Inside the Market’s roundup of some of today’s key analyst actions
National Bank Financial analyst Jaeme Gloyn is maintaining his “favourable” outlook for Canada’s property and casualty insurance sector ahead of first-quarter earnings season, believing its “solid fundamental setup continues into 2025, while insolated from broader macro uncertainty.”
“Year-to-date in 2025, we have seen multiples re-rate to the high end of their historic range,” he noted. “That said, in the context of ROE expectations current valuations appear reasonable. While catastrophes remain a key risk factor in 2025, we believe it is unlikely Canada sees a repeat of the record-setting level of losses.
“Positively, additional rate increases are expected in response to last years’ weather events, further extending the hard market. We maintain a favourable view on the mid-term profitability set-up, with the potential for M&A to enhance the outlook. Given current levels of excess capital across our P&C coverage, consolidation will be a theme to watch for in 2025.”
In a research report released Wednesday, Mr. Gloyn reiterated his stance while revising his estimates and price targets for most of the companies in his Diversified Financials coverage universe.
“The 2025 macro backdrop is a mixed bag,” he noted. “The start of the Bank of Canada’s rate cuts in mid-2024 as inflation eased provided some optimism for tailwinds supporting credit conditions, consumer spending and economic activity. However, this optimism comes just as new headwinds emerge with the trade conflict with the U.S. creating uncertainty and weighing heavily on consumer and business confidence. This overhang combined with a soft labour market has clouded the outlook. As investors asses potential recession risk and trade disruptions we have seen heightened volatility in financial markets.”
“In light of elevated macroeconomic uncertainty, we identify three areas of opportunity within our coverage: 1) defensive names (including IFC, DFY and X) that we believe are most resilient in uncertain times. Valuations here have re-rated to peak levels, which we view as justified given scarcity of similarly defensive names. 2) Defensive names with valuation upside (including EFN, FFH and TSU) that also benefit from defensive characteristics, but valuations have room for further upside. 3) Risk-on names (including GSY and ECN) where macro uncertainty has weighed on sentiment creating attractive entry points with significant upside as the macro overhang clears.”
For P&C providers, Mr. Gloyn made these target adjustments:
* Definity Financial Corp. (DFY-T, “outperform”) to $75 from $70. The average on the Street is $64.11, according to LSEG data.
* Intact Financial Corp. (IFC-T, “outperform”) to $305 from $299. Average: $299.46.
Analyst: “One of the most resilient pockets of our coverage universe. Our Canadian P&C insurance coverage enters 2025 with a strong fundamental outlook including hard market conditions, moderating claims inflation and strong investment income. We are confident in the outlook given little to no exposure to broader economic headwinds and tariffs. IFC and DFY report that less than 15 per cent of their claims’ costs may be affected by tariffs, with pricing and supply chain management helping to offset these higher costs. Additionally, the higher costs will extend the duration of the current hard market conditions and facilitate further rate increases. While valuations at peak levels appear full, P/B ROE regressions suggest upside remains. Moreover, we believe that scarcity of similarly defensive names warrants a premium.”
* Fairfax Financial Holdings Ltd. (FFH-T, “outperform”) to $2,700 from $2,600. Average: $2,475.
Analyst: “Similar to IFC and DFY above, the fundamental outlook for FFH is solid with little exposure to tariff or macroeconomic risks. We expect Fairfax’s consistent underwriting results to continue, on top of the more than $2.5-billion in interest income locked in for the next few years from fixed income investments. Despite the significant valuation re-rating over the past 5 years, Fairfax remains materially discounted relative to peers on an ROE basis. We see upside as we believe consistent results and deployment of excess capital that will drive ROE accretion warrants further re-rating“
For other stocks in his coverage universe, the analyst’s changes are:
- Brookfield Business Partners LP (BBU-N/BBU.UN-T, “outperform”) to US$32 from US$36. Average: US$30.71.
- Goeasy Ltd. (GSY-T, “outperform”) to $240 from $255. Average: $224.60.
- TMX Group Ltd. (X-T, “sector perform”) to $55 from $50. Average: $53.75.
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While TD Cowen analyst Cherilyn Radbourne acknowledges Brookfield Asset Management Ltd. (BAM-N, BAM.A-T) is “not immune to heightened public market volatility/macro uncertainty,” she emphasizes it has continued to outperform other alternative asset managers thus far in 2025.
“We attribute that relative defensiveness to 1) the composition of BAM’s DE [distributable earnings], which comes from FRE [fee-related earnings] vs. more marketsensitive earnings streams (performance fees, carried interest, etc.); and 2) the prospect of wider U.S. index inclusion for BAM over the next year,” she said.
In a research note previewing the May 6 release of its first-quarter results, Ms. Radbourne trimmed her forecast to reflect a lower market cap as well as a lower transaction/advisory fees, and a recent debt issuance. That led to a 6-7-per-cent decline in her 2025/2026 DE per share estimates.
“Our Q1/25 DE estimate of $0.40 is in line with consensus and was cushioned by expected catch-up fees on a final close of [Brookfield Strategic Real Estate Partners V],” she sai. “Q1/25 DE/share should increase 19 per cent year-over-year based on 16 per cent fee revenue growth plus 300 basis points of margin expansion. We have left our 30 times FRE multiple intact.
“BAM’s DE is 100-per-cent derived from FRE, whereas its closest peers derived 20 per cent of 2024 DE from other, more market-sensitive sources. Excluding credit, BAM earns fee revenues largely based on committed capital, which provides significant forward visibility based on its fundraising success. In credit (approximately 45 per cent of fee-bearing capital), the company typically earns fee revenues once capital is deployed, which is subject to timing.”
Ms. Radbourne also notes Brookfield BAM raised closed to US$90-billion in each of 2022, 2023, and 2024, “despite low transaction velocity and a difficult industry fundraising backdrop (lower transaction velocity = less capital returned to LPs = less capital available for new fund commitments).”
“We attribute that relative fundraising success to 1) BAM’s leadership position in infrastructure/renewables/transition, which are high-growth areas; 2) the company’s relationships in the Middle East/Asia, where fundraising has held up better vs. North America/Europe; and 3) the growth of its complementary product offerings, among other factors,” she said. “The previously anticipated upturn in transaction velocity that was expected to re-accelerate the industry flywheel may now have been set back until H2/25, but public market volatility could unearth opportunities to invest for value.
“Our index team expects BAM to be added to the Russell 1000 index in June, and sees a reasonable chance of inclusion in the Vanguard CRSP around that time, resulting in total indexer demand for 8 per cent of the float. The wider index community sees S&P 500 inclusion in play over time, because despite being incorporated in Canada, BAM is predominantly a U.S. company, based on AUM/revenue/employees.”
While maintaining a “buy” recommendation for its shares, Ms. Radbourne cut her target to US$64 from US$68 with her forecast reductions. The average is currently US$54.92.
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After rival Polaris Inc. (PII-N) reported “soft” first-quarter results, reflecting a “challenging” and high promotional consumer environment, Stifel analyst Martin Landry recommends investors should “wait for more clarity on industry conditions” before becoming more positive on Valcourt, Que.-based BRP Inc. (DOO-T).
“Polaris published its Q1 results [Tuesday] morning, reporting an adjusted net loss of $51 million, the first lost reported by PII in more than 10 years,” he said. “The loss was not related to import tariffs as they had a limited impact on Q1 results. Rather, it stemmed from weak sales and gross margin erosion as demand for powersport products remained soft. Polaris introduced a Q2/25 guidance calling for revenues to decrease 13 per cent year-over-year at the mid point, worse than the 12-per-cent decline in Q1/25. This suggests that industry demand is not improving near-term.
“In light of Polaris’ comments we have further decreased our FY26 revenues estimates for BRP by $310-million or 4 per cent. While BRP’s shares are depressed, down 36 per cent year-to-date, we see limited catalysts near-term to move shares higher.”
Minnesota-based Polaris logged a 12-per-cent year-over-year drop in revenue, falling in line with the Street’s expectation but under its own 10-per-cent guidance. Adjusted earnings per share came in at a loss of 90 US cents, down from 23 US cents in fiscal 2024 and topping the consensus by a penny.
“According to Polaris, North American industry retail sales were down low single digits in North America while down high single digits internationally,” said Mr. Landry. “With retail sales down 11 per cent year-over-year, Polaris lost market share during the quarter, potentially to Japanese OEMs which were aggressive with promotional activities. We believe this dynamic may have also negatively impacted BRP. As a silver lining, demand for premium products appears to be more healthy, good news for BRP which over-indexes in the premium category.”
“Polaris commented on continued softness post quarter-end and indicated that demand trends in April were not much different vs March. Management cited soft consumer confidence due to inflation, high interest rates and negative wealth effect from the stock market correction. Historically, industry downturns have lasted between 24-48 months. We are roughly 20-22 months into the current downturn as the weakness started in summer 2023. Given [Tuesday’s] comments, we do not expect industry conditions to improve before the fall of 2025.”
After cutting his forecast to reflect “persisting soft demand trends,” the analyst cut his target for BRP shares to $49 from $58, keeping a “hold” rating. The average is $64.29.
“We are reducing our valuation multiples to reflect the prolonged downturn and continued promotional activity which could weigh on profitability for longer than previously expected, reducing our confidence on our FY27 estimates,” Mr. Landry added.
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In a research report titled No Better Time or Place to Build a Mine, National Bank Financial analyst Don DeMarco initiated coverage of McEwen Mining Inc. (MUX-T) with an “outperform” rating, believing its flagship Los Azules copper project in San Juan, Argentina “shows mega-rerate potential.”
The Toronto-based company holds a 46.4-per-cent share of privately held McEwen Copper, which owns 100 per cent of Los Azules. Mr. DeMarco calls it “one of the largest undeveloped copper projects in the world.”
“MUX’s attributable share of an upsized Large Investment Incentive Regime (RIGI)-adjusted Los Azules NPV8-per-cent is $1.76-billion (46.4 per cent), marking a wide differential versus the company’s current market cap of $415-million, notwithstanding additional value for MUX’s portfolio of precious metals producers,” he explained. “The valuation disparity is largely explained by the Los Azules project stage, time until start of development, financing and construction derisking, and the constraints faced by a junior to clear these value impediments.”
Emphasizing “timing is everything,” the analyst added: “Our investment thesis considers several Los Azules de-risking events have been completed recently or are underway, and provide a basis to ratchet up the valuation of Los Azules, including: permitting completed in December 2024; resource de-risking with confirmation of a payback pit completed with 5-7 years production; FS [feasibility study] is well on its way pending release at the end of June 2025, superseding the PEA (May 2023); Argentina trending favourably, RIGI approval expected in summer 2025; IPO targeted for late Q3/25 to Q4/25, with read through for a potential valuation lift, providing access to investment from the capital markets, and associated pathways to reduce dilution and de-risking project financing; startup date approaching, expected in early 2026.”
Also emphasizing an “Overlooked opportunity with high torque gold/silver in Tier 1 North America,” Mr. DeMarco set a target of $20 per share, falling in line with the current average on the Street.
“The gold portfolio mining NAV weighted to preferred Canada and US jurisdictions (85-per-cent NAV) with balance in Mexico and Argentina (14 per cent),” he said. “What’s more is that MUX is well positioned as gold investors continue to shift downcap for overlooked opportunities, while high cost operations provide additional upside torque in current constructive previous metals tape.”
“MUX is led by renowned mining icon Rob McEwen, Founder, Chairman, CEO, President and Chief Owner, overseeing a depth of talent on the MUX team. McEwen Copper brings complementary expertise led by Michael Meding, VP and GM, a track record of success in San Juan Province, plus operations, accounting and legal managers with local expertise in a RIGI application strategy.”
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Following Tuesday’s release of better-than-expected first-quarter results after the bell, Desjardins Securities analyst Chris Li sees Gildan Activewear Inc. (GIL-T,GIL-N) “navigating through macro uncertainties by leveraging its competitive advantages.”
“GIL’s results were solid, highlighted by continuing strength in Activewear sales (9 per cent year-over-year vs our [estimate of] 5 per cent) due to favourable product mix (fleece and ring spun), market share gains (competitor exits) and product innovation,” he said. “Sales improved through the quarter with momentum continuing 2Q to date. GIL expects a mid-single-digit sales increase in 2Q (in line with 1Q excluding UA phase-out).
“GIL reaffirmed its 2025 guidance, which reflects the 10-per-cent ‘reciprocal’ tariff and slowing industry demand. Since GIL has significant U.S. cotton and yarn content in its products (cotton alone is 25 per cent of cost), which is not impacted by tariffs, it expects the actual tariff to be meaningfully less than 10 per cent. Other mitigating factors include leveraging its global, vertically integrated and low-cost advantage and pricing. Management expects industry demand to be flat to down low single digits vs its previous flattish expectation. While we believe there is some downside risk given the discretionary nature of enduser demand, management expects to mitigate the impact through additional market share gain opportunities from nearshoring by its customers to avoid higher tariff costs.”
Despite the results, Mr. Li is now taking a “more conservative stance” on the remainder of fiscal 2025 due to “ongoing macro uncertainties.” He lowered his sales growth expectation to 3.1 per cent from 4.3 per cent (veruss mid-single-digit guidance) with his earnings per share estimate sliding to US$3.38, a rise of 13 per cent year-over-year, from US$3.50 (and compared to management’s projection of US$3.38–3.58).
“We expect solid FCF generation (more than US$400-million) to support a 5–6-per-cent share buyback, in line with management expectations,” he added.
Reaffirming a “buy” recommendation for the Montreal-based company’s shares, Mr. Li dropped his 12-month target to $80 from $87. The average is $83.01.
“While macro uncertainties continue, we believe the company is well-positioned to deliver 13-per-cent EPS growth in 2025 from continued market share gains, a weaker competitive landscape, rollout of new programs, low-cost manufacturing, strong FCF and a strong balance sheet to support 5–6-per-cent share buybacks,” he said.
Elsewhere, other analysts making target adjustments include:
* TD Cowen’s Brian Morrison to US$60 from US$56 with a “buy” rating.
“Gildan’s Q1/25 release illustrated the benefits of its vertically integrated operations, low cost advantage, and manufacturing agility. With an outlook for modest industry softening, Gildan seems poised for market-share gains in ringspun/fleece and to expand Central American capacity to meet near-shoring demand. This should improve investor confidence in the maintaining of its 2025/2027 guidance,” said Mr. Morrison.
* CIBC’s Mark Petrie to US$56 from US$60 with an “outperformer” rating.
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In an earnings season preview titled Diversified Canadian Lumber Producers Discounting Worst- Case Tariff Scenario, Raymond James analyst Daryl Swetlishoff reduced his commodity price deck and forecasts for stocks in the industry, emphasizing “Canadian Forest Products companies have been under siege” from the global trade war.
“We estimate earnings impacts under an admittedly highly improbable worst-case scenario, i.e., 60 per cent total duties/tariffs with no loss mitigation (e.g., curtailments) nor commodity price offsets,” he said. “Even under this unreasonably bearish scenario, we highlight only 12-18 per cent impacts to our 2025 earnings estimates for the geographically diversified players Canfor, Interfor, and West Fraser (in line with the year-to-date share price performance). Extending the analysis to 2026 yields 15-25-per-cent downside to published estimates. Historically, trade constraints have resulted in higher U.S. lumber prices with US consumers estimated to bear 50-75 per cent of the incremental cost of duties/tariffs. Our analysis published Feb 3 indicates that a 25-50 per cent tariff pass-through fully offsets duty costs for the diversified producers and even provides earnings tailwinds (depending on US Southern Yellow Pine (SYP) lumber pricing assumptions).
“Given the high earnings sensitivity to SYP lumber, we are conservatively reducing our 2026 forecast spread to Cdn Spruce Pine Fir (SPF) lumber to $50/mfbm (from $75, previously) below the 18-month average. This has the effect of reducing our 2026 earnings forecasts and reducing targets across the board. While 1Q25 earnings are not top of investors’ minds, we highlight that West Fraser’s solid beat last week is a positive read-thru for building materials producers reporting next week.”
While believing “lumber share price performance already implies worst-case scenario,” Mr. Swetlishoff made these target price adjustments:
- Canfor Corp. (CFP-T, “strong buy”) to $22 (Street high) from $24. The average is $18.
- Canfor Pulp Products Inc. (CFX-T, “outperform”) to $1.50 from $1.75. Average: $1.30.
- Interfor Corp. (IFP-T, “strong buy”) to $22 from $26. Average: $21.75.
- Mercer International Inc. (MERC-Q, “market perform”) to US$5 from US$7. Average: US$6.38.
- Western Forest Products Inc. (WEF-T, “market perform”) to 40 cents from 50 cents. Average: 56 cents.
“To the extent weaker economic performance is met with monetary easing we expect building materials producers and distributors to be net beneficiaries. Our top picks have modest tariff exposure and are levered to lower rates and include: building product producers Strong Buy rated Canfor and Interfor and diversified industrial players Strong Buy rated ADENTRA and Doman,” he said.
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In other analyst actions:
* Emphasizing it is “currently trading at a discount to its peers, representing a unique entry point to invest in a pure silver producer with significant exploration and production upside,” Scotia’s Ovais Habib initiated coverage of Aya Gold & Silver Inc. (AYA-T) with a “sector outperform” rating and $19 target. The average on the Street is $19.18.
“Aya has a solid production base at the high-grade Zgounder mine, with upside potential,” he said. “We model silver production of 5.0 Moz at an all-in sustaining cost (AISC) of $17.93/oz in 2025, ramping up to 6.7 Moz in 2027, with the ongoing expansion and optimization of the mine and mill from current throughput rates. We expect life-of-mine (LOM) average production of 6.5 Moz silver per year, with a $13.60/oz LOM AISC [life-of-mine all-in sustaining costs] over 11 years.
“Zgounder is a pure-play underground silver operation in a historically under-explored region, making it an attractive acquisition target for active silver producers looking to grow their global presence. We think the company is a potential takeover target for its leverage to higher silver prices, as well as the significant optionality provided by the growing Boumadine exploration project, which currently hosts 452 Moz AgEq (5.0 Moz AuEq) of total resources at a grade of 409 g/t AgEq. We believe the Boumadine resource has the potential to increase by at least 25 per cent with future drill programs as the deposit remains open in all directions.”
* In a report title From Data to Diagnosis: Building a Healthcare AI Leader, Scotia’s Kevin Krishnaratne initiated coverage of HEALWELL AI Inc. (AIDX-T) with a “sector outperform” rating and $2.50 target, below the $3.55 average.
“We believe AIDX is in the early stages of its pursuit to drive better patient outcomes by leveraging its AI and natural language processing (NLP) expertise to detect early signals of rare and complex diseases within the noise of unstructured healthcare data across electronic medical record (EMR) systems, health information exchanges (HIEs), clinical notes, medical images, among many other sources,” he said.
“Healthcare software provides defensive, recurring, and profitable global business and serves as a key distribution channel for current and future AI products.”
* Following a “big miss in uncertain times,” National Bank’s Jaeme Gloyn reduced his target for First National Financial Corp. (FN-T) to $39 from $43, keeping a “sector perform” rating. The average is
“The 17-per-cent EPS miss came from the wrong drivers,” he said. “Usually more predictable Servicing Income and Securtization Income missed big on what appear to be structural issues: lower third-party underwriting fees for the former and lower spread mortgages gain share in the Securitization portfolio (these are primarily mortgages underwritten in 2022 and 2023 when rates increased rapidly). Therefore, we reduced our estimates to $3.38 (was $4.16) in 2025 and $4.11 (was $4.65) in 2026.”
