Inside the Market\u2019s roundup of some of today\u2019s key analyst actions<\/p>\n
RBC Capital Markets analyst Tom Narayan is \u201cconstructive\u201d on North American auto parts suppliers, including Canada\u2019s Magna International Inc. (MGA-N<\/a>, MG-T<\/a>), following second-quarter earnings season.<\/p>\n “Q2 saw mostly beats and \u201925 guidance raises for U.S. suppliers in our coverage,\u201c he said. \u201dOn average, suppliers are up 12.5 per cent since reporting results and we remain buyers on strength. OEMs have been absorbing tariffs thus far and production forecasts have been going higher. The EV slowdown currently underway benefits U.S. OEMs as does a potential USMCA deal which could be more favorable to ones struck with the EU, Korea and Japan. We expect U.S. suppliers to benefit the most from these dynamics.”<\/p>\n In a research report released Friday, Mr. Narayan called European parts manufacturers a \u201cmixed bag\u201d and he\u2019s taking a much more \u201ccautious\u201d view on pure-play electric vehicle manufacturers.<\/p>\n \u201cBoth Rivian and Lucid cut their \u201925 guidance on macro issues,\u201d he noted. \u201cFor Rivian specifically, regulatory credits are coming in below initial company expectations. Additionally, as we discussed (see report), we are increasingly more cautious on BEV sales in the US near term, especially considering the price spread between new and used BEVs vs new and used ICEs. Moreover, with consumer incentives expiring in September and loosening emissions regulations in the US more of a certainty, regulatory credit revenues are less certain. Finally, legacy OEMs are increasing their competitive positioning in the space. Notably, Ford recently announced (see report) it will be debuting an affordable, 4-door mid-size electric pickup priced at $30K in 2027. Legacy OEMs can utilize their ICE businesses to subsidize EV loss-making production. This could be a competitive problem for pure-play EV makers who need to reach volume levels to become profitable.\u201d<\/p>\n For Aurora, Ont.-based Magna, Mr. Narayan thinks its scaled \u201cprovides advantage in vehicle electrification\u201d and emphasized the benefits of its \u201ccomplete systems approach.\u201d<\/p>\n \u201cMagna is one of the largest automotive suppliers globally and offers a wider range of components, systems, and complete vehicles than peers,\u201d he said. \u201cThe company\u2019s size and complete systems approach is more capital-efficient, allows it to be quicker to market, and provides a greater knowledge base across the vehicle, which we think should help the company in the transition to EVs.<\/p>\n \u201cMagna has product capabilities that include body, chassis, exterior, seating, powertrain, active driver assistance, electronics, mechatronics, mirrors, lighting, and roof systems. We think the company leads in breadth of product offering and this enables it to provide unique complete vehicle solutions that are unmatched by peers.\u201d<\/p>\n Also touting its total addressable market and a portfolio that is \u201clargely agnostic to propulsion system,\u201d he raised his target for its shares to US$45 from US$38, keeping a \u201csector perform\u201d rating. The average target on the Street is US$45.76, according to LSEG data.<\/p>\n \u201cMagna raised its \u201925 Adj. EBIT guidance to $2.226-billion (mid-point) from $2.185-billion (midpt) and Revenue to $41.2-billion (midpt) vs prior $40.8-billion (midpt),\u201d he said. \u201cQ2 margins came in at 5.5 per cent, well above our prior 4.7 per cent and Q1\u2019s 3.5 per cent. Full year guidance is for 5.2-5.6 per cent, which implies an H2 margin uplift. Magna\u2019s H2 segment margin guidance implies Seating at 4.9 per cent at the midpt vs 0.4 per cent in H1 and 6.8 per cent in H2 for P&V vs 3.8 per cent in H1. On the call, mgmt noted better commercial recoveries as a key reason for this upswing. We model to the lower end of the guidance range given the significant upshift needed to reach the guide midpt. The strong Q2 beat and \u201925 raise causes us to raise our \u201825\/\u201926 EBITDA estimates to $3.7-billion\/$4.0-billion from $3.5-billion\/$3.8-billion. As such, our PT moves up.\u201d<\/p>\n =====<\/p>\n National Bank Financial analyst Mohamed Sidib\u00e9 thinks \u201csome of the nuclear \u2018hype\u2019 has been priced into the stock” of Cameco Corp. (CCO-T<\/a>), however he thinks the full upside from its stake in Westinghouse Electric Co. is \u201cnot yet fully reflected\u201d and sees \u201cplenty of upside left.\u201d<\/p>\n In November of 2023, Cameco and Brookfield Asset Management (BAM-T<\/a>) completed the acquisition of\u202fPennsylvania-based Westinghouse. Cameco now owns a 49-per-cent interest and Brookfield owns the remaining 51 per cent in Westinghouse, one of the world\u2019s largest nuclear services businesses.<\/p>\n “Given the recent run-up in CCO\u2019s share price following a positive guidance update at Westinghouse, which unearthed hidden potential that was underappreciated by both the street and ourselves, we are revisiting our valuation of the segment,\u201c said Mr. Sidib\u00e9. \u201dRecent media coverage around the settlement between Westinghouse and Korea also creates a timely opportunity to reassess what Westinghouse could be worth inside the portfolio.”<\/p>\n It has been reported South Korea\u2019s state-run Korea Hydro & Nuclear Power Co. (KHNP) is in talks with Westinghouse to form a joint venture in the United States. That comes after KHNP secured a US$18.6-billion contract in June to build a pair nuclear power reactors in the Czech Republic, following the end of a lengthy dispute with KHNP and Korea Electric Power Corporation (KEPCO) over nuclear technology rights with Westinghouse.<\/p>\n \u201cThe partnership between Westinghouse, KEPCO and KHNP is truly remarkable specifically given its potential impact on near-term EBITDA (45-per-cent guidance increase in 2025),\u201d said the analyst. \u201cHowever, in line with our prior thinking, it remains the cherry on top with it representing 7 per cent of future new build segment revenue based on our assumptions (10 per cent in the upside case scenario).<\/p>\n \u201cBut it is important to caveat that our model only captures 35 per cent of the anticipated Korean opportunity set with no upside from future core business services synergies and opportunities that would arise from the partnership. Notably, we only model a total involvement in 20 reactors by KHNP, while recent Bloomberg articles highlighted that Korea was bidding on as much as 43 per cent of the 400 planned reactors. Our base case assumes a much lower total addressable market and no participation from Korean entities in the U.S. or Poland where we view as Westinghouse as the preferred option.\u201d<\/p>\n Mr. Sidib\u00e9 estimates the partnership could add almost $5 to Cameco\u2019s share price by increasing his core services revenue growth assumption from 3 per cent to 5 per cent and a 14-per-cent rise in Westinghouse\u2019s cash flow. <\/p>\n \u201cUltimately, we expect the partnership between the two entities to remain intact as it is beneficial to both parties despite recent media articles,\u201d he added. \u201cWe view an ex-Korea case as unlikely at this time.\u201d<\/p>\n Maintaining his \u201coutperform\u201d recommendation for Cameco shares, he raised his target to $115 from $110. The average target is $111.29.<\/p>\n =====<\/p>\n National Bank Financial analyst Vishal Shreedhar is expecting to see a moderation in food same-store growth for Empire Co. Ltd. (EMP.A-T<\/a>) when it reports first-quarter 2026 financial results on Sept. 11 “reflecting the cycling of a boycott of Loblaw in May 2024.”<\/p>\n “We remain on the sidelines as we evaluate EMP\u2019s ability to deliver consistent growth; the valuation discount versus peers, in part, compensates investors for a long-term fluctuating earnings track record,” he said.<\/p>\n Mr. Shreedhar is currently projecting earnings per share for the quarter of 85 cents, down 6.2 per cent year-over-year (90 cents) and 7 cents below the consensus forecast, which he attributes to ” lower aggregate share of earnings from investments and Other income, higher SG&A (excluding D&A), higher D&A, higher interest expense and a higher tax rate, partly offset by positive Food Retailing (FR) sssg, new store openings and a higher gross margin rate.”<\/p>\n “We expect Q1\/F26 FR sssg (excl. fuel) to moderate sequentially in part reflecting the cycling of a boycott of Loblaw in May 2024 (transient impact),” he added. \u201cBeyond the quarter, we expect stronger sssg partly reflecting less pressure with cycling a boycott. Also, EMP first commented on improving basket size and declining promotional penetration in Q3\/F25. <\/p>\n \u201cStatistics Canada data until July 2025 suggests an average food store inflation rate of 3.2 per cent during Q1\/F26 versus 2.0 per cent last year and 3.3 per cent in Q4\/F25.\u201d<\/p>\n Mr. Shreedhar added peer commentary \u201cpoints to a continuation of themes from prior quarters,\u201d noting: \u201cOur review of peer commentary suggests: (i) An ongoing consumer focus on value, (ii) The Buy Canadian movement remains resilient, albeit there are suggestions that momentum is slowing, and (iii) Some indications that the impact of tariffs is becoming more pronounced.\u201d<\/p>\n After modest adjustments to his forecast for the next two fiscal years, he reiterated his \u201csector perform\u201d rating and $59 target for Empire shares. The average is $56.63.<\/p>\n =====<\/p>\n Following institutional investment meetings with Savaria Corp. (SIS-T<\/a>) chief executive Sebastien Bourassa, Stifel analyst Justin Keywood sees its shares poise to re-rate higher, pointing to margin improvements and M&A potential.<\/p>\n \u201cThe company is near successfully complete Savaria One, a pursuit to improve EBITDA margins from approximately 15 per cent to 20 per cent, among other goals over two years,\u201d he said. \u201cQ2 EBITDA margins were 20.6 per cent, as guided and $925-million 2025 sales is close to the $1-billion goal. Savaria has a history of meeting ambitious goals and sets up well for Savaria 2.0, where further margin expansion and scale is expected to be conveyed in 1H\/2026. An active M&A pipeline was also described, where good assets in the assisted lift sector could benefit from the operational excellence and automation, demonstrated with Savaria One, leading to wide synergies. Savaria\u2019s balance sheet helps support M&A (1.3 times leverage) as FCF should torque up, with one-time fees dropping off in 26\u2019.\u201d<\/p>\n Mr. Keywood thinks the Laval, Que.-based accessibility solutions provider is \u201cevaluating several targets in the assisted lift sector.\u201d<\/p>\n \u201cThere are dealer\/distributor assets in lifting direct sales and capturing additional margin in doing so,\u201d he said. \u201cThis area of M&A is a balancing act and more of the tuck-in variety to not disrupt the broader 1k partner dealer network. Savaria is also pursuing assets where it has product gaps. E.g. commercial elevators for 3\u20136 floors, where it has products for 1\u20132 floors currently. There are also good assets that are perhaps family run but could benefit greatly from Savaria\u2019s operational excellence, automation and global reach. There is attention to integration as well in reducing this period to 12\u201318 months vs. +3 years prior. We see M&A as a valuable pursuit in supporting new scale, organic growth and margin expansion. Savaria\u2019s balance sheet (about 1.3 times leverage) with $275-million of available capacity helps support M&A with a target leverage ratio, below 2.5 times.”<\/p>\n Maintaining his \u201cbuy\u201d rating, Mr. Keywood bumped his target to $25 from $24. The average is $25.79.<\/p>\n =====<\/p>\n