across-the-board EPS beat that featured an expected boost from market-sensitive businesses, but also included solid gains in fee-based revenue more broadly, signs of a pickup in loan volumes, and further evidence that credit costs remain very manageable at this stage of the credit cycle.\u201d<\/p>\n
Accordingly, he says he continues to have \u201ca positive bias\u201d on the group\u2019s earnings per share trajectory through fiscal 2027, despite acknowledging \u201cstretched valuation multiples that we believe limit any meaningful share price upside.\u201d<\/p>\n
\u201cAs of 5\/28\/2026, the large Canadian banks traded at an average P\/E multiple of 14.2 times (market cap-weighted), which is well above the group\u2019s 10-year historical average of 11.2 times,\u201d he said. \u201cWe acknowledge that valuation multiples have become stretched, reflecting a lot of positives in the near-term outlook and suggesting that consensus EPS estimates are still too low. We believe that current market dynamics are still favorable for the group, making it possible for further upward EPS revisions in the quarters ahead, which we believe will help keep valuation multiples well above historical levels for the time being, particularly with credit costs still looking to be very manageable. Having said that, we see only limited upside potential to share prices and risk skewed to the downside, as reflected in our revised target prices, which imply relatively modest total returns in the high-single-digit range (inclusive of dividends).\u201d<\/p>\n
In a client report released before the bell, Mr. Rizvanovic upgraded Bank of Montreal (BMO-T<\/a>) to \u201csector outperform\u201d from a \u201csector perform\u201d recommendation.<\/p>\n \u201cOur rating change is premised on (1) strong potential lending volume upside in the U.S. with optimization now complete and the bank actively expanding within its targeted footprint in California; (2) clear momentum in the bank\u2019s ROE trajectory, which improved to 13.5 per cent this past quarter, making the 15-per-cent target (exiting F2027) appear more achievable; and (3) higher upside potential on EPS growth, driven largely by momentum in the U.S. business,\u201d he said.<\/p>\n The analyst\u2019s target for BMO shares rose to $234 from $209. The average target on the Street is $229, according to LSEG data.<\/p>\n Conversely, Mr. Rizvanovic downgraded Canadian Imperial Bank of Commerce (CM-T<\/a>) to \u201csector perform\u201d from \u201csector outperform\u201d with a $155 target, falling from $159 and below the $160.81 average.<\/p>\n \u201cWhile we still have a favorable view on CM\u2019s medium-term outlook, we believe that the bank\u2019s roughly 2-year stretch of consistent outperformance relative to peers is set to moderate in the quarters ahead given: (1) diminishing NIM upside, which had been a material catalyst for CM; (2) a bit more potential downside risk in the Capital Markets business as CM\u2019s growth since F2024 has been the most outsized; and (3) more exposure to the lending market in Canada, which we believe will trail growth rates in the U.S. through our forecast period,\u201d he explained.<\/p>\n The analyst made these other target adjustments:<\/p>\n EQB Inc. (EQB-T<\/a>, \u201csector perform\u201d) to $125 from $122. Average: $121.Royal Bank of Canada (RY-T<\/a>, \u201csector outperform\u201d) to $275 from $252. Average: $275.05.Toronto-Dominion Bank (TD-T<\/a>, \u201csector outperform\u201d) to $165 from $150. Average: $160.45.<\/p>\n Following first-quarter earnings season for Canadian pipeline, utility and energy infrastructure companies, National Bank Financial analyst Patrick Kenny continues to see \u201cstrengthening\u201d macroeconomic tailwinds, \u201cnamely the intensified spotlight on North American energy security\/reliability.\u201d<\/p>\n \u201cOver and above heightened WTI price volatility during the U.S.\/Iran war, the three-month (and counting?) disruption of the Strait of Hormuz is having a structural impact on trade flows and investor sentiment surrounding North America\u2019s role in delivering global energy security and reliability,\u201d he said. <\/p>\n \u201cThis comes at a time when domestic support for pipeline egress is picking up steam, bringing 1.0 mmbpd [million barrels per day] of medium-term expansions into focus (ENB up 250 mbpd [thousand barrels per day] MLO2; TMX up 300 mbpd; SOBO up 450 mbpd Prairie Connector), while the longer-term over 1.0 mmbpd West Coast pipeline is to be submitted to the Major Projects Office by July 1, 2026, following the Government of Canada\u2019s recent implementation agreement. On the natural gas front, heightened global security of supply concerns also amplify market demand for Canada\u2019s over 6.0 bcf\/d of potential LNG projects off the West Coast.\u201d<\/p>\n Mr. Kenny also emphasized the impact of the surge in power demand related to data centre construction.<\/p>\n \u201cWe continue to expect the sanctioning of 1.2 GW of Phase I Alberta data centre capacity (Greenlight, Keephills) over the near term, as well as implementation of the AESO\u2019s Phase 2 large load allocation process (\u2019bring your own generation\u2019) on the back of the Government of Canada and Alberta providing clarity on Alberta\u2019s long-term carbon pricing under TIER, maintaining the Clean Electricity Regulations (CER) in abeyance while the constitutional reference and any appeals proceed (i.e., Alberta gas-fired plants will not be forced to achieve net-zero by 2035),\u201d he said. \u201cMore broadly, we continue to observe hyperscalers prioritizing speed-to-power, positioning natural gas and behind-the-fence generation solutions as supporting North America\u2019s ability to compete for global AI-related infrastructure projects.\u201d<\/p>\n In a client report released before the bell, Mr. Kenny adjusted his valuations for companies in his coverage universe to reflect this bullish view, while touting a \u201cStrait up premium for energy security.\u201d<\/p>\n \u201cEven if and when blockages on the Strait of Hormuz are lifted, we believe the global trade diversification train has left the station, with North America\u2019s energy infrastructure companies benefitting from rising international demand for reliable and affordable energy exports, while presenting a generational opportunity for Canada to reach its potential as an energy superpower,\u201d he said. \u201cAs such, on the heels of ourAnnual Canadian Energy Infrastructure Conference, we are reducing our equity risk premiums embedded in our cost of equity assumptions by 100 bps on average across our coverage list (i.e., increasing our EV\/Free-EBITDA valuation multiples by 1.0 per cent), with our target prices moving up approximately 11 per cent.\u201d<\/p>\n Mr. Kenny continues to see \u201cattractive\u201d entry points for his unchanged top picks for the year ahead, which are: <\/p>\n * AltaGas Ltd. (ALA-T<\/a>, \u201coutperform\u201d) with a $60 target, up from $52. The average target on the Street is $55.62, according to LSEG data.<\/p>\n * Capital Power Corp. (CPX-T<\/a>, \u201coutperform\u201d) with an $82 target, up from $75. Average: $84.07.<\/p>\n * Gibson Energy Inc. (GEI-T<\/a>, \u201coutperform\u201d) with a $33 target, up from $30. Average: $30.50.<\/p>\n * Rockpoint Gas Storage Inc. (RGSI-T<\/a>, \u201coutperform\u201d) with a $35 target, up from $32. Average: $32.<\/p>\n * TC Energy Corp. (TRP-T<\/a>) with a $102 target, up from $92. Average: $96.24.<\/p>\n His other target revisions are: <\/p>\n Atco. Ltd. (ACO.X-T<\/a>, \u201csector perform\u201d) to $69 from $62. Average: $72.80.Brookfield Infrastructure Partners LP (BIP-N<\/a>\/BIP.UN-T<\/a>, \u201coutperform\u201d) to US$43 from US$38. Average: US$43.73.Canadian Utilities Ltd. (CU-T<\/a>, \u201csector perform\u201d) to $51 from $46. Average: $49.17.Emera Inc. (EMA-T<\/a>, \u201csector perform\u201d) to $75 from $69. Average: $78.81,Enbridge Inc. (ENB-T<\/a>, \u201csector perform\u201d) to $81 from $73. Average: $79.62.Fortis Inc. (FTS-T<\/a>, \u201csector perform\u201d) to $82 from $75. Average: $79.72.Hydro One Ltd. (H-T<\/a>, \u201csector perform\u201d) to $61 from $56. Average: $58.83.Keyera Corp. (KEY-T<\/a>, \u201csector perform\u201d) to $56 from $50. Average: $59.64.Pembina Pipeline Corp. (PPL-T<\/a>, \u201coutperform\u201d) to $71 from $63. Average: $67.South Bow Corp. (SOBO-N<\/a>\/SOBO-T<\/a>, \u201csector perform\u201d) To US$35 from US$31. Average: US$33.31.Superior Plus Corp. (SPB-T<\/a>, \u201csector perform\u201d) to $8.50 from $7.50. Average: $8.93.TransAlta Corp. (TA-T<\/a>, \u201coutperform\u201d) to $24 from $22. Average: $24Tidewater Midstream and Infrastructure Ltd. (TWM-T<\/a>, \u201csector perform\u201d) to $17 from $15. Average: $14.83.<\/p>\n Seeing it \u201corganically outperforming its U.S. storage peers in a challenging North American housing market, Raymond James analyst Brad Sturges upgraded StorageVault Canada Inc. (SVI-T<\/a>) to \u201cstrong buy\u201d from \u201coutperform\u201d previously.<\/p>\n \u201cSince mid-2015, StorageVault has generated average quarterly SP-NOI [same-property net operating income] growth of 9.5 per cent year-over-year, or 390 basis points above the U.S. storage peer average of 5.6 per cent,\u201d he said. \u201cIn 2025 and 2026 year-to-date, StorageVault\u2019s SP-NOI growth has recently recovered back to a quarterly average of 4.5 per cent year-over-year, or 450 basis points above the U.S. storage peer average. StorageVault\u2019s recent SP-NOI growth year-over-year reflects same-store revenue growth in the 4-7-per-cent range year-over-year, while its SP-NOI margin has been stable year-over-year at 69 per cent.\u201d<\/p>\n In a client report released Monday, Mr. Sturges said his upgrade to the Toronto-based company is based on three main factors: \u201c1) NAV\/share discount and improved relative P\/AFFO multiple valuation; 2) above-average SP-NOI and AFFO\/share growth prospects; and 3) greater private market M&A activity in the Canadian storage sector that validates a higher NAV\/share estimate.\u201d<\/p>\n \u201cInstitutional investor interest remains strong for direct Canadian storage real estate, as illustrated by recent larger portfolio transactions executed by large, reputable buyers in key Canadian urban markets,\u201d he added. \u201cNotable portfolio transactions in Vancouver, Montreal, and Ontario have been executed by larger institutional investors such as QuadReal Property Group and Brookfield occurred at valuations (going-in cap rate: less than 5 per cent) well above StorageVault\u2019s implied trading valuation (cap rate: more than 6 per cent).<\/p>\n His target for the company\u2019s shares slid to $5.25 from $5.50, which is below the $5.75 average on the Street.<\/p>\n \u201cAfter outperforming its U.S. storage peers by 29 pp on average in 2025, StorageVault\u2019s relative total return performance has reversed in 2026 year-to-dare (at May-29), as StorageVault has relatively underperformed its US storage peers by 27 pp. While StorageVault\u2019s total return performance last year benefited from increased private market Canadian storage M&A activity, the total return performance in 2026 year-to-date for the company\u2019s U.S. storage peer group has been supported by Public Storage\u2019s pending takeout offer for National Storage Affiliates Trust (NSA) earlier this year. Currently, StorageVault trades at a substantial NAV\/share discount, versus a slight historical NAV\/share premium. StorageVault\u2019s P\/AFFO multiple versus its US storage peers has also contracted to an ~0.5x turn premium, versus a long-term historical P\/AFFO multiple premium average of approximately 6 times,\u201d he concluded.<\/p>\n When Dollarama Inc. (DOL-T<\/a>) reports its first-quarter fiscal 2027 results on June 11, National Bank Financial analyst Vishal Shreedhar expects the discount retailer to see the benefits of improving same-store sales growth while near-term investments, particularly in Australia, may limit earnings expansion.<\/p>\n \u201cOur forecast of sequentially higher sssg (Q4\/F26 was 1.5 per cent; 3.5-per-cent adjusted for the calendar shift) largely reflects positive article price inflation and a recovery from unfavourable weather last quarter, among other factors,\u201d he said. \u201cOur price checks of items suggest like-for-like article price inflation of 1.6 per cent year-over-year. Further, our analysis suggests a higher mix of $4-$5 articles (4 per cent year-over-year, largely within consumables), which may contribute to higher aggregate article inflation. <\/p>\n \u201cOur data suggests that sssg accelerated quarter-over-quarter. Recall, DOL noted:\u201c…Towards the end of fiscal 2026, we started seeing some price increases from the domestic side, which will trickle into fiscal 2027.\u201d(3) Our review of peer commentary suggests: (i) consumer spending remains focused on value, (ii) competitive environment is intense, yet rational, and (iii) higher growth in younger and more affluent consumer cohorts within discount retailing.”<\/p>\n Mr. Shreedhar is now projecting earnings per share of 99 cents, which is a penny less than the consensus on the Street but 4 cents higher than the same period a year ago. He attributes that 4-per-cent year-over-year gain to \u201c(i) 4.0-per-cent sssg, (ii) net new store openings (73 year-over-year), (iii) share buybacks, and (iv) 24-per-cent year-over-year higher Dollarcity contribution.\u201d<\/p>\n \u201cThese factors are expected to be partly offset by: (i) 230 basis points lower EBITDA margin at 29.6 per cent, largely reflecting a lower margin contribution in Australia, (ii) higher D&A, (iii) higher interest expense, and (iv) a higher tax rate,\u201d he added.<\/p>\n Reaffirming his \u201coutperform\u201d rating for Dollarama shares, Mr. Shreedhar raised his target to $203 from $198. The average is $205.41.<\/p>\n \u201cWe hold a positive view on DOL reflecting a stable, high return on capital international growth story supported by strong cash flows, a solid balance sheet and resilient sales performance,\u201d he said. \u201cWhile near-term investments are elevated, we expect DOL to execute effectively on improvement initiatives over time, consistent with its track record of disciplined conservatism and success in international markets.\u201d<\/p>\n Following better-than-expected first-quarter results and a \u201cpositive\u201d update to its guidance, Desjardins Securities analyst Benoit Poirier is \u201cencouraged\u201d by BRP Inc.\u2019s (DOO-T<\/a>) \u201cbalance sheet, premium positioning and supportive trends.\u201d<\/p>\n The Valcourt, Que.-based recreational vehicle manufacturer reported quarterly revenue of $747-million, exceeding the Street\u2019s expectation of $736-million and at the top of its guidance range of $710-million to $750-million. Adjusted basic earnings per share of 36 cents fell under the consensus of 44 cents despite a 30-per-cent year-over-year jump in sales.<\/p>\n Seeing \u201cmodest growth\u201d in fiscal 2027, BRP now expects the company to generate normalized earnings before interest, taxes, depreciation and amortization of $925-million to $975-million this fiscal year, compared to a previous forecast at the end of March of between $1.18-billion to $1.28-billion.<\/p>\n \u201cWe are not concerned about the softer-than-expected 2Q FY27 guided EPS, as it is primarily driven by timing factors rather than underlying demand weakness,\u201d he said. \u201cSpecifically, the outlook reflects lower PWC shipments delivered earlier in 1Q, combined with the full tariff impact as mitigation factors are going to have a positive impact only in 2H. We therefore model margins of 4.3 per cent for 2Q and 10.3 per cent for the full year. <\/p>\n \u201cUnderlying trends remain strong. BRP\u2019s premium mix continues to be supported by an affluent customer base more insulated from inflation and fuel price volatility. Management highlighted continued retail momentum, especially in ORV, and strong snowmobile pre-orders, and stated that May retail was positive on a consolidated basis, with both ORV and personal watercraft up. It emphasized that pricing is a minimal component of the mitigation strategy and does not expect any significant pricing actions. We model revenue growth of 6.6 per cent for 2Q and 9.1 per cent for the full year.\u201d<\/p>\n Also emphasizing share buybacks are \u201cback on track,\u201d Mr. Poirier raised his target for BRP shares to $103 from $97, keeping a \u201cbuy\u201d rating, after increased his revenue and earnings expectations through fiscal 2029. The average on the Street is $95.11.<\/p>\n