Inside the Market\u2019s roundup of some of today\u2019s key analyst actions<\/p>\n
Scotia Capital analyst Jonathan Goldman does not expect \u201cmajor\u201d surprises from Canadian industrial companies during second-quarter earnings season, emphasizing Magna International Inc. (MGA-N<\/a>, MG-T<\/a>) \u201coffers an asymmetric risk\/reward\u201d for investors.<\/p>\n \u201cThe 2026 guide is backed by resilient volumes and higher content on launch programs,\u201d he explained in a client report released Monday. \u201cOil-based inflation has been \u2018modest\u2019 while the company has good visibility on operational excellence, which is still in the early to middle-innings. FCF conversion from net income should approach 100 per cent this year (and next year) enabling the company to aggressively pursue buybacks (18 million shares, 7 per cent of float, repurchased under current NCIB so far).\u201d<\/p>\n With shares of Aurora, Ont.-based Magna now trading at approximately 9.2 times price-to-earnings based on his 2026 and 2027 estimates, which is in-line with the 5-year average, Mr. Goldman thinks \u201cinvestors are getting a reliable earnings yield of more than 10 per cent with a free call option on an auto recovery and potential entry into \u2018non-auto\u2019 verticals (e.g., battery storage, defence).\u201d<\/p>\n \u201cWe recently hosted Magna for an NDR in Montreal,\u201d he added. \u201cManagement has been speaking to customers about using capacity for other non-auto programs as there is a shortage of U.S. industrial capacity to make highly engineered products. The company is approaching the opportunity deliberately, but potential new verticals include robotics, battery storage, warehousing, data centers; defense (ex munitions) and mobility outside of auto. These opportunities come with significantly higher margins and don\u2019t require a lot of incremental capex. The company will provide more colour at its IR Day on November 11.\u201d<\/p>\n Maintaining his \u201csector outperform\u201d rating for Magna\u2019s NYSE-listed shares, Mr. Goldman increased his target to US$74 from US$72. The average on the Street is US$65.60.<\/p>\n While \u201cremaining on [the] sidelines\u201d on Linamar Corp. (LNR-T<\/a>), he raised his target for its shares to $102 from $99, keeping a \u201csector perform\u201d rating. The average is $106.17.<\/p>\n \u201cThe company continued its string of strong results in 1Q,\u201d he said. \u201cAuto margins are best in class and the company has the lowest leverage among peers at 0.6 times. However, we have limited visibility on the impact of revised S232 tariffs in the Industrial segment. While more than 90 per cent of consolidated sales are not impacted by tariffs, that still leaves more than $1-billion of exposure. Recall, the new tariff regime applies a 15-per-cent tariff to the entire value of a unit whereas it was only 50 per cent on value of the steel and aluminum content previously.\u201d<\/p>\n National Bank Financial analyst Doug Taylor thinks \u201cselectivity remains key\u201d in Canada\u2019s technology sector heading into quarterly earnings season.<\/p>\n \u201cSince our transition of coverage was completed on May 26, 2026, we\u2019ve seen continued volatility in our largely software-centric coverage universe,\u201d he said. \u201cThe average share price performance of our software coverage over that period (which excludes Zedcor and Kraken) has been 3 per cent vs. the 2 per cent of the TSX. Notable outperformers include Shopify (up 18 per cent), Lightspeed (up 18 per cent), Docebo (up 17 per cent), Altus (up 9 per cent), and Kinaxis (up 8 per cent).\u201d<\/p>\n In a client report released before the bell, Mr. Taylor, who joined the firm from Canaccord Genuity earlier this year, said recent investor meetings have confirm \u201cunsurprisingly\u201d that sentiment across the software sector \u201cremains subdued as confusion persists over the terminal value of software revenue streams amidst rapidly evolving agentic AI impact\/noise.\u201d<\/p>\n \u201cWe continue to observe market behaviour that suggests software as a whole is trading unselectively and often inversely to semiconductor\/IT infrastructure sentiment, a function of general subsector pair trading vs. the near-term fundamentals of software specifically,\u201d he added.<\/p>\n \u201cWhile the valuation setup remains arguably attractive – valuations have not moved significantly off recent lows \u2013 the market dynamics continue to warrant selectivity. We continue to favour names that are showing consistent evidence of top-line growth reacceleration and\/or resiliency to help combat the perceived AI risk.\u201c<\/p>\n He said a trio of companies \u201ccontinue to screen best to us amongst our coverage.\u201d They are:<\/p>\n * Descartes Systems Group Inc. (DSGX-Q<\/a>, DSG-T<\/a>) with an \u201coutperform\u201d rating and US$95 target, matching the average target on the Street.<\/p>\n Analyst: \u201cWe believe Descartes\u2019 resilient organic growth, best-in-class Adj. EBITDA margins (45 per cent plus), strong balance sheet to support continued M&A, and long-term trough valuation present a compelling buying opportunity. We view Descartes as a Top Pick.\u201d <\/p>\n * Kinaxis Inc. (KXS-T<\/a>) with an \u201coutperform\u201d rating and $200 target. Average: $200.<\/p>\n Analyst: \u201cWe continue to view Kinaxis as one of the most compelling revenue re-acceleration stories in our coverage, supported by a strong supply-chain thematic and positive AI attributes. Despite shares accelerating 30 per cent plus since the 2026 lows in February, it still trades at just 4.0 times NTM [next 12-month] Sales vs. the five-year average at 6.9 times; given this value alongside operational execution, Kinaxis remains a Top Pick of ours.\u201d<\/p>\n * Shopify Inc. (SHOP-Q<\/a>, SHOP-T<\/a>) with an \u201coutperform\u201d rating and US$155 target. Average: US$150.<\/p>\n Analyst: \u201cWe continue to believe Shopify\u2019s outsized growth profile is being fortified by AI across an expanding set of commerce levers. It remains a Top Pick.\u201d<\/p>\n Mr. Taylor added: \u201cCertain value names also present interesting opportunities that we\u2019ll be looking for confirmation of when the prints start rolling in (CGI better organic year-over-year comps, for example),\u201d he added. \u201cWe\u2019ve made some minor model changes in a couple spots in response to recent updates but are making no rating changes at this juncture.\u201d<\/p>\n Desjardins Securities analyst Brent Stadler is predicting \u201csolid\u201d second-quarter results from Fortis Inc. (FTS-T<\/a>), calling it \u201ca catalyst-rich utility offering investors strong exposure to power demand\/energy tailwind.\u201d<\/p>\n \u201cITC should continue to benefit from incremental transmission opportunities in the Midwest, UNS Energy should see a tailwind from continued strong load growth in Arizona (datacentres, onshoring, general growth) and FortisBC offers exposure to the LNG expansion,\u201d he said.<\/p>\n Ahead of the release of its quarterly results on July 30, Mr. Stadler trimmed his earnings per share projection by a penny to 79 cents \u201cbased on a slight model recalibration,\u201d but it remains 2 cents above the consensus projection and 3 cents ahead of the result from a year ago.<\/p>\n \u201cWhat to watch for with 2Q26 results including updates on key catalysts. (1) An update on its datacentre opportunity in Arizona; we continue to believe FTS has the potential to double the initial 300MW ramping in 2027 and build a second site drawing an additional 500\u2013700MW. If FTS executes on the datacentre expansion, it could add US$1.5\u20132.0-billion (C $2.0\u20132.7-billion) of incremental generation through 2030\u201331, which at the midpoint could add 100bps to its current 7-per-cent rate base CAGR with potential for additional transmission spend. (2) Update on new rates at TEP (closing briefs are expected at the end of July, new rates expected to take effect in the fall)\u2014earning on the greater than US$700-million of regulatory lag could be a $40-million-plus earnings lift into 2027. (3) Potential commentary on additional transmission opportunities at ITC, which could provide longer-term growth, including MISO LRTP Tranche 2.1 in Michigan and Minnesota, where ROFRs are in effect and could total US$3.3\u20133.8-billion, and, additionally, any projects from competitive bids in Iowa. (4) Any updated commentary on IRPs in the MISO and Arizona, which are expected in 2H26 and will likely highlight additional growth opportunities (just yesterday TSMC announced another US$100-billion investment into Arizona). (5) Potential update on FortisBC\u2019s Tilbury Phase 2 LNG expansion project.”<\/p>\n Maintaining his \u201cbuy\u201d rating, Mr. Stadler raised his target for Fortis shares to $85 from $81. The average is $79.77.<\/p>\n Separately, Mr. Stadler bumped his target for Emera Inc. (EMA-T<\/a>) to $74, exceeding the $73.02 average, from $70, with a \u201chold\u201d rating.<\/p>\n \u201cWe have reduced our 2Q26E EPS on expectations of higher interest expense in the quarter (partially timing) and timing of new rates at NSPI. As a result, our 2Q26E EPS declined to $0.74 (from $0.82),which is in line with consensus excluding a low outlier. With the quarter, we will be primarily looking for updates on the outlook in Florida, including progress on a datacentre deal and the closing of NMGC,\u201d he said.<\/p>\n BMO consumer equity analyst Tamy Chen made a series of rating revisions after changes to her coverage universe on Monday.<\/p>\n She upgraded these companies: <\/p>\n * Empire Co. Ltd. (EMP.A-T<\/a>) to \u201coutperform\u201d from \u201cmarket perform\u201d with a $58 target. The average is $54.67.<\/p>\n \u201cWe believe EMP is coming from a lower starting point vs. Loblaw\/MRU in several areas like discount grocery and pharmacy, and CEO Pierre St-Laurent is focused on catching up in these aspects. Even incremental actions to capture the several low-hanging fruit opportunities we see should yield good growth over the coming years and narrow the valuation gap to Loblaw\/MRU,\u201d he said.<\/p>\n * George Weston Ltd. (WN-T<\/a>) to \u201coutperform\u201d from \u201cmarket perform\u201d with a $113 target, up from $103. Average: $107.33.<\/p>\n Analyst: \u201cUpgrading WN to Outperform (from Market Perform), following our Loblaw upgrade. Our target price is revised to $113 (from $103) and is based on our projected one-year forward NAV with a 10-per-cent \u2018HoldCo\u2019 discount, which is towards the lower end of the historical 8-20-per-cent range. At current prices, the implied HoldCo discount at WN is in the mid-teens percentage, which is around the midpoint of its historical range.\u201d<\/p>\n * Loblaw Companies Ltd. (L-T<\/a>) to \u201coutperform\u201d from \u201cmarket perform\u201d with a $70 target, up from $68. Average: $70.<\/p>\n Analyst: \u201cWe recognize the stock is a consensus long already and has had quite a multi-year rally. Similar to DOL, we see Loblaw as a core holding for investors. Tactically, we currently have a slight preference for Loblaw exposure through WN as the WN \u201cHoldco\u201d discount recently increased towards the midpoint of its historical range.”<\/p>\n Conversely, she downgraded these companies:<\/p>\n * AutoCanada Inc. (ACQ-T<\/a>) to \u201cmarket perform\u201d from \u201coutperform\u201d with a $24 target. Average: $22.89.<\/p>\n Analyst: \u201cResults since Q3\/25 show management\u2019s cost reduction was ultimately too aggressive and broad that it impaired dealerships\u2019 ability to drive sales and triggered high staff turnover. When we consider the areas that need improvement, the turnaround will likely take time. As such, we downgrade ACQ to Market Perform. Target price remains $24, and the target multiple is 7 times our revised 2027 estimated EBITDA. <\/p>\n \u201cOur overall coverage pecking order of Outperform-rated names: MGA, LNR, EMP, WN, L, DOL, MFI. \u201d<\/p>\n * Metro Inc. (MRU-T<\/a>) to \u201cmarket perform\u201d from \u201coutperform\u201d with a $95 target, down from $105. Average: $103.62.<\/p>\n Analyst: \u201cWe believe MRU is already feeling an impact from Loblaw\u2019s continued discount expansion in Quebec and the magnitude is greater than we expected. Not only is Loblaw continuing this roll-out in Quebec, we believe EMP and Walmart Canada plan to as well. MRU is most-exposed to rising competition in Quebec given its concentrated geographic weighting. Valuation is at the mid-point of its historical range, so not compelling in our view.\u201d<\/p>\n Stifel analyst Martin Landry thinks Gildan Activewear Inc.\u2019s (GIL-N<\/a>, GIL-T<\/a>) \u201cdepressed valuation provides a good entry point\u201d ahead of the release of its results on July 30 as the Montreal-based clothing manufacturer continues to struggle to limit the damage inflicted by an American short seller<\/a>, who alleges it is inflating sales.<\/p>\n “Gildan\u2019s shares have only marginally recovered from the 19-per-cent decline seen on June 16, following the publication of a short report,\u201c said Mr. Landry. \u201dWe believe this provides investors with an appealing entry point given the depressed valuation of 10-times forward earnings, more than three turns lower than the 10-year average. We expect management to adopt a reassuring tone and quell concerns raised by the short report. A bullish scenario would include reassuring arguments by management, an earnings beat by Gildan and positive comments on Q3\/26. We believe this scenario is likely, setting-up a good backdrop for investors to purchase shares ahead of the print.”<\/p>\n In a client report released before the bell, the analyst reaffirmed his second-quarter 2026 earnings per share forecast of US$1.11, which is a gain of 14 per cent year-over-year and a penny above the Street\u2019s expectation.<\/p>\n \u201cWe believe there is upside to our Q2\/26 EPS estimates for several reasons: (1) management tends to guide conservatively, Gildan has beat EPS consensus estimates in 11 of the last 12 quarters, (2) at the beginning of Q2\/26, management noted improvements in both retail and wholesale trends, (3) there has been a rebound in consumer confidence and economic activity in June with stronger than expected U.S. retail sales, (4) the abolition of tariffs on qualifying goods under the CAFTA-DR imports from Honduras since late February with the Supreme Court ruling,\u201d he said.<\/p>\n Mr. Landry pointed to several other potential catalysts, including the completion of the manufacturing transfer of Hanes\u2019 production into Gildan\u2019s facilities by the end of June or early July as well as further clarity on product innovation, but he thinks the focus will remain on how it addresses the claims of Jehoshaphat Research, a Florida-based investment firm which alleges Gildan has been incentivizing clients to order more product than they may need in a given quarter to boost revenue.<\/p>\n \u201cWe expect that management, during the Q2\/26 earnings call, may quell concerns raised by the short seller,\u201d he said. \u201cThis will be the first time management will have the opportunity to speak publicly on the matter and reassuring comments could go a long way.\u201d<\/p>\n \u201cThe report alleged, amongst other things, that Gildan engaged in channel stuffing activities around quarter end to boost sales. We doubt that Gildan engaged in such practices in a material way, and we hope management addresses this in the upcoming earnings call. In our view, the bloated inventory argument is weak, and of limited concern to us, given Gildan has significantly reduced inventory at distributors in H1\/26 due to manufacturing transition out of Hanes\u2019 facilities\u201d<\/p>\n Seeing \u201cthe risks\/rewards appealing at these levels,\u201d Mr. Landry reiterated his \u201cbuy\u201d rating and US$80 target for Gildan shares. The average is US$78.45.<\/p>\n In a separate report released Monday, Mr. Landry recommends investors put Premium Brands Holdings Corp. (PBH-T<\/a>) on their watch list.<\/p>\n \u201cLooking near-term some questions remain given that management\u2019s guidance implies a strong back-half. Consensus estimates call for H2\/26 EBITDA to increase by 36 per cent year-over-year a growth pace not achieved in the last four years,\u201d he explained. \u201cThis increase is expected to come from new program wins in the United States, for which we have limited visibility. Management\u2019s mitigated track record adds to the anxiety about a potential for history to repeat itself. However, with a small leap of faith, the long-term potential for share price appreciation is real.\u201d<\/p>\n Ahead of the release of its second-quarter results on Aug.6, the analyst continues to estimate earnings per share for the period of $1.52 for the Vancouver-based company, which is a gain of 14 per cent year-over-year but sits 8 cents below the Street\u2019s forecast. <\/p>\n \u201cThe company has tested investors\u2019 patience in recent years with delayed product launches, rising commodity costs causing a mismatch in costs vs prices and a long CAPEX cycle,\u201d said Mr. Landry. \u201cWith investors stepping on the sidelines, valuation cratered from 22-times forward earnings in 2022 to 12.5 times currently. With a bit of faith, one can see light at the end of the tunnel. In our view, PBH is at an inflection point given (1) free cash flows are expected to turn positive, (2) earnings quality should improve with fewer start-up and restructuring costs, (3) financial leverage should come down with net debt\/EBITDA expected to get to 4 times by year-end. It is early, but we believe we are at the onset of a cycle of valuation re-rating for PBH.\u201d<\/p>\n Touting an \u201cappealing\u201d valuation wit Premium Brands\u2019 shares trade at 12.5 times his 2027 EPS estimate, which he notes is seven turns lower than the company\u2019s average of the last 10 years, Mr. Landry kept a \u201cbuy\u201d rating and $117 target. The average is $119.<\/p>\n \u201cThe risk to our thesis comes partly from management\u2019s mitigated track record,\u201d he cautioned. \u201cPBH missed its initial EBITDA guidance in each of the last three years. Actual adjusted EBITDA came-in on average 5.6 per cent lower than the mid-point of the company\u2019s initial guidance. Under a scenario where history would repeat itself, an EBITDA miss of 5.6 per cent would translate into 2026 EBITDA of $840 million, 4.6 per cent lower than consensus estimates of $881-million, as consensus estimates are lower than the midpoint of management\u2019s guidance.\u201d<\/p>\n In other analyst actions: <\/p>\n * In a report titled A Painful, But Necessary, Reset, ATB Cormark\u2019s Jeff Fenwick, who is currently the lone analyst covering Bridgemarq Real Estate Services Inc. (BRE-T<\/a>), upgraded his rating to \u201coutperform\u201d from \u201cmarket perform\u201d while reducing his target to $11.25 from $12.50. <\/p>\n \u201cBridgemarq\u2019s announcement that it was materially reducing its monthly dividend triggered a significant sell-off [52.3 per cent] on Friday. We had anticipated this eventuality, given the continued softness of Canadian home sales, which had left BRE upside-down on its payout ratio. We view the decision as a painful but necessary step, and a material positive development with respect to the future outlook. Financial flexibility is meaningfully improved, enabling BRE to more readily leverage what is a high FCF, asset light business model, to support a more growth-focused business plan,\u201d said Mr. Fenwick.<\/p>\n * In response to the announcement of another substantial issuer bid (for $70-million), better-than-expected second-quarter preliminary results and a increase to its full-year 2026 revenue guidance, National Bank\u2019s Doug Taylor bumped his Docebo Inc. (DCBO-Q<\/a>, DCBO-T<\/a>) target to US$22 from US$21 with a \u201csector perform\u201d rating, while ATB Cormark\u2019s Gavin Fairweather reduced his target to $35 from $36 with an \u201coutperform\u201d rating. The average on the Street is US$28.<\/p>\n \u201cThe guidance revisions are a positive step in terms of the fundamentals of the business, while the SIB is a clear internal vote of confidence in the Company\u2019s business prospects. In the construct of our valuation buildup, the buyback does not alter the math significantly. However, rolling forward our model with Q2 now known leads us to bump our target price to $22,\u201d said Mr. Taylor. <\/p>\n * ATB Cormark\u2019s Gavin Fairweather hiked his target for D2L Inc. (DTOL-T<\/a>) to $17 from $13 with an \u201coutperform\u201d rating. The average is $13.07.<\/p>\n \u201cWe recently attended D2L\u2019s Fusion user conference in Phoenix followed by meetings between Management and investors. We walked away from the events with increased conviction in D2L\u2019s upcoming growth acceleration given strong execution on innovation, growth in non-traditional learning, increased dissatisfaction with competitors and an accelerating push into international and corporate markets. The stock remains one of the most dislocated under our coverage, and we recommend investors buy the shares ahead of the financial inflection and SaaS sentiment improvement,\u201d said Mr. Fairweather. <\/p>\n