Inside the Market\u2019s roundup of some of today\u2019s key analyst actions<\/p>\n
Following Thursday evening\u2019s release of stronger-than-anticipated first-quarter fiscal 2027 financial results<\/a>, Stifel analyst Martin Landry thinks Aritzia Inc.\u2019s (ATZ-T<\/a>) current valuation is \u201creasonable and could expand in the coming months leading to the investor day in October.\u201d<\/p>\n \u201cAritzia reported strong Q1FY27 results with comparable sales growth of 35.1 per cent year-over-year, the highest pace since the IPO,\u201d he said in a client report titled Comps Gone Wild: Aritzia\u2019s 35% Party Isn\u2019t Over Yet.<\/p>\n \u201cIt is difficult to point to one single reason to explain the success of the company, as it appears to be a confluence of items which includes (1) products that are resonating with shoppers, (2) the right inventory in the right quantities, reducing markdowns and out of stocks, (3) the mobile app continues to gain traction and boost online sales, (4) the brand awareness is rising translating into stores reaching maturity sales levels within months as opposed to years previously, and (5) strategic investment in marketing to attract new clients, maintain existing and re-activate previous clients.\u201d<\/p>\n After the bell, the Vancouver-based fashion retailer reported revenue of $951-million for the quarter, a gain of 53 per cent year-over-year and above both Mr. Landry\u2019s $924-million estimate and the Street\u2019s projection of $922-million. The beat came from comparable sales growth \u201cdriven by traffic, as pricing contributed low-single-digits while higher mix was also a small contributor.\u201d <\/p>\n \u201cThis pace of traffic growth is eye-popping and reflects the strong momentum of the brand,\u201d said the analyst.<\/p>\n The company\u2019s earnings per share jumped 96 per cent from the previous fiscal year to 96 cents, also topped expectations (90 cents and 88 cents, respectively) as gross margins expanded of 3.10 per cent to reach 50.3 per cent, which is also the highest level since the company\u2019s IPO in October of 2016.<\/p>\n \u201cQ2FY27 guidance is above expectations,\u201d added Mr. Landry. \u201cManagement introduced guidance for Q2FY27, which calls for revenues to increase by 35-3 per cent, higher than consensus expectations of 25-26 per cent. The company also calls for EBITDA margin expansion of 325 bps at the mid-point, higher than the 125 basis points expansion reflected by consensus. This should lead to upward earnings revisions. <\/p>\n \u201cThe mobile application continues to drive growth. Recall that Aritzia launched its mobile app in late October 2025. The company has now reached 2 million downloads and 30% of the company\u2019s online sales are carried through the mobile application. This has been a significant driver of growth for the company.\u201d<\/p>\n With the \u201cstrong\u201d guidance, Mr. Landry increased his fiscal 2027 and 2028 EPS forecasts by 3 per cent and 4 per cent respectively. However, he continues to model \u201ca slowdown\u201d in growth with comparable sales growth of 15 per cent and 8 per cent for the third and fourth quarters of the current year, respectively. <\/p>\n Reaffirming his \u201cbuy\u201d rating for Aritzia shares, he raised his target to $190 from $180. The average target on the Street is $177.07, according to LSEG data.<\/p>\n \u201cAritzia has significant momentum currently as its products are well received by customers, the company has ample inventory to support heightened demand and digital marketing investments are paying off,\u201d he said. \u201cWhile this strong pace is bound to slow down at some point, comparable sales growth could stay above historical levels for several more quarters. … In our view, Aritzia has a long growth runway both in the United States and internationally. In the U.S., the company operates fewer than 90 stores, only one-third to one-quarter the size of some of its peers\u2019 networks. Internationally, Aritzia has yet to establish a brick-and-mortar presence, despite having online customers across 137 countries. As a result, we see significant opportunities for management to reinvest cash flows back into the business. With a strong ROIC above 23 per cent, these reinvestments should compound rapidly.\u201d<\/p>\n Elsewhere, others making target revisions include: <\/p>\n * Ventum Capital Markets\u2019 George Doumet to $186 from $180 with a \u201cneutral\u201d recommendation.<\/p>\n \u201cHeading into Q1\/F27, the debate had shifted from the quality of Aritzia\u2019s business to the pace of comparable sales normalization, particularly in Canada,\u201d said Mr. Doumet. \u201cThe Company delivered another high-quality quarter, with SSSG\/EPS exceeding consensus by 400 basis points\/9 per cent, while raising the top\/bottom end of its F2027 outlook (we increased our F27 EPS estimate by 5 per cent). Management also noted a modest acceleration into Q2TD, with comparisons becoming materially tougher in H2. Overall, we expect a positive share price reaction, though investor focus will remain on the pace of normalization in H2, which will limit further multiple expansion.\u201d <\/p>\n * RBC\u2019s Irene Nattel to $202 from $193 with an \u201coutperform\u201d rating.<\/p>\n \u201cATZ delivered another quarter of strong and above forecast results despite tougher prior year comps … Existing customer loyalty is being augmented by successful new customer acquisition via strong product, effective marketing, geographic expansion and accelerating digital growth following the launch of the mobile app late in Q2\/F26. Sales momentum strong and sector-leading across geographies and channels, F27 guidance nudged upward, tweaking F27\/28 EBITDA\/EPS forecasts by 5 per cent\/2-4 per cent respectively, driving PT revision to $202, up 5 per cent, reiterating constructive view\/OP rating.\u201d <\/p>\n * BMO\u2019s Stephen MacLeod to $196 from $188 with an \u201coutperform\u201d rating.<\/p>\n \u201cMomentum accelerated slightly into Q2; 2027E guidance was increased. Aritzia continues to execute well, driving strong traffic growth with existing and new clients,\u201d said Mr. MacLeod. \u201cUnderlying growth drivers remain compelling, and we believe Aritzia is well-positioned to execute on its significant U.S. (and international) growth opportunity, reflecting its strong momentum, growing brand affinity, and Everyday Luxury positioning.\u201d<\/p>\n * TD Cowen\u2019s Brian Morrison to $200 from $183 with a \u201cbuy\u201d rating.<\/p>\n \u201cWe believe the Q1\/F27 beat\/raise surpassed the most bullish of expectations. While SSSG will moderate as Aritzia laps outsized H2\/F26 comps, gross margin leverage and an active NCIB (surplus net cash\/strong FCF) should sustain EPS growth more than 20 per cent. Brand heat, a positive Q2\/F27 outlook, upward revisions to F27\/F28 consensus, and surplus cash should support a premium valuation\/share price momentum,\u201d said Mr. Morrison.<\/p>\n * Desjardins Securities\u2019 Chris Li to $180 from $175 with a \u201cbuy\u201d rating.<\/p>\n \u201cATZ delivered another outstanding quarter with robust comp sales, supported by excellent execution (strong product demand, well-positioned inventory, marketing, increasing brand awareness, outsized e-com growth etc). With momentum continuing in 2Q and ATZ\u2019s confidence in maintaining the growth \u2018flywheel\u2019 in 2H, FY27 guidance was raised after just one quarter. We believe potential for further upside revisions and the investor day in October providing longer-term growth plans should support ATZ\u2019s premium valuation,\u201d said Mr. Li. <\/p>\n * Canaccord Genuity\u2019s Luke Hannan to $193 from $182 with a \u201cbuy\u201d rating.<\/p>\n \u201cIn our view, Aritzia continues to clear a high bar, with a beat and raise reflecting continued momentum year-to-date within the business. Importantly, paybacks on new stores remain less than 12 months, and the runways for growth across geographies and channels continue to be strong (i.e., new boutique pipeline in the U.S., encouraging results from marketing pilots in two international markets, and more digital initiatives to be rolled out during H2\/F27). We also note that, should the tariff regime change for H2\/F27, management expects refunds received for past IEEPA tariffs could serve as an offset to any potential new tariff headwinds (expected to be $25-$30 million). We have adjusted our model to reflect the new guidance and, as a result, have increased our target price,\u201d said Mr. Hannan.<\/p>\n RBC Dominion Securities analyst Drew McReynolds thinks Canada\u2019s telecommunications industry is battling through another \u201ctransition\u201d year in 2026, but he sees a \u201cbetter setup\u201d for the two years ahead.<\/p>\n \u201cWe continue to expect the revenue recovery for the industry in 2026 to remain gradual reflecting minimal population growth, elevated Q1\/26 wireless promotional activity, regulatory headwinds, ongoing substitution and a sluggish Canadian economy.\u201d he said. \u201cUntil proven otherwise, what looks to be a maturing Canadian telecom industry warrants heightened emphasis on lowering the cost to serve to drive FCF, improve ROIC and enhance capital returns. On a more positive note, we see the potential for a better set-up to emerge in 2027 and 2028 reflecting the culmination of: (i) renewed population growth in Canada; (ii) further de-levering progress resulting in healthier Big 3 balance sheets; (iii) what could be a growing contribution from new revenue streams and\/or efficiency initiatives; and\/or (iv) additional asset\/industry consolidation.\u201d<\/p>\n In a client report released Friday previewing second-quarter earnings season, Mr. McReynolds warns the \u201csatellite disruption narrative [is] weighing on Canadian telecom valuations.\u201d <\/p>\n \u201cWhile far from a new narrative, we attribute the majority of the renewed pressure on Canadian telecom valuations to the satellite disruption narrative that has begun to spill over into Canada,\u201d he explained. \u201cOver the short term and medium term (less than 5 years), we assume for Canada that: (i) satellite broadband impacts are largely contained to rural footprints; (ii) the current partnerships with the incumbents are maintained; and (iii) opportunities open up over time for satellite operators to license more spectrum. Over the long term (>5 years), we assume: (i) satellite broadband begins to establish some presence in urban and suburban markets driven by next-generation satellites and lower pricing; and (ii) the probability of satellite-tomobile operators pivoting from the MNO partnership model in Canada to become direct competitors to incumbents is low but in our view cannot be ruled out entirely or indefinitely. <\/p>\n \u201cSince the beginning of June, the average FTM[forward 12-month] EV\/EBITDA multiple for the group has decreased from 7.0 times to 6.7 times, which we attribute mainly to this satellite disruption narrative. The current Big 3 range of 6.0 times-7.1 times compares to a cyclical peak of 8.5x-10.0x in April 2022 and a more recent cyclical low of 5.8-7.8 times in April 2025.\u201d <\/p>\n From an investing perspective, the analyst thinks \u201cthe reiteration of 2026 guidance by the Big 3 operators with Q2\/26 results is at minimum required for the stocks to find firmer support.\u201d <\/p>\n \u201cFurthermore, we believe a firmer floor is also contingent on maintaining the notable Q2\/26 price discipline through H2\/26 and into 2027,\u201d he said. \u201cWhile we expect BCE and Rogers to reiterate 2026 guidance, we do believe the door is open for TELUS to lower what is the highest bar for organic revenue and adjusted EBITDA growth among the Big 3, given the transition to the new management team and management\u2019s acknowledgment following Q1\/26 results that performance was trending to or below the midpoints of the ranges (we note our 2026 revenue and adjusted EBITDA forecast is currently below the low end of the up 2-4-per-cent ranges). For Q2\/26, we expect: (i) Quebecor to lead on wireless network revenue growth with BCE and Quebecor leading on wireless net additions; (ii) TELUS to lead on Internet net additions (+23k) followed by Rogers (+15k) and BCE (+10k); and (iii) Cogeco to report another mixed quarter at American Broadband.\u201d<\/p>\n Believing \u201cthe relative winners will be the operators that exceed expectations with respect to the controllables \u2013 execution on new revenues, EBITDA\/FCF margin expansion and balance sheet\/ crystallization initiatives,” Mr. McReynolds made these target adjustments:<\/p>\n BCE Inc. (BCE-T<\/a>, \u201coutperform\u201d) to $36 from $39. The average is $37.98.Cogeco Communications Inc. (CCA-T<\/a>, \u201csector perform\u201d) to $70 from $74. Average: $74.40.Quebecor Inc. (QBR.B-T<\/a>, \u201csector perform\u201d) to $70 from $64. Average: $66.81.Rogers Communications Inc. (RCI.B-T<\/a>, \u201coutperform\u201d) to $60 from $63. Average: $59.99.Telus Corp. (T-T<\/a>, \u201coutperform\u201d) to $20 from $22. Average: $19.83.<\/p>\n Canaccord Genuity analyst Aravinda Galappatthige sees the telecommunications sector continuing to be \u201cunder pressure\u201d and thinks the outlook and valuations are \u201cnot compelling enough to call rebound.\u201d<\/p>\n \u201cThe Canadian telecom sector continues to underperform both the S&P\/TSX and essentially all other yield-oriented sectors year-to-date,\u201d he said. \u201cIt was also down 9 per cent (excluding dividends) during Q2\/26 due to the lagged impact of a heavy promotional season during the February\/March period, as well as a CRTC decision to eliminate certain activation, cancellation, and switching costs, which could further pressure ARPU. Additionally, we have seen pressure on some US comps on account of concerns related to satellite-led competition. It is unclear at this point whether these concerns could spill over to the Canadian industry. Factoring in the above and the present interest rate environment, we continue to take a cautious view on this sector.\u201d<\/p>\n \u201cDespite the underperformance of the sector, we do not view valuations as compelling when one considers (1) international comps and (2) the dividend yield spread against the 10- year treasury yield vs. history. Additionally, the current bifurcated nature of the broader equity market, in which in-favour growth names (semis, defence, and space, etc.) enjoy elevated valuation multiples while most value names (including longstanding blue chips) trade around the 12-15-per-cent FCF yield range, makes it difficult for us to be bullish on this sector.\u201d<\/p>\n Mr. Galappatthige downgraded Quebecor Inc. (QBR.B-T<\/a>) to a \u201chold\u201d rating from \u201cbuy\u201d previously, \u201cconsidering its exceptional run.\u201d <\/p>\n \u201cWith that said, we see this as a tactical move and still consider QBR a core holding for telecom investors given its longer-term upside as Freedom continues to gain ground in national wireless,\u201d he added.<\/p>\n The analyst kept a $68 target for Quebecor shares, exceeding the $66.81 average.<\/p>\n He also made these target changes:<\/p>\n BCE Inc. (BCE-T<\/a>, \u201chold\u201d) to $33 from $35. The average is $37.98.Telus Corp. (T-T<\/a>, \u201chold\u201d) to $15.50 from $16.75. Average: $19.83.<\/p>\n “We have maintained our BUY rating on Rogers [with a $58 target] on account of our view that the SportsCo monetization will be front and centre yet again during H2\/26, and we see additional upside as we approach a transaction,\u201c he said. \u201dWith respect to Bell Canada, while we are progressively constructive on the longer-term direction, in the near term it is very much an execution play. In particular, we would like to see more notable progress at Ziply, which has been somewhat sluggish since the acquisition. Another catalyst is wireless, where we observe some underperformance to peers on a service revenue basis. Despite the significant weakness in TELUS\u2019 share price, we have opted to maintain our HOLD rating. We expect investors to take a \u201cwait-and-see\u201d approach to the stock until there is greater clarity on its strategic direction, including capital allocation as well as asset divestitures. <\/p>\n \u201cKey potential catalysts to look out for: In addition to tracking promotional activity and the impact of the aforesaid CRTC decision, we remain focused on major cost reduction plans (including capex step-downs) and asset divestitures. We believe that the key to rebuilding investor confidence in the telecom sector, in particular among the big three, is reinstating the sector\u2019s longstanding defensive credentials. This, in turn, relies on (1) sustained balance sheet deleveraging, mostly through asset divestitures, and (2) returning to a sustainable, low-single-digit EPS and organic EBITDA growth profile, alongside higher EBITDA-to-FCF conversion.\u201d<\/p>\n Calling it \u201ca share-gainer now writing the agentic commerce playbook,\u201d Stifel analyst J. Parker Lane upgraded Shopify Inc. (SHOP-Q<\/a>, SHOP-T<\/a>) to \u201cbuy\u201d from \u201chold\u201d previously.<\/p>\n \u201cWe believe the company will continue to execute its share-gaining playbook in the e-commerce space (legacy replatforming, enterprise, B2B, international, payments) while extending its leadership through agentic commerce and compounding GMV at a multiple of the broader ecommerce market,\u201d he said. \u201cBased on our survey work and industry conversations, we see a realistic path to 30-per-cent-plus revenue growth in 2026 and sustained mid-20s beyond. <\/p>\n \u201cWith shares down 23-per-cent year-to-date (vs. IGV down 11 per cent) and agentic commerce in its infancy, we see an attractive entry point for a high-quality compounder with a widening moat and multiple growth levers to pull, combined with a highly disciplined operating model and capital-allocation strategy that give the company flexibility in a rapidly evolving landscape.\u201d<\/p>\n Mr. Lane said the Ottawa-based e-commerce giant\u2019s \u201coutsized\u201d gross merchandise volume (GMV) growth is \u201cevidence of compounding momentum.\u201d<\/p>\n \u201c1Q GMV was $101-billion, growing up 35 per cent year-over-year, and marking the second consecutive quarter merchants cleared $100-billion in sales,\u201d he said. \u201cAgainst that, U.S. retail e-commerce grew just 9.8 per cent year-over-year in 1Q26 (via U.S. Census Bureau). In the company\u2019s Global Ecommerce Sales Growth Report (2026), it noted expectations of a 7.2-per-cent increase in global online transactions. <\/p>\n \u201cAny way you frame it, Shopify\u2019s outsized GMV growth is clear evidence of consistent share-gains, which we believe will accelerate as agentic commerce proliferates. Management explicitly frames strength as broadbased across geographies, merchant sizes and channels, versus any single driver. Growth balanced between same-store and new merchants. A roughly even balance of same-store and new merchant growth is a differentiated aspect at Shopify\u2019s scale that signals ample opportunity for merchant acquisition and steady expansion through add-ons.\u201d<\/p>\n Emphasizing its international business \u201cremains under-penetrated and serves as a key pillar of the growth story,\u201d Mr. Lane hiked his target to US$150 from US$110. The average is US$155.76.<\/p>\n \u201cWe believe Shopify sits in front of a sizable market opportunity in the e-commerce space, driven by a combination of new merchant acquisition and numerous customer expansion paths that include the attachment of services like Payments, POS, and others,\u201d he concluded. \u201cHowever, the investments the company is making to expand its platform capabilities are pressuring gross margins and driving increased capex in the near term, which is weighing on the company\u2019s ability to drive meaningful profitability and FCF.\u201d<\/p>\n Ahead of the release of TFI International Inc.\u2018s (TFII-N<\/a>, TFII-T<\/a>) second-quarter results after the bell on July 27, National Bank Financial analyst Cameron Doerksen sees trucking industry trends continuing to improve.<\/p>\n Although Q2 results will still reflect lingering demand softness for the trucking industry with margins still not reflecting a market recovery, we are increasingly confident in a broader industry pricing rebound driven by lower industry supply,\u201c he said in a client note. \u201dWe are still in the early stages of an industry recovery and given that the trucking supply reductions are a function of regulatory changes in the U.S. and Canada, this up-cycle has the potential to be more long-lasting than has historically been the case for trucking cycles.”<\/p>\n Mr. Doerksen points to regulatory changes as well as enforcement on both sides of the border, which he thinks \u201care spurring trucking capacity exiting the market with positive implications for rates.\u201d <\/p>\n \u201cU.S. dry van spot pricing as measured by DAT remains exceptionally strong, increasing 48.5 per cent year-over-year in June with contract rates up 21.3 per cent year-over-year, noting that spot rates are now running higher than contract rates for the first time since early 2022,\u201d he explained. \u201cThe U.S. flatbed market has also been strong this year with U.S. flatbed spot rates up 44.0 per cent year-over-year in June with contract rates up 24.0 per cent year-over-year. Industry-wide LTL [less-than-truckload] pricing in the U.S. has continued to trend positively with the latest PPI for May showing a 20.9-per-cent increase year-over-year.<\/p>\n \u201dIndustrial economy looking more positive. Trucking volumes remained muted through Q2, but we highlight that the U.S. ISM Purchasing Manager\u2019s Index (PMI) for manufacturing has now expanded for six consecutive months with the latest reading from June coming in at 53.3, indicating that activity in the manufacturing sector in the U.S. is expanding.”<\/p>\n For the second quarter, Mr. Doerksen raised his revenue and adjusted earnings per share estimates to US$2.129-billion and US$1.56, respectively, from US$2.121-billion and US$1.54. The consensus expectations on the Street are US$2.23-billion and US$1.61.<\/p>\n \u201cBased on our updated 2027 estimates (which assumes earnings that are still recovering to full potential), TFII shares are trading at 20.4 times P\/E versus the weighted average peer group at 23.8 times (long-term historical forward average for TFII is 15.1 times with the five-year average at 19.4 times),\u201d he said. \u201cBased on 2027 EV\/EBITDA, TFII is trading at 10.4 times, which is a slight discount to the weighted average peers at 10.9 times(long-term forward average of 8.1 times for the stock with the five-year average at 9.8 times). Based on our 2027 free cash flow forecast, the current FCF yield is 8.2 per cent.\u201d<\/p>\n Calling its valuation \u201cstill reasonable,\u201d Mr. Doerksen moved his target for TFI shares to US$160 from Canadian $208 (or approximately US$153) after shifting his valuation to U.S. currency. The average target is US$165.16. He maintained an \u201coutperform\u201d rating.<\/p>\n \u201cWe continue to value TFII using a sum-of-parts based on our 2027 forecast as outlined below,\u201d he explained. \u201cAlthough TFII reports in USD, we have historically derived a CAD target price to reflect the historical Canadian roots of the company and trading volumes. However, to better reflect consensus valuation methodology and to eliminate f\/x volatility, we are shifting our valuation to a USD target price.<\/p>\n \u201cTo reflect the recent expansion in peer group valuation multiples, we are increasing our Logistics segment multiple to 14.0 times from 12.5 times previously. With this change, and after our forecast adjustments, our new target is $160.00.\u201d <\/p>\n ATB Cormark analyst Tim Monachello remains bullish on Canadian Energy Services equities heading into second-quarter earnings season.<\/p>\n \u201cWhile the volatility in crude prices is likely to continue to drive near-term equity performance, we believe the fundamental outlook for North American energy services activity and margins is improving,\u201d he said in a client report. \u201cAs long as crude prices can sustain above US$65\/bbl, we believe E&Ps will return to modest growth agendas, while continuing to focus on D&C efficiency (supporting demand for high performance services), while DUCs are dwindling in U.S. oil basins which provides tailwinds for U.S. drilling activity over the medium-term. Tactically, we believe a floor in crude prices could provide a bid for beleaguered energy services equities that have underperformed over recent weeks. Energy services equities in our coverage have traded down 10-59 per cent from 52 week highs and the median 2027e FCF yield sits at 23 per cent across our coverage.<\/p>\n \u201cQ2\/26e Beats and Misses, and Key Themes: Our estimates are largely in-line with consensus other than for TCW and CFW where we forecast adj. EBITDAS both to be 6 per cent below consensus for Q2\/26. Key themes for Q2\/26 reporting include 1) the strongest second drilling activity in Canada since 2014; 2) a bottoming in U.S. rig activity in April driven by private E&Ps; 3) strong well servicing activity across North America as E&Ps look for low capital intensity ways to add production; 4) our channel checks point to robust demand for compression and processing equipment in Q2\/26; and 5) we believe sentiment for energy services pricing and margins is inflecting positively, though this is likely to be more noticeable in future quarters as reactivation costs and timing impacts from cost pass throughs weigh on Q2\/26 margins.\u201d<\/p>\n Mr. Monachello made one rating revision, downgraded Calfrac Well Services Ltd. (CFW-T<\/a>) to \u201csector perform\u201d from \u201coutperform\u201d \u201cgiven a 26-per-cent return to target vs a 45-per-cent median for OP rated companies in our energy services coverage universe.\u201d<\/p>\n \u201cWhile we believe CFW benefitted from strong activity in North America in Q2\/26, we expect this to be largely offset by lower margin product mix in Argentina quarter-over-quarter, and we reduce our Q2\/26 estimates as a result,\u201d he said. \u201cAlthough we maintain a positive view on the company\u2019s longer-term structural upside, particularly as 2027 Vaca Muerta egress expansions unlock incremental completions demand, this outlook remains somewhat speculative and could limit upside until more tangible catalysts emerge<\/p>\n His target for Calfrac shares remains $7.50. The average on the Street is $8.<\/p>\n Mr. Monachello\u2019s top picks are:<\/p>\n * ACT Energy Technologies Ltd. (ACX-T<\/a>) with a $9.50 target, up from $9.25, and \u201coutperform\u201d rating. Average: $9.25.<\/p>\n Analyst: \u201cWith the highest return to target in our coverage (57 per cent), tailwinds in both Canada and U.S. activity levels, and among the most attractive valuations in our coverage, ACX is our top small-cap value pick within our coverage. We understand ACX is seeing strong activity levels across its North American platform. In Canada, ACX is the premier directional driller in the clearwater play which we believe has driven strong year-over-year activity growth in Q2 and should provide upside in H2\/26. In the U.S., ACX has improved its market position through its recent acquisitions of Stryker and SB Directional that has shored up its U.S. market share, and given relatively high exposure to private E&P customers, we believe ACX is well positioned to benefit from rising US drilling activity which has largely been concentrated in oil focused privates.\u201d<\/p>\n * Enerflex Ltd. (EFX-T<\/a>) with a $47 target, up from $46, and \u201coutperform\u201d rating. Average: $47.50.<\/p>\n Analyst: \u201cEFX remains a top pick given 1) our view that it is a key beneficiary of North American natural gas production growth while having only limited exposure to natural gas pricing; we view this as among the most robust structural growth trends in the energy markets, supported by expanding LNG offtake and associated gas production growth from oil plays which we expect to accelerate as rising Permian activity is increasingly focused on higher-gas producing tier 2 acreage. These trends are emphasized by near-full utilization of industry rental compression capacity and over two-year lead times for key engines. 2) while early days, EFX is seeing a significant opportunity in packaging modular power generation equipment for AI data centers. We believe EFX\u2019s opportunity set now exceeds 7GW of potential projects, though its ability to execute these projects is highly dependent on its ability to secure the requisite engines that have lead-times over 2.5 years; 3) EFX is making strides to optimize and simplify its business which it has guided to 200 basis points of structural margin expansion by 2030, which we view as conservative; and 4) EFX\u2019s valuation remains attractive at 6.7 times|5.6 times EV\/adj. EBITDAS with 7-per-cent|9-per-cent FCF yields (6 per cent|8 per cent on EV) in 2026e|2027e.\u201d<\/p>\n * Precision Drilling Corp. (PD-T<\/a>) with a $165 target, down from $175, and \u201coutperform\u201d rating. Average: $151.73<\/p>\n Analyst: \u201cWhile we trim our price target to $165.00 from $175.00 given a modest reduction in our target multiple, we modestly increase our estimates. PD shares are off 20% from 52-week highs in late-March (pre-SoH closure), meanwhile it has gained ground in the U.S. market where it is now running 43 rigs, up 19 per cent from 36 rigs, and representing PD\u2019s highest US rig activity since January 2024. In our view, PD is among the best positioned in our coverage for medium-term multiple expansion as it 1) delivers accelerating FCF generation over the coming years, providing strong visibility to achieving its deleveraging targets, funding potential organic upgrade opportunities, while also driving a material acceleration in shareholder returns in 2027 and beyond; and 2) if PD trades up to $155\/share (3.8 times 2027e EV\/EBITDAS) we believe it would be positioned for TSX Composite index inclusion which has been a catalyst for multiple expansion. We believe PD also offers a top-tier technology edge over most North American competitors (see here) that could provide further tailwinds to market share in H2\/26 and beyond.\u201d <\/p>\n * Total Energy Services Inc. (TOT-T<\/a>) with a $33 target, up from $32, with an \u201coutperform\u201d rating. Average: $32.<\/p>\n Analyst: \u201cWith an improving macro environment, market share expansion in Canadian drilling, robust demand for natural gas compression and processing equipment with record backlog, a solid outlook in Australia, and a clean balance sheet primed for scale enhancing acquisition and organic growth opportunities, we believe TOT is seeing tailwinds across its business. We believe TOT remains among the best risk\/return propositions in our coverage given its diversified business model, a net cash position, track record of high FCF generation and consistent returns to shareholders.\u201d<\/p>\n Despite investor pessimism, Scotia Capital analyst Jonathan Goldman believes artificial intelligence \u201caugments not replaces\u201d the tasks done by traditional engineering and construction firms.<\/p>\n \u201cE&C shares are discounting pretty draconian scenarios related to AI: our cohort (and Colliers International) is down 30 per cent over the past year on average,\u201d he said. \u201cSentiment has driven share price declines as forward Street estimates are actually up low-single-digits in the past 10 months. <\/p>\n \u201cIn an effort to separate fact from fiction, we analyzed each stage of the E&C project lifecycle to see what AI could automate. The main takeaway is that there is very little AI can fully automate without human oversight and intervention. It is best seen as a means of streamlining workflow, particularly for admin-heavy tasks, and augmenting design-heavy tasks, e.g., generate initial schematics, optimize designs for cost, perform multiple scenario analyses, cross-reference building codes and client specifications. Of course, all of this enhances the value proposition and supports pricing. In contrast to the prevailing narratives, we could easily envision a scenario wherein E&Cs preserve current economics and benefit from productivity gains which support structurally higher earnings power and valuations, which are now back to 2019 levels.\u201d<\/p>\n In a client report released Friday, Mr. Goldman said he analyzed what he sees as the 12 stages of the E&C project lifecycle, finding AI \u201ccan fully automate only one stage of the workflow, namely initial proposal generation, which is relatively formulaic.\u201c<\/p>\n \u201cWhile AI can partially automate subsequent phases, such as engagement scoping and feasibility studies, human oversight is still required to incorporate client preferences and negotiate fees, interpret results, and navigate bureaucracy,\u201c he added. \u201dAs it relates to design, AI can supplement human effort by developing high-level designs using input from architects and engineers. However, engineers are still required to validate the feasibility of the design and make final bespoke adjustments. Finally, any design must be approved by a licensed professional. We view that assumption of liability as a high barrier to entry.<\/p>\n “The bear thesis that AI will reduce billable hours or lower cost to serve, with savings passed on to customers is overly simplistic. It ignores a scenario where E&Cs trade off volume for price, that is, deliver more services to clients, such as multiple scenario analyses or designs, but at the same price and at little to no additional cost. We view this as a win-win since it enhances the value proposition for the customer while preserving economics for the E&C firm. With the majority of contracts being fixed price or cost-plus\/time and materials, the industry already operates with a de facto value-based pricing model. When you take productivity gains into account, we think it\u2019s more likely AI will actually improve E&C margins. Moreover, continued consolidation should support pricing power, especially as fewer firms are able to take on more complex mega projects and make investments in AI. Finally, AI could reduce project material costs by 10 per cent to 20 per cent by removing human biases in design decisions. E&Cs could capture some of those savings.”<\/p>\n Despite his optimistic view, Mr. Goldman lowered his target prices for two stocks in his coverage universe:<\/p>\n Stantec Inc. (STN-T<\/a>, \u201csector outperform\u201d) to $133 from $138. The average is $143.38.WSP Global Inc. (WSP-T<\/a>, \u201csector outperform\u201d) to $281 from $286. Average: $301.75.<\/p>\n \u201cAs we have noted before … a recovery has emerged within the AI-disruption trade,\u201c said Mr. Goldman. \u201dU.S. software (IGV ETF<\/a>) rallied meaningfully in May to early June period, indicating that investor fears around AI-related disruption are beginning to ease, though the sector has normalized since then. As for the affected non-tech Canadian names (CIGI, WSP, TRI), they are still down 40 per cent since the last year peak, while U.S. software are only 10 per cent below the peak. We think this could be a leading indicator for a rebound in investor sentiment and reiterate our SO rating on CIGI with a US$150.00target price.”<\/p>\n In other analyst actions: <\/p>\n * ATB Cormark\u2019s Chris Murray raised his targets for Canadian National Railway Co. (CNR-T<\/a>) to $166 from $150 with a \u201csector perform\u201d rating and Canadian Pacific Kansas City Ltd. (CP-T<\/a>) to $137 from $130 with an \u201coutperform\u201d rating. The averages are $171.14 and $136.71, respectively.<\/p>\n * ATB Cormark\u2019s Nicolas Dion initiated coverage of Excellon Resources Inc. (EXN-X<\/a>) with a \u201cspeculative buy\u201d rating and 65-cent target.<\/p>\n \u201cWe are initiating coverage on Excellon Resources (EXN) which is focused on restarting silver production at the 100%-owned Mallay mine in Peru. Mallay was operated from 2012-2018 by Buenaventura (peak of 1.6 MMoz Ag in 2016) and has extensive underground development plus an existing 600 tpd mill. We believe EXN offers levered silver exposure, with the opportunity for a re-rating as it ramps-up silver production at Mallay over the coming quarters. It stacks up well vs. other junior silver producers\/restarts, with the expectation that drilling will expand the mine-life\/resource. We see Peru as an increasingly favorable mining jurisdiction, relative to Mexico. We see further upside from ongoing exploration around Mallay, initial drilling on Tres Cerros, and potential monetization of the secondary assets (Kilgore and Saxony Silver),\u201d he said.<\/p>\n * Raymond James\u2019 Steve Hansen increased his Firan Technology Group Corp. (FTG-T<\/a>) to $30 from $24 with an \u201coutperform\u201d rating, citing \u201c1) record order intake; 2) record backlog; 3) attractive growth pipeline; 4) pristine balance sheet; & 5) increasing M&A optionality.\u201d The average is $26.<\/p>\n