Inside the Market\u2019s roundup of some of today\u2019s key analyst actions<\/p>\n
Benefitting from \u201cstaying power and relevance\u201d over its century-long history, Canadian Tire Corp Ltd. (CTC.A-T<\/a>) has acquired \u201ca scale advantage which should favor market share gains over smaller operators as the Canadian retail landscape continues to consolidate,\u201d according to Stifel analyst Martin Landry.<\/p>\n \u201cCanadian Tire is a Canadian iconic retailer with strong customer awareness and brand affinity,\u201d he said. \u201cUnder the True North initiative, the company is undergoing significant changes including, (1) integrating its retail banners internally to leverage its scale and improve its access to customers, (2) investing in store expansions and relocation with new concepts that are getting traction with customers, and (3) growing the loyalty program with the addition of key strategic partners. <\/p>\n \u201cCTC is starting the second year of a four-year $2 billion initiative, which we believe will drive earnings growth and shareholder returns. Shares of CTC are attractively valued, trading at 11-times forward earnings. We derive our target price by applying a 13.5 times multiple to our 2027 EPS forecasts, and supporting that using a sum of the parts methodology.\u201d<\/p>\n In a client report released before the bell titled Where Dad Buys Everything, Mr. Landry initiated coverage of Canadian Tire with a \u201cbuy\u201d rating, pointing to three factors in justifying his bullish stance:<\/p>\n 1. Appealing valuation. <\/p>\n Analyst: \u201cCTC\u2019s shares trade at a 11 times forward earnings, a depressed valuation in our view. We believe that there is potential for multiple expansion as management executes on its True North strategy and yields revenue and earnings growth. The company\u2019s valuation ranged between 13-15 times forward earnings during the 2016-2018 period with similar operating metrics vs currently. CTC\u2019s valuation has been expanding in the last three years, and we believe this expansion could continue. Our conservative sum of the parts valuation scenarios suggests a value ranging between $210-260 per share.\u201d<\/p>\n 2. An increased focus on shareholder returns. <\/p>\n Analyst: \u201cIn 2022 and 2023, CTC\u2019s shares lagged the S&P\/ TSX consumer discretionary index and, in reaction to this, management in conjunction with the Board performed an introspection. As such, the True North initiative was sparked, in part, by a desire to address an underperforming stock price. A strong signal, in our view, is the change in the company\u2019s Long-Term Incentive Plan with 50 per cent of management\u2019s PSU compensation now based on shareholder returns vs peers, a new metric not present previously. Management has clearly stated its goals to generate shareholder returns above historical levels. <\/p>\n 3. A \u201cstrong competitive moat.\u201d <\/p>\n Analyst: \u201cCTC owns iconic retail banners such as Canadian Tire, SportChek and Mark\u2019s, which are well entrenched in their markets. These banners have a loyal customer base with a strong brand affinity. The company has 9.8 million active registered members in its loyalty program, representing an impressive 50-60-per-cent household penetration rate. The company has popular Owned Brands, which generated $5.7-billion in revenues in 2025, representing a penetration rate of 37 per cent. Owned Brands offer exclusive products, generate traffic into the stores and offer higher margins than national brands.\u201d<\/p>\n Mr. Landry set a target of $215 for Canadian Tire shares. The average target on the Street is $204.69, according to LSEG data.<\/p>\n While he warns iron ore markets \u201cappear to be over-supplied currently, with large-scale supply additions offsetting depletion and declining output at mature operations,\u201d National Bank Financial analyst Shane Nagle thinks Canadian producers are \u201cwell positioned\u201d from a quality perspective, \u201csupported by high-grade resources, access to renewable energy, and proximity to Atlantic export corridors.\u201d<\/p>\n \u201cDespite more challenging near-term headline market conditions, the backdrop for high-grade iron ore appears constructive as the market continues its gradual shift toward (Direct Reduced Iron) DRI and (Electric Arc Furnace) EAF based steelmaking, which increases the value-in-use of high-grade, low-impurity iron ore relative to standard benchmark material,\u201d he added. <\/p>\n \u201cCanada [is] well positioned as [the] market shifts to high-purity. Iron Ore Canada\u2019s Labrador Trough contains several large-scale, high-grade iron ore resources, with access to renewable energy and proximity to Atlantic export corridors. The Government of Canada remains focused on advancing critical mineral projects through financial\/infrastructure commitments, strategic partnerships, and collaboration between regulatory agencies\/First Nations<\/p>\n In a client report titled The Dawn of Canada\u2019s Iron Age, National Bank Financial analyst Shane Nagle initiated coverage of Champion Iron Ltd. (CIA-T<\/a>) and Oceanic Iron Ore Corp. (FEO-X<\/a>) with \u201coutperform\u201d ratings, seeing both poised to benefit from the market shift.<\/p>\n He named Montreal-based Champion his \u201cproducer of choice despite near-term costs impacts.<\/p>\n \u201cChampion Iron is an established high-grade iron ore producer, with significant value-in-use premiums for the company\u2019s DR-feed iron concentrate to be realized as shipments ramp-up throughout H2\/26,\u201d he said. <\/p>\n \u201cThe recent Rana Gruber acquisition in Norway provides blending opportunities to immediately access growing DRI\/EAF steel markets in Europe, while its 51-per-cent interest in Kami offers long-term DR-feed optionality with its partners Nippon Steel and Sojitz. Near term, Champion is negatively exposed to higher diesel prices\/shipping rates, which are expected to ease with a potential reopening of the Strait of Hormuz.<\/p>\n He set a target $5.75 for Champion shares, which is narrowly below the $5.96 average on the Street.<\/p>\n Mr. Nagle called Vancouver-based Oceanic Iron Ore, which is focused on its 100-per-cent owned Hopes Advance, Morgan Lake and Roberts Lake iron ore development projects in the Labrador Trough, \u201ca well positioned developer\u201d while adding a \u201cspeculative\u201d risk designation to his stock rating. <\/p>\n \u201cOceanic Iron Ore\u2019s large-scale, high-grade, Hopes Advance project is distinguished by its coastal location and \u201cno-rail\u201d development concept,\u201c he said. \u201dThe PEA mine plan evaluates only three of the 10 known iron deposits within the property outlining the potential for further development opportunities, and recent metellurgical testwork outlined opportunity for future DR-feed quality production. Oceanic will leverage its experienced Board\/Management team with a strong track record of financing\/developing\/operating mines in Canada.”<\/p>\n His target is $1.70, falling below the $2 average.<\/p>\n Seeing a \u201crobust\u201d business jet environment, Desjardins Securities analyst Benoit Poirier thinks the Street underestimates Bombardier Inc.\u2019s (BBD.B-T<\/a>) ability to generate revenue of US$13.5-billion or more and EBITDA of at lease US$2.5-billion in 2030, \u201cdriving a potential value of C$506\/share.\u201d<\/p>\n \u201cWe expect strong FCF generation to reduce leverage to negative 1.0 times (now at 1.8 times), which could unlock US$7.5-billion in incremental borrowing capacity, providing meaningful strategic optionality,\u201d he said. <\/p>\n In a client report released Wednesday, Mr. Poirier said he sees conditions that will support a ramp-up in production toward 180 or more units in 2030 and emphasizes management objectives for that year are \u201cpoised for upward revision\u201d with the Street estimates \u201coverly conservative.\u201d<\/p>\n \u201cBusiness aviation has shifted to a structurally higher baseline, with traffic 15\u2013 20 per cent above pre-COVID levels and OEM backlogs reaching record highs,\u201c he explained. \u201dFleet operators\u2014 now representing 56 per cent of the market\u2014are reshaping demand dynamics, while HNWI growth remains strong, with population and wealth expanding at CAGRs [compound annual growth rates] of 9 per cent and 18 per cent, respectively, over the past three years. Further supporting production upside, we estimate 400+ outstanding purchase options with near-100-per-cent exercise rates, providing additional embedded demand not reflected in current backlogs. <\/p>\n \u201cWe see meaningful upside to management\u2019s 2030 targets across key segments, including defence, with a pipeline of campaign opportunities. In aftermarket, Bombardier has already achieved its 50-per-cent market share objective, increasing confidence that the previously viewed aspirational 70-per-cent upper bound is attainable. Incorporating these tailwinds, we forecast revenue of US$13.9-billion in 2030, exceeding management\u2019s initial target of US$13.0-billion and consensus of US$11.6-billion.:<\/p>\n Also touting \u201csignificant FCF generation ahead, providing US$7.5-billion of dry powder,\u201d Mr. Poirier raised his target for Bombardier shares to $364 from $324, keeping a \u201cbuy\u201d rating, after introducing his 2029\u201330 estimates. The average target on the Street is $314.43.<\/p>\n \u201cBottom line, we still like the stock and believe its valuation remains compelling at current levels,\u201d he said.<\/p>\n Calling its Keystone pipeline system \u201can irreplaceable long-duration asset that underpins predictable cash flows for decades,\u201d Raymond James analyst Michael Barth initiated coverage of South Bow Corp. (SOBO-T<\/a>) with an \u201coutperform\u201d rating.<\/p>\n \u201cKeystone is young as far as Canadian long-haul pipelines go, and is still largely operating under the initial multi-decade take-or-pay contract structure,\u201d he said. \u201cThose take-or-pay contracts cover more than 90 per cent of total capacity, and are supported by high quality counterparties, which gives us high visibility to a stable FCF stream to support deleveraging and\/or new growth. We don\u2019t necessarily buy into the idea that significant toll upside exists as those initial take-or-pay contracts roll off in the early-2030s, but we do expect that supply\/demand for egress from the WCSB will remain sufficiently tight that recontracting of capacity should be a layup.\u201d<\/p>\n In a client note released Wednesday, Mr. Barth also predicted the company\u2019s Prairie Connector, which is a pipeline to transport crude oil from Hardisty, Alta., to U.S. markets in the Midwest and Gulf Coast, will receive a positive final investment decision (FID), which he calls a \u201cgame changer\u201d for the Calgary-based company.<\/p>\n Canada, U.S. must do more to remove political risks around pipeline permits, South Bow CEO says<\/a><\/p>\n \u201cWe\u2019d argue that SOBO was lacking any material obvious organic growth until the Prairie Connector concept came to fruition, but we estimate that Prairie Connector by itself can drive a mid-single-digit DCF\/share CAGR through 2030,\u201c he said. \u201dThere are still plenty of unknowns around this project and downstream connectivity, but the open season suggests plenty of commercial support exists, and we make the case in this report that this project has a very high probability of proceeding. We estimate that Phase 1 of Prairie Connector (which we include in our model) is worth ~C$5\/share to SOBO today, while the NPV of Phase 2 (which we don\u2019t include in our model) could be worth another $4\/share. In our view, the current share price still doesn\u2019t reflect full value for Phase 1, let alone any value for Phase 2.<\/p>\n \u201c\u201cM&A is certainly on the menu, and we can easily paint a picture where strategic and accretive deals get done. Management made it abundantly clear at the last IR Day that M&A would be a key growth pillar, and we see plenty of potential targets (largely in Canada) that would make both strategic sense and likely deliver solid DCF\/share accretion. As one of the few strategic consolidators of oil assets in Western Canada, we think SOBO is uniquely positioned to pursue M&A, and view that as additional free upside optionality.\u201d<\/p>\n Seeing an \u201cattractive\u201d valuation, Mr. Barth set a Street-high target of $60 per share, which exceeds the $47,11 average.<\/p>\n \u201cAt the current share price we have SOBO trading at a 8.9-per-cent DCF yield on our FY26 estimates. That\u2019s sufficient cash to cover the 5.3-per-cent dividend yield, and (on our estimates) likely self-fund Phase 1 of Prairie Connector, which should help drive a 6-per-cent CAGR in DCF\/share through 2030. Implicitly, that\u2019s a 11-12-per-cent total return with additional upside from Phase 2 of Prairie Connector, other organic growth, or M&A,” he explained.<\/p>\n National Bank Financial analyst Baltej Sidhu believes \u201cunderlying demand drivers of the broader energy transition and electrification thematic support the durability of [Hammond Power Solutions Inc.\u2019s (HPS.A-T<\/a>)] growth profile, underlying profitability and our investment thesis.\u201d<\/p>\n “We recently had the opportunity to host management across Europe for investor meetings,\u201c HE said. \u201dWe came away with several consistent messages: demand visibility remains strong, capacity is again becoming a strategic constraint, and AEG should broaden the growth algorithm beyond dry-type transformers. Investor dialogue broadly honed in on tariffs, data centre architecture changes, data centre capex, and capacity-cycle risk.”<\/p>\n Citing stronger long-term pricing and cash flow expectations, he raised his target for Hammond shares to $355 from $325, maintaining an \u201coutperform\u201d rating. The average is $360.60.<\/p>\n In a client report, Mr. Sidhu said capacity restrictions have forced the need for expansion, emphasizing it\u2019s now \u201cwhere and how much, not if,\u201d and he emphasized data centre demand remains the \u201cprimary growth engine.\u201d<\/p>\n \u201cThe question is no longer whether HPS needs more capacity, but where and how much,\u201d he said. \u201cMonterrey 4 and reconfiguration across Monterrey 3\/4 should bridge near-term demand and support approximately $1.2-billion of revenue capacity in 2026E, with existing real estate potentially adding another $50-$100-million. Beyond that, we believe a greenfield decision is increasingly likely, with quotation activity remaining robust and a new facility requiring 1.5-2.0 years to build.\u201d<\/p>\n \u201cData centres have moved from 10 per cent of revenue three years ago to 30 per cent exiting 2025, with a higher share of backlog at more than 30-40 per cent. This demand signal is also changing backlog quality: orders are larger in value and longer-dated, with typical data centre awards of $10-$20-million. In our view, this reinforces HPS\u2019 differentiation in custom dry-type transformers, where schedule, integrity, engineering support, and quality matter more than price.\u201d<\/p>\n The analyst also sees Hammond\u2019s $365-million acquisition of AEG Power Solutions, a global manufacturer of mission-critical industrial power electronics and power conversion systems, extending its \u201cgrowth runway\u201d while tariffs and technology risks \u201clook manageable.\u201d<\/p>\n \u201cManagement reiterated expectations for a Q2\/26 close [of the AEG deal], subject to regulatory approvals,\u201d he said. \u201cWe continue to view AEG as an underappreciated strategic platform, expanding HPS into UPS, power electronics, services and AC\/DC power quality solutions. With limited geographic and product overlap, the key opportunity is leverage HPS\u2019 North American channels to sell AEG technology while preserving AEG\u2019s existing strength in Europe, APAC and the Middle East.\u201d<\/p>\n \u201cSection 232 tariffs create margin timing pressure, particularly on standard product, but HPS has moved on price and larger custom contracts often include tariff protection. Solid-state transformers and 800 VDC data centre architecture remain legitimate long-term watch items, but current economics appear narrow and niche. We view AEG as giving HPS building blocks that turn emerging AC\/DC architectures into option value.\u201d<\/p>\n Citing stronger long-term pricing and cash flow expectations, Mr. Sidhu hiked his target for Hammond shares to $355 from $325, keeping an \u201coutperform\u201d rating. The average is $360.60.<\/p>\n Desjardins Securities analyst Brent Stadler thinks TransAlta Corp.\u2019s (TA-T<\/a>) US$1-billion acquisition<\/a> of two natural gas-fired peaking facilities near Denver from U.S. alternative-asset management giant Blackstone Inc. (BX-N<\/a>) \u201cticks a number of boxes in that it is immediately accretive, increases the contractedness of its fleet and expands its growth platform in the western U.S.\u201d<\/p>\n \u201cIn our view, the M&A ticks a number of boxes: (1) it is immediately accretive to FCF\/sh, (2) it improves TA\u2019s overall portfolio contractedness to 11 years (from 10 years) with 52 per cent (from 50 per cent ) of its fleet now contracted (by MWs) improving cash flow quality, (3) TA is effectively buying brand new gas assets which will average down the age of its gas fleet, and (4) it increases exposure to the western U.S. which is a core growth region for TA,\u201d he added. \u201cTA is acquiring de-risked assets, and generally, on M&A we would also like to see the opportunity to create value for shareholders through additional growth or contracting, and we could get some colour on growth opportunities over time.<\/p>\n \u201cPotential near-term catalysts. TA remains confident on a tightening market in Alberta, and we continue to expect the FID of Pembina\u2019s 970MW Greenlight data centre project by the end of June, which should drive momentum in TA\u2019s share price.\u201d<\/p>\n While Mr. Stadler, who resumed coverage following with a concurrent equity raise, acknowledges the acquisition multiple \u201ccomes in a bit rich,\u201d he thinks it is \u201creflective of the contracted term and fully de-risked nature of the assets.\u201d <\/p>\n \u201cWe estimate that the deal is 5-per-cent accretive to our 2027 FCF\/sh estimates, and adds C$0.25 to our risk adjusted NAV\/sh,\u201d he said.<\/p>\n Maintaining his \u201chold\u201d rating for TransAlta shares, the analyst raised his Street-low target to $18.50 from $18. The average is $24.<\/p>\n Elsewhere, others resumed coverage include: <\/p>\n * TD Cowen\u2019s John Mould with a \u201cbuy\u201d rating and $26 target.<\/p>\n \u201cWe attribute the 13-per-cent pullback since TA\u2019s CO peaker acquisition announcement to asset characteristics (highly derisked) and full valuation (12.5 times EV\/EBITDA). We view these new peakers as complimentary to TA\u2019s older gas-fired merchant fleet & consistent with TA\u2019s desire to grow in WECC. We continue to anticipate near-term progress on the broader Alberta data centre opportunity,\u201d said Mr. Mould.<\/p>\n * ATB Cormark\u2019s Nate Heywood with an \u201coutperform\u201d rating and $28 target.<\/p>\n \u201cWhile the deal increases TA\u2019s overall contracted capacity\/duration profile and provides low- to mid-single-digit FCF per share accretion, it comes at a premium 12.5 times EV\/EBITDA multiple and will modestly elevate the company\u2019s average cost of debt and leverage ratio,\u201d said Mr. Heywood.<\/p>\n * Scotia\u2019s Robert Hope with a \u201csector outperform\u201d rating and $27 target.<\/p>\n \u201cWe estimate the transaction to be 2-3-per-cent accretive to cash flow with potential upside through availability incentives. The shares have been weak following the announcement, which we view as an overreaction given the transaction is accretive while preserving significant upside related to a recovery in the Alberta power market (which is a key catalyst),\u201d said Mr. Hope.<\/p>\n * RBC\u2019s Maurice Choy with an \u201coutperform\u201d rating and $24 target.<\/p>\n \u201cWhile we acknowledge the market\u2019s pushback on the deal\u2019s timing and relative valuation, many of TransAlta\u2019s near-term catalysts that have attracted investors to this stock recently remain in place, with the share price pullback offering investors a more attractive entry point and a stronger pro forma cash flow profile. Also, upcoming events should lead to a rapid deleveraging in the near-term, alleviating investors\u2019 credit concerns. As these events unfold, and the company\u2019s strategic repositioning (and any resulting investor turnover) continues to take place over the long-term, we see TransAlta\u2019s share valuation improving more sustainably,\u201d said Mr. Choy.<\/p>\n In other analyst actions: <\/p>\n * Citing valuation concerns, Morgan Stanley\u2019s Robert Kad downgraded TC Energy Corp. (TRP-T<\/a>) to \u201cequalweight\u201d from \u201coverweight\u201d with a $103 target. The average is $93.61. <\/p>\n * In response to its $650-million deal to be acquired<\/a> by private equity giant Thoma Bravo LP, Stifel\u2019s Justin Keywood downgraded Kneat.com Inc. (KSI-T<\/a>) to \u201chold\u201d from \u201cbuy\u201d with a $6.50 target, up from $5.75 but narrowly under the $6.56 average. <\/p>\n \u201cWe perceive the acquisition as a positive for Kneat investors given the strong downward pressure on shares driven by the terminal AI risk on the broader Canadian technology sector and the validation software market in which KSI operates,\u201d said Mr. Keywood. \u201cWe previously revised our target to $5.75 to reflect a 23-per-cent premium to the May 8 close. Nevertheless, the offer arrived 20 per cent above this initial estimate. We recognize Thoma Bravo\u2019s history of more aggressive offers for scarcity-value technology opportunities, reminiscent of its 2023 acquisition of Magnet Forensics at 9.8 times NTM [next 12-month] sales. We also believe the healthy multiple provides solid support for the broader Canadian Technology\/Digital Health space and should be viewed as a compelling analog to similarly fast-growing, sticky technology plays; we highlight VitalHub (VHI-TSX, BUY, $7.24) in this category, which trades at 1\/3 of KSI\u2019s takeout multiple at 2.8 times our 2026 revenue estimate, where a buy-back initiation could be constructive for shares. WELL Health (WELL-TSX, BUY, $4.84) is also notable as the business model sharpens to a pure-play pursuit, including M&A and certain U.S. divestitures, anticipated to lift valuation from 1.3 times NTM [next 12-month] sales currently, towards peers, 2.2 times.\u201d<\/p>\n * CIBC\u2019s Krista Friesen increased her target price for Exchange Income Corp. (EIF-T<\/a>) to $141 from $123, keeping an \u201coutperformer\u201d rating, following a recent facility tour and meeting with management. The average on the Street is $123.33.<\/p>\n