Inside the Market\u2019s roundup of some of today\u2019s key analyst actions<\/p>\n
TD Cowen analyst Michael Tupholme downgraded Ag Growth International Inc. (AFN-T<\/a>) to \u201chold\u201d from \u201cbuy\u201d previously, emphasizing \u201cthe level of risk and expected cost associated with AFN\u2019s ability to manage upcoming debt maturities (one this year and two converts next) has risen considerably since early-August.\u201d<\/p>\n Last week, the Winnipeg-based company announced that it is seeking various amendments to the terms of its $85-million, 5.25-per-cent senior debentures due Dec. 31, including the maturity date to Dec. 31, 2030, and increasing the interest rate from 5.25 per cent to 9.0 per cent.<\/p>\n \u201cAFN\u2019s elevated leverage ratio (5.2 times) and how it planned to deal with upcoming debt maturities have been focus areas for investors (AFN also has two converts maturing in 2027),\u201d said Mr. Tupholme in a client note. \u201cHowever, relative to when we last published on AFN (early-August), we now see an increased level of risk and cost associated with AFN\u2019s ability to manage upcoming maturities (bond yields in general and yields on AFN\u2019s own debentures have both risen sharply). Until now, AFN provided few details on its refinancing plans. <\/p>\n \u201cWhile the path AFN is pursuing for its 2026 debentures has now been revealed, uncertainty and questions remain. First, it remains to be seen if the proposed amendments will be passed (Oct. 28, 2026 meeting; 66 2\/3-per-cent approval needed). If not passed, precise next steps are unclear (we believe options exist, but lack of clarity on potential structure\/terms). Second, we believe risk\/uncertainty has increased around how AFN will handle its two 2027 convert maturities ($115-million due Jun. 30, 2027; $104-million due Dec. 31, 2027), and we do not expect near-term clarity.\u201d<\/p>\n After updating his forecast to reflect higher interest expense and lower cash flow estimates), Mr. Tupholme dropped his target for Ag Growth shares to $11 from $23. The average target on the Street is $20.57.<\/p>\n \u201cWe expect pending debt maturities to act as an overhang on the stock. Likelihood of a favourable re-rating is limited, in our view, until clarity is obtained on pending 2026\/2027 maturities (i.e., any improvement in agriculture fundamentals likely to be too gradual and overlooked for the time being given balance sheet\/refinancing focus),\u201d he said. \u201cVisibility into AFN\u2019s Strategic Review Committee\u2019s work is very low, but we note that a value-surfacing event (such as a sale of AFN) represents a potential source of upside risk to our PT.\u201d<\/p>\n Scotia Capital analyst Jonathan Goldman sees the current price for 5N Plus Inc. (VNP-T<\/a>) as \u201can attractive entry point for a business that could continue to compound EBITDA\/share in the [double digits] over the next several years \u2013 before considering upside from defence.\u201d<\/p>\n In a client report released before the bell titled Underappreciated and Overreacted, he said the Montreal-based producer of specialty semiconductors and performance materials is becoming \u201ca defence one-stop shop\u201d and the upside potential from its position in that industry \u201ccould be material.\u201d <\/p>\n \u201cWe believe 5N has become embedded in the U.S. military supply chain and that relationship should only deepen,\u201d said Mr. Goldman. \u201cIt started with a DoD grant in 2024 supporting germanium (Ge) crystal growth and substrate manufacturing at St. George. Earlier this year, the company received another grant to increase Ge recycling and refining by 7 times. Supplying upstream Ge opened the door to downstream opportunities, including the recent award to establish domestic production of gallium arsenide (GaAs) components. The U.S. is fully reliant on gallium (Ga) imports according to the U.S. Geological Survey.<\/p>\n \u201cLast week, the company announced plans to increase capacity at St. George by 50 per cent. That\u2019s an increase to entire site capacity, which encompasses other product lines besides Ge recycling\/refining, including aforementioned GaAs. None of this is in our numbers, but we estimate Ge tolling alone could add 5-10 per cent to our 2028 estimates. Further, U.S. imports of GaAs wafers were US$120-million in 2025. At 25 -per-cent market share, we estimate that could add another 10 per cent to our 2028 estimates.\u201d<\/p>\n While 5N Plus\u2019 shares have recovered most of the losses since second quarter, Mr. Goldman noted they are still off their highs by 35 per cent, emphasizing \u201cwe expect margin compression to be a blip as pass-throughs work their way through the system.\u201d <\/p>\n \u201c2Q results likely dredged up outdated perceptions that 5N is still a commodity pass-through business tied to a metal margin \u2013 but, the business has been completely transformed over the past five years into higher margin downstream operation underpinned by long-dated customer relationships,\u201d he added. \u201cFor context, LTM [last 12-month] EBITDA margins are up nearly 2 times since 2021 despite the cost of its main input rising by 3 times. Already strong end-markets are incrementally positive with AZUR (space) bid value up 2 times year-over-year in 1H and recent DoW awards. <\/p>\n \u201cWe think the market is underappreciating how material the defence opportunity could be underscored by the recent 50-per-cent capacity expansion announcement at its St. George, Utah facility.\u201d<\/p>\n Maintaining his \u201csector outperform\u201d rating for 5N Plus shares, he raised his target to $37 from $35. The average on the Street is $45.31.<\/p>\n \u201cVNP shares are trading at 16.1 times EV\/EBITDA on our 2027 estimates, down 25 per cent from peak of 21.5 times in June,\u201d he said. Sector valuations have also come off, but not to that degree. <\/p>\n \u201cSector valuations have also come off, but not to that degree: Defence (down 15 per cent), Semis (down 15 per cent), Solar (down 3 per cent), Space (down 15 per cent). However, we do not view VNP as a purely sentiment-driven or speculative story. The company is already benefitting from durable secular trends with 2\/3 of top-line contracted out to 2027\/2028 supporting high double-digits growth before any contribution from defense. Gross margin compression is a temporary blip while operating leverage supports additional margin expansion. The balance sheet is in great shape with net debt to EBITDA including leases of 0.5 times as at 2Q26 down from 1 times last quarter.\u201d<\/p>\n With its flagship Morelos Property in Mexico continuing to demonstrate \u201clong-life potential, delivering broad, high-grade intersections across all major mining fronts,\u201d ATB Cormark analyst Richard Gray upgraded Torex Gold Resources Inc. (TXG-T<\/a>) to \u201coutperform\u201d from \u201csector perform\u201d in response to the release of its third-quarter exploration results.<\/p>\n \u201cThe exploration results continue to demonstrate the exceptional potential of the Morelos property for resource expansion and mine life extensions, while the Morelos operation should have a much stronger H2\/26 and generate significant FCF,\u201d he said.<\/p>\n \u201cThese results position Torex well for another year of successful resource and reserve replacement ahead of the upcoming 2027 MRE.\u201d<\/p>\n Mr. Gray hiked his target to $89 from $71. The average is $91.20.<\/p>\n TD Cowen analyst Wayne Lam views Artemis Gold Inc.\u2019s (ARTG-X<\/a>) acquisition of Vista Gold Corp. (VGZ-T<\/a>) in an all-stock deal valued at US$427 million \u201cconstructively, adding a large-scale asset in a similar vein to the purchase of Blackwater that kickstarted the path to production in 2020.\u201d<\/p>\n \u201cWe view the addition of the Mt Todd project in Australia providing another large-scale asset to complement Blackwater with total reserves of 5.2 Moz [million ounces] at 0.94 g\/t [grams per ton] Au and a large resource base totaling 10.6 Moz at 0.83 g\/t Au (M&I+I),\u201d he explained. \u201cWe model upfront construction of the 50 Ktpd [tons per day] operation but note potential for ARTG to pursue another phased build out strategy similar to Blackwater. Based on capital intensity of the Blackwater build to 21 Mtpa ($83\/tpa) along with inflation, we estimate total capex of $1.82B for a 50 Ktpd operation representing capital intensity of $100\/Mtpa (page 4), which compares vs Cote ($218\/tpa) and Greenstone ($125\/ tpa). We estimate production of 406 Koz\/yr at mine-site AISC of $1,626\/oz over 12 years with potential upside via conversion of the larger M&I resource, which could double the current life.\u201d<\/p>\n Mr. Lam now expects Artemis to focus on the upcoming work plan to be released post-closing in early-2027. <\/p>\n \u201cKey focus items include (1) ore hardness and corresponding cost impact with flowsheet including a multi-stage crush and HPGR circuit, (2) ongoing consultation with the Jawoyn Aboriginal Community and protection of sacred sites across the mining license while noting Aboriginal Areas Protection Authority (AAPA) Certificate in hand, and (3) optimization of the mine plan and design given similarities to Blackwater,\u201d he said. \u201cGiven the success of the ARTG mine build team on construction and ramp up at Blackwater to date, we view investors having a higher degree of confidence in execution and identification of upside opportunities.\u201d<\/p>\n \u201cIn our view, the planned construction of Mt Todd post completion of EP2 positions ARTG on a path to production of 1 Moz annually. However, given growth capex of C$1.44-billion anticipated with the EP2 build to be completed by mid-2028 and our subsequent estimate of $1.82-billion for Mt Todd starting in mid-2029, we estimate relatively limited FCF generation for ARTG through 2030. As such, we anticipate near-term focus on guided timeline and spending to advance Mt Todd to a construction decision. Lastly, we view investors potentially viewing the acquisition as a signal that a takeout is not imminent, which may provide a modest overhang for those who had viewed ARTG being well positioned as a candidate for consolidation.\u201d<\/p>\n Maintaining his \u201chold\u201d rating for Artemis shares, Mr. Lam raised his target to $44 from $39. The average is $53.75.<\/p>\n \u201cOn a pro-forma basis, we estimate ARTG trading at 0.7 times spot NAV, representing a 30-per-cent discount vs Intermediate peers reflecting construction risk ahead with potential for gradual rerating as growth objectives are achieved,\u201d he said. \u201cWhile we estimate the acquisition being significantly accretive on a NAV basis, we remain on the sidelines given limited near-term FCF amidst construction of EP2 and Mt Todd.<\/p>\n \u201cOur rating is based on a more tempered FCF outlook as ARTG moves through an investment cycle with build out of the Phase 1A and EP2 expansion projects, followed by anticipated construction of Mt Todd. We continue to view the company constructively on a longer term basis given large-scale, low cost output in Tier I jurisdictions with Blackwater in Canada complemented by Mt Todd in Australia.\u201d<\/p>\n National Bank Financial analyst Mike Stevens thinks the growth and margins for Calian Group Ltd.\u2019s (CGY-T<\/a>) Global Navigation Satellite System (GNSS) \u201cappear stronger than investors may appreciate.\u201d<\/p>\n He said a tour of the company\u2019s GNSS manufacturing facility in Ottawa last week highlighted it \u201cas one of the clearest examples of Calian\u2019s technology-led growth opportunity, supported by attractive margins.\u201d<\/p>\n \u201cWhile still a relatively small contributor to Calian overall, we estimate GNSS now generates close to $50-million in annual revenue, or 6-per-cent-plus of consolidated revenue, up from just $9-million when Calian acquired Tallysman Wireless six years ago,\u201d said Mr. Stevens. \u201cDemand remains broad across commercial and defence applications, supporting continued double-digit growth, with defence becoming a more meaningful contributor. Further, we believe the business generates strong Adj. EBITDA margins above Calian\u2019s 23-per-cent Defence & Space segment margin, reinforcing GNSS as a particularly attractive source of organic growth within the portfolio.<\/p>\n \u201cCustomization and design-in capabilities support a durable competitive position. Calian can efficiently tailor antennas around a customer\u2019s platform requirements, supported by deep radio frequency (RF) expertise, a broad product catalogue and relatively short lead times. Once designed into an OEM platform, Calian participates as production scales, while the engineering, testing and qualification work required to change suppliers can make those positions durable over time.\u201d<\/p>\n Mr. Stevens thinks the GNSS\u2019 capacity should also \u201csupport the next leg of growth.\u201d <\/p>\n \u201cThe operation is running at high utilization, but additional shifts, selective automation, third-party board assembly and better use of the 65,000 sq. ft. footprint provide meaningful room to scale before a major new facility is required,\u201d he added.<\/p>\n \u201cThe tour reinforces a key element of our thesis that Calian\u2019s proprietary technology businesses can support organic, modernization-led growth, with GNSS a strong example.\u201d<\/p>\n He reaffirmed his \u201coutperform\u201d rating and $100 target for Calian shares. The average is $103.83.<\/p>\n Desjardins Securities\u2019 Lorne Kalmar said he came away from Crombie Real Estate Investment Trust\u2019s (CRR.UN-T<\/a>) analyst day in Halifax last week \u201cimpressed with the REIT\u2019s newest addition to its multi-res portfolio, renewed conviction in the Empire\/ Crombie relationship, and a high degree of optimism regarding Nova Scotia\u2019s near- and longer-term economic prospects.\u201d <\/p>\n \u201cWe found management\u2019s update to be an informative refresher of the REIT\u2019s strategy and where it sees meaningful opportunities within the portfolio,\u201d he explained. \u201cLeasing commentary remained constructive, with management emphasizing that its coast-to-coast platform, including 6msf of retail GLA in regional markets, provides a competitive advantage with retailers seeking a presence in markets of various sizes. Of its top 20 tenants, 19 operate in regional markets. The Marlstone, where the event was hosted, showed very well, in our view, with condo-quality finishes, a strong amenity offering and a centre-ice location. While no leasing update was provided, we are optimistic this unique offering in the heart of downtown Halifax will perform well. <\/p>\n \u201cThe Empire Strikes Back. Empire\u2019s SVP of Real Estate and Construction, Mark Eaton, provided constructive commentary around CRR\u2019s future participation in store growth and modernizations. He believes Empire\u2019s GLA will continue to grow at 1\u20132 per cent annually. As the landlord for 20 per cent of Empire\u2019s stores, this should provide a good runway of growth for the REIT. With Empire aiming to refresh its stores every 10 years, we expect modernizations to remain an important component of CRR\u2019s non-major development program for the foreseeable future.\u201d<\/p>\n In a note titled East Coast Kitchen Party, Mr. Kalmar updated his forecast for Crombie to reflect the recent rise in bond yields, and he now sees mortgage renewal rates of 5.0 per cent and unsecured refinancing rates of 4.85 per cent. <\/p>\n \u201cThese changes did not have a material impact on our estimates,\u201d he said. \u201cOur 2026 and 2027 estimates were largely unchanged, while 2028 declined less than 1 per cent. We expect 2.5-per-cent annual FFOPU growth in 2026 and 2027, before moderating slightly to 2 per cent in 2028. <\/p>\n Mr. Kalmar reaffirmed his \u201cbuy\u201d rating and $18 target for Crombie units. The average is $18.58.<\/p>\n \u201cFollowing the recent sell-off, CRR offers a 28-per-cent total return to our target,\u201d he said. \u201cWe believe the REIT will remain well insulated in the current environment, while offering upside via acquisitions and non-major developments.\u201d <\/p>\n Elsewhere, RBC\u2019s Pammi Bir kept a \u201csector perform\u201d rating and $18 target.<\/p>\n \u201cCRR\u2019s analyst day provided an \u2018inside baseball\u2019 peek at its operating and capital allocation strategies,\u201d said Mr. Bir. \u201cRather than a multi-year outlook or guidance, presentations underscored the strengths of its national portfolio of grocery anchored properties, ability to create value through portfolio optimization, and advantages afforded by its strategic ties with Empire (EMP). A tour of The Marlstone and other Halifax retail properties also highlighted the quality of its assets. At current levels, we see steady growth and a reasonable valuation.\u201d<\/p>\n In other analyst actions: <\/p>\n * Touting \u201ca more durable backlog than historically,\u201d Ventum Capital\u2019s Daniel Lavoie initiated coverage of Terrebonne, Que.-based steel fabricator ADF Group Inc. (DRX-T<\/a>) with a \u201cbuy\u201d rating and $20.50 target. The average is $21.<\/p>\n \u201cOur investment thesis rests on five key pillars: infrastructure spending provides a multi-year demand runway; structurally improved core margins following investments in automation; Groupe LAR as a new growth platform with exposure to hydroelectric infrastructure; capacity expansion and revenue visibility driven by durable backlog; and a compelling valuation relative to peers at an inflection point on ADF\u2019s improved earnings durability.<\/p>\n \u201cThe key change in the ADF story, in our view, is not simply the size of the backlog, but its duration and composition. Multi-year contracts now provide revenue visibility several years forward, while the Canadian share of backlog has increased substantially. We believe this should reduce the historical volatility associated with ADF\u2019s project-based business and provide greater visibility around production, labour requirements, and capital investments.\u201d<\/p>\n * In a preview of its third-quarter results. RBC\u2019s James McGarragle moved his target for Algoma Steel Group Inc. (ASTL-T<\/a>) to $7 from $6, keeping a \u201csector perform\u201d rating. The average is $5.55.<\/p>\n \u201cWe decrease our Q3 EBITDA estimate to negative $40-million (from negative $3-million; consensus negative $37-million) and revise our full-year 2026 EBITDA to negative $226-million (from negative $221-million; cons. negative $241-million), reflecting the volume impact from the turbine outage, partially offset by higher steel prices,\u201d he said. \u201cWe remain focused on the 2027 EBITDA trajectory, as we expect higher steel prices and improved fixed cost absorption on recovering volumes to drive an earnings inflection. We continue to view tariff normalization as the key re-rating catalyst for Algoma.\u201d<\/p>\n * TD Cowen\u2019s Derek Lessard increased his target for The Cronos Group Inc. (CRON-T<\/a>) to $7 from $6, reaffirming a \u201cbuy\u201d rating. The average is $4.73.<\/p>\n \u201cWe came away more bullish on CRON following the company\u2019s inaugural investor day, with the GrowCo tour reinforcing that this is far more than a cultivation story. Proprietary genetics, purpose-built assets, and focused hero brands are driving stronger growth, margins, and FCF. CRON\u2019s debt-free balance sheet also positions it to fund expansion, repurchase shares, and pursue value-enhancing M&A,\u201d said Mr. Lessard.<\/p>\n * ATB Cormark\u2019s MacMurray Whale reduced his NanoXplore Inc. (GRA-T<\/a>) to $2.25 from $3 with an \u201coutperform\u201d rating. The average is $1.98.<\/p>\n \u201cWe have updated our long-term estimates following revenue guidance provided by Management for F2027 and F2028, as part of Q4\/F26 reporting. In today\u2019s note, we put this guidance in the context of updates Management provided on initiatives to expand adoption of graphene drilling fluids, foams, plastic films and recycled materials,\u201d said Mr. Whale.<\/p>\n