Monday’s analyst upgrades and downgrades

Inside the Market’s roundup of some of today’s key analyst actions

National Bank Financial analyst Dan Payne thinks it is becoming evident that North American oilfield services companies “have been priced for stability, and impending opportunity for structural growth should increasingly suggest earnings momentum (10-15 per cent per annum; some persistent & some select), to drive multiple contraction and a depth of value (like what we have seen to date in the upstream).”

In a client report released Monday titled Inflecting to Value, he emphasized both the “environment and opportunity” for the energy sector and its participants “continues to evolve, with macro and geopolitics still in focus, while appreciation of the micro remains in question.”

“A number of thematic narratives remain to be resolved, but almost certainly offer opportunity for those best positioned participants, notably; global conflict & reoriented supply complex, rebuild/restoration/restocking/reinvest, domestic policy support & egress expansion, strategic upstream growth, and new thematics (power/data centres & LNG),” he said. “In our view, each should increasingly come in to view over coming quarters, and should positively bias the sector through protraction of the cycle through expanded activity, utilization, pricing & margins, in what remains a tight capacity environment; against that, the risks remain modest, given the valuation and capitalization of the group remains discounted to historical (does it matter if the upstream remains structurally disciplined; growth is not priced-in).”

For the third quarter, Mr. Payne’s forecast largely falls in line with his peers on the Street, seeing a 7-per-cent sequentially gain in earnings driven, which he says is “a function of stable margins.”

“The commodity complex remains in-hand, with spot hovering in the $100/bbl range (up 50 per cent quarter-over-quarter) and strip sitting around $85/bbl (up 20 per cent quarter-over-quarter), and the only modest source of drag to reference comes through the differential backdrop (a function of crude-on-crude competition and refinery outages), in addition to perpetual drag from the natural gas macro (strip trending around $2-3/mcf, lagging seasonal trends),” he explained.

“All in, a very sound backdrop from which the upstream sector should continue to progress reinvestment, specifically noting required new capacity (reoriented global supply complex) and domestic policy announcements (regulatory/fiscal/policy support towards new egress), and each of which we expect to gain perspective on through upcoming producer budgets (to be included with Q3/26 results & year-end). Expect upside to reinvestment to complement activity in the medium-term, and suggest investors increasingly ask, how are basins expected to scale in support of these thematics (whether with regard to scarcity of inventory or capacity).”

“While early, the activity cycle has improved, with rig counts trending higher by a factor of up 3 per cent (quarter-over-quarter) & up 0 per cent (year-over-year) in the U.S. (up 2-per-cent oil & 6-per-cent gas) and Canada (up 11 per cent), respectively. General thematics (as referenced) all suggest an inclining activity bias, while we increasingly believe that services capacity remains tight (tighter than perceived), and continued inflection of utilization could positively bias pricing & margins for the sector.”

With macro conditions “increasingly supports a rising tide for industry activity,” Mr. Payne says he’s “increasingly looking” at Precision Drilling Corp. (PD-T) as “the best risk-reward means to participate in the cycle, with high embedded earnings momentum to come that should validate deep value in the stock.”

That led him to upgrade his rating for its shares to “outperform” from “sector perform” rating.

“First, we remain confident in the support its base business is experiencing through current moderated activity levels, and that should be validated through forthcoming third-quarter earnings (as foreshadowed through margin guidance of $12,500/day CAN & $7,500/day U.S.), where we forecast strong seasonal results with top-line revenue of $519-million and associated EBITDA ex-SBC of $137-million to imply a 26-per-cent margin, and which generally align with consensus,” Mr. Payne said.

“From there, continued support of its entrenched business in Canada (structural market share, utilization & margins at current solid activity levels; including C&P) should increasingly be complemented by an improving opportunity set in the U.S., where activity levels are grinding higher (third parties suggesting 30-40 rigs to be added over the coming year) in association with high-quality counterparties, and which should be compounded by rising margins (suggested in the $10,000/day range).”

“Increasingly highlight the relative risk-reward of the equity,” he raised his target for Precision Drilling shares to $185 from $150. The average target on the Street is $156.81.

Mr. Payne made these other target price adjustments:

• CES Energy Solutions Corp. (CEU-T, “outperform”) to $24 from $20. The average is $21.93.
• Enerflex Ltd. (EFX-T, “outperform”) to $45 from $42.50. Average: $49.28.
• Pason Systems Inc. (PSI-T, “sector perform”) to $17 from $15.50. Average: $16.38.

Rogers Communications Inc.’s (RCI.B-T) potential sale of a portion of its consolidated sports holdings “unlocks meaningful accretion,” according to Desjardins Securities’ Jerome Dubreuil.

“We currently assume RCI will sell minority stakes of 20–30 per cent of its sports portfolio,” he said in a client note. “With potential sales likely occurring in 1H27, we expect the company to benefit from higher private market valuations (PMVs), based on Forbes valuations, for the Toronto Maple Leafs, Toronto Blue Jays and Toronto FC.”

Will betting big on sports pay off for Rogers Communications?

The equity analyst did call Forbes’ most recent update to its valuations for National Basketball Association franchises, which was released in Oct. 16, “slightly disappointing” from a Rogers perspective.

“The Toronto Raptors now worth US$5.9-billion, up from last year’s US$5.4-billion. This 9-per-cent increase in valuation is lower than the league average of 14 per cent and the valuation is much lower than Sportico’s US$6.5-billion, he explained. ”The valuation increase has nonetheless contributed to our higher target price [for Rogers shares]. NHL valuations will be updated by Forbes in December. We continue to expect RCI to sell minority stakes in its sports asset portfolio in 1H27 at a valuation of $25-billion, based on very strong valuations in recent professional sports team deals."

At the same time, Mr. Dubreuil called Rogers’ third-quarter results “decent” while emphasizing “relatively weak” key performance indicators (KPIs).

“A key highlight of RCI’s 3Q results was its robust cash generation,” he added. “During the conference call, management signaled that the lower 2026 capital intensity could be sustained into 2027. Even using our more conservative normalized FCF definition, RCI now trades at a 2027E FCF yield above 10 per cent, while the yield based on the company’s definition stands at approximately 17 per cent.”

“RCI’s FCF yield (our definition) of 10 per cent, before assigning any value to sports, is compelling, as we believe sector concerns around incremental SpaceX competition are unlikely to meaningfully materialize in Canada, but acknowledge US/ /valuations are sometimes used to assess Canadian telcos’ attractiveness. Sports monetization could create $5–6/share (vs keeping 100 per cent of the assets), of which we estimate at least half is not reflected in the share price.”

Accordingly, Mr. Dubreuil raised his target for Rogers shares to $57 from $55, keeping a “buy” rating. The average is $59.83.

“Our valuation is based on the average of a DCF and an NAV, which yields our updated target price of $57 (from $55). This increase reflects the updated Raptors valuation and lower yields since our last target price change. We adjust both our DCF and NAV for the value of the sports assets at a 40-per-cent discount,” he added.

National Bank Financial’s Alex Terentiew thinks K92 Mining Inc.’s (KNT-T) Kainantu mine in Papua New Guinea is “a world-class mine in the making, with the exploration upside to potentially support decades of high-margin production.”

Following an an analyst and investor tour last week, he said Kainantu is “advancing on a path to join the ranks of a world-class mine, holding the sought-after attributes of long-life, low-cost and an expandable production base.”

“K92 presents one of the best growth profiles in the industry with tremendous exploration upside,” he added.

In a note released Monday, Mr. Terentiew said his bullish view of the Vancouver-based company is backed by the “formation of a very capable team” alongside “significant exploration and resource growth upside.”

“K92 has delivered capital projects on schedule and under budget, despite significant global inflation, highlighting the company’s success at building an owners team, managing logistics and attracting high-quality people,” he said. “Over the past two years, the company has made several strong new hires that have contributed directly to its success.

“While drilling at Kora, Judd and Arakompa continues to deliver excellent intercepts, drilling at Maniape and new targets such as Mati-Mesoan (one we are keenly watching) and Wera have potential to establish new resources and production centres, ultimately supporting greater scale in production and mine life. The mill has upside. As mining rates increase, the capacity of the new 1.2 Mtpa plant is only just now being tested. It appears that most of the facility is capable of operating at rates well above design, with 1.8 Mtpa a reasonable target and some backend (filtration and flotation) upgrades the main items needed to process substantially higher rate.”

Maintaining his “outperform” recommendation for K92 shares, Mr. Terentiew raised his target to $39 from $37, which is the current average on the Street, to reflect “growth upside.”

Desjardins Securities analyst Gary Ho is expecting a “quiet” quarter from Superior Plus Corp. (SPB-T) when it reports results on Nov. 11 after the bell, believing “winter readiness takes centre stage.”

“Seasonally, 3Q is unimportant— weather is a non-factor, with 1Q and 4Q driving the year. We lowered our 3Q EBITDA to US$9.2-million (consensus US$10.5-million), mainly as our Certarus estimates were too aggressive,” he said.

“Focus turns to 4Q — hitting 2026 guidance hinges on Superior Delivers and weather, with a very strong El Niño possible.”

Mr. Ho cut his EBITDA forecast for its Certarus compressed natural gas (CNG) business to US$29.0-million (was US$33.4-million), bringing his growth projection down to 10 per cent year-over-year.

“2Q26 benefited from favourable commodity prices, which we have not assumed in our 3Q26 estimate,” he explaibed. “No new datacentre contracts have been announced since 2Q, though we view the pipeline as robust. The US$70-million capex step-up for new MSUs should land mostly in late 2026/1H27, and we expect it to initially displace winter rentals rather than add EBITDA. Elevated WTI has yet to translate into higher wellsite pricing (stable for over a year); 2027 E&P budgets could provide upside. Our 2026E CNG EBITDA is US$138-million (was US$142-million).”

Reiterating his “hold” rating for the Toronto-based company’s shares, Mr. Ho lowered his target to $8.25 from $8.75. The average is $8.83.

“We see SPB shares as fairly valued,” he said. “While new datacentre contracts are encouraging, they require a hefty upfront capital outlay. We continue to monitor propane customer churn and elevated leverage.”

In other analyst actions:

* Ahead of the release of its third-quarter results on Nov. 3, Desjardins Securities’ Gary Ho trimmed his target for units of Alaris Equity Partners Income Trust (AD.UN-T) to $27.50 from $28 with a “buy” rating. The average on the Street is $29.54.

“While we do not anticipate any material surprises across the portfolio either way (ECR [earnings coverage ratio] remains healthy), the significant rise in U.S. and Canadian yields drive up higher discount rates leading to unrealized FV losses, although we expect a partial recovery in 4Q. We will look for updates on deployment pipeline and monetizations. Reflecting a $0.51 reduction to our BVPU estimate, we lowered our target price,” said Mr. Ho.