Inside the Market\u2019s roundup of some of today\u2019s key analyst actions<\/p>\n
Bank of Nova Scotia (BNS-T<\/a>) is \u201cbecoming more than just a relative value play,\u201d according to National Bank Financial analyst Gabriel Dechaine.<\/p>\n Citing a \u201cmore optimistic credit performance and stronger top-line performance,\u201d he upgraded Scotia to an \u201coutperform\u201d rating from \u201csector perform\u201d based on a mid-teens total return to his target for its shares and what he still views \u201cas attractive relative valuation.\u201d<\/p>\n BMO, Scotia signal caution, but say businesses adapting well to trade unrest<\/a><\/p>\n \u201cBNS achieved its fiscal 2027 ROE [return on equity] target of 14 per cent this quarter, an important milestone for a bank typically viewed as a \u2018value play\u2019,\u201d said Mr. Dechaine. \u201cThis performance was boosted mainly by the Capital Markets business (i.e., ROE up 350 basis points quarter-over-quarter, vs. 70 basis points average in other segments). Management emphasized that the next step forward will be driven by the Canadian banking business. Encouragingly, performance in this business has been improving: 1) Year-to-date PTPP [pre-tax, pre-provision earnings] has grown by 10 per cent, including Q3\/26 growth of 11 per cent; 2) NIM [net interest margin] has expanded by 8 basis points so far this year, with potential improvement ahead tied to term deposit outflows and mortgage repricing; and 3) net fee income growth of 9 per cent.\u201d<\/p>\n Scotia shares soared 7 per cent on Tuesday following the premarket release of its third-quarter results, which including adjusted earnings per share of $2.28, topping both Mr. Dechaine\u2019s $2.09 estimate and the consensus forecast of $2.10. He attributed the beat primarily to higher PTPP (10 cents, \u201cmainly trading and advisory revenues\u201d) and lower PCLs (7 cents). <\/p>\n \u201cCredit outlook is cautiously optimistic,\u201d added the analyst. \u201cImpaired PCLs [provisions for credit losses] were down 10 per cent quarter-over-quarter (and 10 per cent below our forecast), reflecting improvement in both the Canadian and International banking segments. Management cited improved collections efforts in the Canadian consumer book and improved risk selection in International as factors (notwithstanding a \u2018top-up\u2019 provision on a wholesale impairment in Brazil). Regarding downside risks to the latest trade tensions between Canada and the U.S., BNS highlighted small (i.e., sub-1-per-cent) exposure to sectors with higher tariff exposure.<\/p>\n \u201cCapital management strategy: low risk of M&A Management downplayed potential M&A activity in the U.S. regional banking space, citing more interest in organic expansion. If anything, acquisition activity would most likely involve small wholesale businesses in the U.S. as targets.\u201d<\/p>\n After increasing his forecast to reflect the results and his positive view, Mr. Dechaine raised his target for Scotia shares to $142 from $128. The average target on the Street is $123.78.<\/p>\n Elsewhere, TD Cowen\u2019s Mario Mendonca raised Scotia to \u201cbuy\u201d from \u201chold\u201d with a $141 target, up from $124.<\/p>\n \u201cQ3\/26 results were strong, reflecting better loan growth, strong CMRR [capital markets revenue], and lower PCLs,\u201d said Mr. Mendonca. \u201cWe are upgrading BNS to BUY on the basis of renewed loan growth across the bank (except non-retail IB), ROE progression (particularly in CAD banking), and favourable capital priorities. We see as a positive that management is more focused on return of capital and not U.S. M&A at this time.\u201d<\/p>\n He added: \u201cThe upgrade reflects renewed loan growth across the bank (except for non-retail IB – we expect some progress in \u201927), lower PCLs, and ROE progression (particularly in CAD banking). We also believe management could raise the ROE target in Q4\/26); capital return priorities (over US M&A) also support our upgrade.\u201d<\/p>\n Analysts making target adjustments include: <\/p>\n * RBC\u2019s Darko Mihelic to $129 from $117 with a \u201csector perform\u201d rating.<\/p>\n \u201c Q3\/26 results were stronger than our expectations particularly in Global Banking and Markets. We saw signs that BNS could potentially raise its targets. BNS exceeded its 14-per-cent-plus core ROE target and suggested this target was not a ceiling. Its updated International Banking (IB) double-digit core earnings growth guidance (underpinned by 6-8-per-cent revenue growth and 4-per-cent expense growth) in 2027 and beyond improved from its 2026 guidance (modest\/low-single-digit earnings growth). We model IB loan growth to turn positive (which may be generous, as it declined 1 per cent year-over-year constant FX ex-divestitures in Q3\/26),\u201d said Mr. Mihelic.<\/p>\n * Raymond James\u2019 Stephen Boland to $139 from $137 with an \u201coutperform\u201d rating.<\/p>\n \u201cWe continue to believe the market is under pricing BNS\u2019s transition toward higher-return, multi-product primary relationships. As the Bank continues to execute in International and Canadian Banking, we expect its valuation discount to peers to narrow,\u201d said Mr. Boland.<\/p>\n * Canaccord Genuity\u2019s Matthew Lee to $127 from $121 with a \u201chold\u201d rating.<\/p>\n \u201cBNS reported Q3 results featuring an EPS beat driven by robust growth across its Canadian businesses and improving strength in its International segment. Our key takeaway from the quarter was the bank\u2019s increasing confidence in its ROE trajectory, with management highlighting that its prior 14-per-cent target would not be a ceiling for the bank. We viewed BNS\u2019 Canadian banking performance as particularly strong, with PTPP up 11 per cent year-over-year and loan growth up 3 per cent which suggests that BNS can find growth domestically while its LATAM business begins its pivot to growth. Credit was also a positive, with PCLs beating our estimate despite including $71-million of idiosyncratic PCLs related to a single corporate client. Overall, we view the quarter positively but remain on the sidelines as we look for further evidence that the improving loan growth and credit trends in International Banking can be sustained.,\u201d said Mr. Lee.<\/p>\n * Keefe Bruyette\u2019s David Konrad to $152 from $148 with an \u201coutperform\u201d rating.<\/p>\n While Bank of Montreal (BMO-T<\/a>) revealed \u201csolid\u201d quarterly results, RBC Dominion Securities analyst Darko Mihelic says he\u2019s clinging to \u201csome conservatism for 2027.\u201d<\/p>\n \u201cBMO\u2019s Q3\/26 results were stronger than expected, mostly in Capital Markets, Wealth Management, and U.S. Banking,\u201d he said. \u201cBMO expects its announced divestitures to increase its CET 1 ratio by 50 basis points on closing and these businesses represented 3 per cent of core earnings in Q3\/26. We continue to believe further upward revisions to 2027E core earnings may require greater loan growth and wider operating leverage (in Canada and the U.S.) while capital markets activity remains robust.\u201d<\/p>\n BMO shares closed up 0.6 per cent on Tuesday after it reported third-quarter core earnings per share of $3.96, topping both Mr. Mihelic\u2019s projection of $3.74 and the consensus estimate of $3.77 \u201cdue to higher-than-expected Capital Markets, Wealth Management, and U.S. Banking results.\u201d <\/p>\n \u201cOn a consolidated basis, non-interest income was higher than expected and total provision for credit losses (PCLs) were lower than anticipated,\u201d he added. \u201cThe bank expects Q4\/26 impaired PCLs to be in line with Q3\/26.\u201d<\/p>\n The analyst is now modelling \u201chigher total revenue and higher non-interest expense estimates across the operating segments and refine our expected core earnings impact from divestitures.\u201d <\/p>\n \u201cOur 2027 estimates increase in most operating segments but decrease in Canadian P&C in 2027,\u201d he added. \u201cWe model BMO to repurchase ~65% of its newly announced NCIB. Our core EPS estimates increase to $14.79 (was $14.48) in 2026 and $16.08 (was $15.57) in 2027. We introduce our 2028 estimates with this note and expect a core EPS of $18.04 in 2028.\u201d<\/p>\n With those changes, Mr. Mihelic raised his target for BMO shares to $241 from $230, keeping a \u201csector perform\u201d rating. The average target is $248.82.<\/p>\n Elsewhere, other changes include: <\/p>\n * Canaccord Genuity\u2019s Matthew Lee to $271 from $265 with a \u201cbuy\u201d rating.<\/p>\n \u201cOur key takeaway from the quarter was the acceleration in US loan growth, which we view as a key part of the segment\u2019s ROE expansion thesis. Credit was also a key positive, with impaired PCLs falling 4 basis points quarter-over-quarter, and management indicating that the underlying credit fundamentals continue to improve (although impaired PCLs should remain relatively stable in Q4). While we largely expected a strong quarter from BMO on the back of Capital Markets activity, we view the Q3 results as robust and broad-based, reinforcing our confidence that the bank will be able to reach its 15-per-cent ROE target by the end of F27. With our PTPP estimates modestly increased for Capital Markets and the US business, and our medium-term PCL assumptions moderated, our target price increases from $265.00 to $271.00. We maintain our BUY rating and continue to believe that BMO can deliver group-leading EPS growth over the next two years,\u201d said Mr. Lee.<\/p>\n * National Bank\u2019s Gabriel Dechaine to $271 from $278 with a \u201csector perform\u201d rating. <\/p>\n \u201cWe are adjusting our estimates to account for stronger trading revenues and modestly lower PCLs. We are also reducing our target P\/E multiple to 14.5 times from 15 times due to potential margin compression as loan growth outpaces deposit growth. As a result, our price target reduces,\u201d said Mr. Dechaine.<\/p>\n RBC Dominion Securities analyst Irene Nattel is maintaining \u201ca high degree of confidence\u201d in her long-term constructive thesis on Alimentation Couche-Tard Inc. (ATD-T<\/a>) despite \u201csofter consumer demand and heightened macro uncertainty.\u201d<\/p>\n \u201cBased on our analysis, key to ATD as a compelling investment and multiple re-rating\/improved investor interest lies in underlying performance, secular tailwinds favouring large operators, and greater clarity on path forward with the proposed \u017babka acquisition (not in estimates),\u201d she added. \u201cShould management continue delivering on Core+More with structural fuel supply chain upside, the valuation gap to peers could narrow meaningfully.\u201d<\/p>\n In a client note released before the bell, Ms. Nattel adjusted her forecast for the Montreal-based convenience store operator ahead of the release of its first-quarter fiscal 2027 results on Sept. 1 to \u201csofter consumer demand reads, updated gas price expectations, fine-tuned gas margin assumptions.\u201d<\/p>\n \u201cWe are trimming our U.S. inside SSS [same-store sales] assumption to up 2.25 per cent from up 3.0 per cent to reflect a softer demand backdrop for the value-oriented consumer that typically represents 50 per cent of c-store traffic, as evidenced by recent earnings from Walmart (NYSE: WMT) and PepsiCo (NYSE: PEP) pointing to more cautious spending patterns,\u201d she said. \u201cRevised SSS forecast at the lower end of management\u2019s F2026- F2030 framework target CAGR [compound annual growth rate] of 2-3 per cent. <\/p>\n \u201cOur latest forecasts reflect updated FQ1E U.S. fuel margin 48.75\u00a2\/g (from 48.00\u00a2\/g previously), 6.5\u00a2\/g premium to industry margin, within the range of prior eight quarter premium 3\u00a2\u201316\u00a2 as significant fuel price volatility amid the geopolitical situation continues. We reiterate our view that ATD U.S. fuel margins should be sustainable in the high-40\u00a2\/g range with upward bias through our forecast horizon. Estimated EPS sensitivity to \u00b11\u00a2\/g\/Q change in the U.S. fuel margin is \u00b1$0.02, all else equal.”<\/p>\n Despite her adjustments, Ms. Nattel reaffirmed an \u201coutperform\u201d rating and $111 target for Couche-Tard shares, which exceeds the average on the Street of $103.73.<\/p>\n \u201cATD shares have traded down 10 per cent from the post-FQ4 amidst weakening consumer spending trends,\u201d she said. \u201cWe view the current share price as a compelling entry point, catalysts for improving investor sentiment, in our view, would include traction and cadence of SSS and SSG recovery, gas margin sustainability, progress on Core+More strategy execution, continued momentum in Europe, and clarity on \u017babka transaction timeline\/integration approach. \u201d<\/p>\n While acknowledging the debate on artificial intelligence is likely to continue, RBC Dominion Securities analyst Paul Treiber thinks \u201csustained healthy fundamentals may continue to fuel improved sentiment\u201d across Canada\u2019s technology sector following a solid second-quarter earnings season, seeing an \u201cattractive risk-reward\u201d across his coverage universe.<\/p>\n \u201cThe S&P\/TSX Info-tech sub-sector has rallied 33 per cent off its trough on May 13th and is now down just 6 per cent year-to-date,\u201d he said in a client note. \u201cDespite this sharp rebound, the sub-sector\u2019s year-to-date performance still lags the S&P\/ TSX Composite (up 15 per cent year-to-date) and the S&P 500 Info-tech sub-sector (up 18 per cent year-to-date). The rally in Canadian tech stocks since mid-May reflects improved investor sentiment for software, driven by two factors: generally healthy near-term fundamentals (11-per-cent average organic growth, 62 per cent of our covered stocks reported Q2 revenue above consensus) and valuations near multi-year lows.\u201d<\/p>\n Mr. Treiber noted consensus revenue estimates across his coverage universe have increased following stronger-than-expected quarterly results \u201cwith Q3 revenue estimates up 0.5 per cent and CY26 up 0.6 per cent, a much larger increase than last quarter\u2019s 0.3 per cent and 0.1 per cent, respectively.\u201d<\/p>\n \u201cProfitability expectations also rose: Q3\/CY26 adj. EBITDA estimates increased 0.5 per cent and CY26 adj. EBITDA rose 1.0 per cent, whereas both declined last quarter,\u201d he added. \u201cThese results reflect a generally stable macro and resilient enterprise discretionary spending despite increasing AI investments, along with sustained consumer spending, no increase in customer churn, and operating leverage. <\/p>\n \u201cCanadian tech top 100. We compare our coverage against the 100 largest technology stocks listed on Canadian stock exchanges, which provides broader context and helps identify outliers across the larger landscape. Among Canadian tech stocks with more than $50-million market cap, the best 90-day performers are PKK (up 820 per cent), DMGI (up 50 per cent), and SHOP (up 45 per cent); the largest quarterly revenue beats in the last 90 days came from BB (revenue 11 per cent above consensus), CLS (7 per cent), and CGY (7 per cent); and the largest upward CY26 revenue revisions over the last 90 days belong to VQS (23 per cent), PNG (17 per cent), and QTRH (16 per cent).\u201d<\/p>\n Mr. Treiber named four companies as his \u201cbest ideas\u201d in the sector<\/p>\n Shopify Inc. (SHOP-Q<\/a>, SHOP-T<\/a>) with an \u201coutperform\u201d rating and US$180 target. The average is US$171.39.Constellation Software Inc. (CSU-T<\/a>) with an \u201coutperform\u201d rating and $4,400 target. Average: $4,014.18.Kinaxis Inc. (KXS-T<\/a>) with an \u201coutperform\u201d rating and $210 target. Average: $203.Celestica Inc. (CLS-N<\/a>, CLS-T<\/a>) with an \u201coutperform\u201d rating and US$450 target. Average: US$463.54.<\/p>\n \u201cWe expect fundamentals across our coverage to remain healthy through Q3 and Q4,\u201d he concluded. \u201cDespite the rally since mid-May, 78 per cent of the stocks in our coverage universe are still in the lowest quartile of their historical valuation range. We therefore believe earnings growth will underpin improved returns, and the S&P\/TSX Info-Tech may continue to narrow its year-to-date underperformance (down 6 per cent vs. S&P\/TSX Composite up 15 per cent, S&P 500 up 12 per cent, S&P 500 Info-Tech up 18 per cent) through year-end. <\/p>\n \u201dWe expect Shopify (down 7 per cent year-to-date) to extend its rebound through year-end, driven by robust revenue growth (we forecast CY26 revenue up 32 per cent year-over-year). Constellation (down 6 per cent year-to-date) is positioned to benefit from an increased pace of acquisitions, driving continued compounding of capital (we forecast Constellation\u2019s adj. EBITDA up 18-per-cent year-over-year CAGR over the next 2 years). Kinaxis (up 4 per cent year-to-date), in our view, may see an upward valuation re-rating on continued SaaS and ARR growth re-acceleration (we forecast CY26 SaaS revenue up 20 per cent year-over-year). For Celestica (0 per cent year-to-date), the company may continue to deliver solid beat-and-raises through year-end, as AI data centre build-outs fuel strong revenue growth and operating leverage (we forecast CY26 adj. EPS up 82 per cent year-over-year).”<\/p>\n Stifel analyst Ryan Walker thinks an investment in Cabral Gold Inc. (CBR-X<\/a>) provides exposure to \u201ca gold exploration and emerging small-scale oxide-gold producer focused on a large prospective land package centred on the largest historic producer (2 million ounces) of placer gold during Brazil\u2019s 1980s Tapaj\u00f3s gold rush.\u201d<\/p>\n ” CBR has so far focused on just six targets (three main deposits) for resource addition, representing a very small fraction of the (306 square kilometres ) project\u2019s prospective footprint, with drilling to date testing the various deposits and mineralized zones to depths of just 150 million,\u201c he said. \u201dCBR plans to systematically (internally funded via cash flow) expand known mineralization and test a wealth of advanced and more greenfield targets (above 50) at the formerly prolific alluvial gold producer.”<\/p>\n In a client report released before the bell, he initiated coverage of the Vancouver-based company with a \u201cbuy\u201d rating.<\/p>\n \u201cWe highlight the potential for near-term modest but low-cost gold production aimed at providing CBR with meaningful cash flow to allow for non-dilutive exploration of a large prospective land package covering the largest producer of placer gold during the 1980s Tapaj\u00f3s gold rush,\u201d he added. \u201cWe also note that Cabral CEO, Alan Carter, is considered the driving force behind the team that identified five grassroots gold discoveries in Brazil, including G Mining Venture\u2019s (TSE:GMIN) neighbouring Tocantinzinho gold mine \u2013 Brazil\u2019s third-largest gold mine. <\/p>\n Mr. Walker set a target of $1.70. The average is $1.65.<\/p>\n \u201cOur target price is anchored in a DCF valuation of the expected cash flows from the company\u2019s commissioning-stage trial mining operation at the 100-per-cent-owned Cui\u00fa Cui\u00fa gold project in Brazil. We also include an EV\/oz-based valuation of unmodelled resources and exploration target at the 305.6km2 project, which covers the entire gold district that ranked as the largest producer of placer gold during the 1980s Tapaj\u00f3s gold rush. Upside to our target is represented by continued exploration success and the potential to add additional existing and newly identified oxide-gold material to the Phase 1 mine plan,\u201d he added.<\/p>\n In other analyst actions: <\/p>\n