Thursday’s analyst upgrades and downgrades

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

While Alimentation Couche-Tard Inc.’s (ATD-T) first-quarter fiscal 2027 results fell in line with his expectations, Stifel analyst Martin Landry said they “reflect a challenged low-income consumer,” prompting him to lower his near-term forecast.

Shares of the Montreal-based convenience store operator fell 2.4 per cent on Wednesday despite reporting earnings per share for the quarter of 90 cents, a gain of 15 per cent year-over-year and exceeding Mr. Landry’s 87-cent estimate and the Street’s forecast of 89 cents. The biggest concern was an increase in U.S. merchandise same-store sales of 1.7 per cent year-over-year, down from 3.4 per cent and 2.8 per cent in the previous two quarters and missing the consensus expectation of 2.1 per cent.

“[That result] disappointed investors who sent shares down 3 per cent on the day, even following a difficult three weeks, when shares declined by 9 per cent,” said the analyst in a client note.

“While this may seem overly punitive, near-term growth rates could come at the low-end of management’s long-term growth algorithm. Low-income consumers are grappling with elevated interest rates and high fuel prices and as a result are trading down to find value. This is a change vs the Q4FY26 landscape where management discussed consumer resilience. As a result, we have reduced our near-term expectations to reflect this. ATD’s shares could be range-bound near-term until the Żabka acquisition closes.”

Mr. Landry said Couche-Tard management attributed several factors to the decline, including “consumers trading down to promotional items, increasing GLP-1 penetration resulting in declining sales of salty snacks and carbonated soft drinks and lower in-store traffic as consumers make fewer trips to the stores.”

“Couche-Tard appears to have performed better than peers, with 7-Eleven reporting a flat growth year-over-year in existing store merchandise sales for the same period as ATD’s Q1FY27, Murphy USA reporting a 1-per-cent growth for the quarter ended June 30th 2026 and ARKO Corp reporting a decline of 1.7 per cent,” he said.

“Q2/FY27 is trending at a similar pace as Q1/FY27. According to management, Couche-Tard’s U.S. merchandise same-store-sales growth heading into Q2/FY27 is trending at a similar pace as Q1FY27. However, management pointed to a stabilization and re-acceleration in recent weeks. In an effort to boost same-store-sales growth, shelf space will be reallocated towards functional, protein-rich and better-for-you categories.”

In a client note released before the bell, Mr. Landry emphasized the potential impact of the company’s US$8.7-billion deal for Polish retailer Zabka Group SA.

“Recall, this could become Couche-Tard’s largest acquisition, with the potential to boost the company’s EBITDA by approximately 15 per cent,” he explained. “The transaction is expected to be slightly dilutive to earnings in the first year post the closing and should be accretive afterward. We have modeled that the acquisition closes on December 31st, 2026 and that Couche-Tard gathers roughly 70 per cent of the shares of Żabka by that date. We have assumed that the remaining 30 per cent is collected by Couche-Tard during calendar 2027. We view this transaction favorably as it is a premium asset at a fair price.”

Reaffirming his “buy” rating and seeing an “appealing” valuation for Couche-Tard shares, Mr. Landry trimmed his target to $102 from $108 alongside the reduction in his forecast. The average target on the Street is $103.55.

“ATD’s shares trade at 16.5 times forward earnings, in line with the 10-year average, while Canadian peers, such as grocers and dollar stores, trade at a higher premium to their historical averages. ATD’s growth prospects have increased recently with the proposed acquisition of Żabka Group. This acquisition could be accretive to EPS by low double digits with 100-per-cent ownership and full synergies realized,” said Mr. Landry.

Elsewhere, other target adjustments include:

* TD Cowen’s Derek Lessard to $103 from $110 with a “buy” rating.

“The long-term outlook remains favourable, in our view, and we still expect ATD to outperform industry peers. The company’s in-store, fuel and loyalty initiatives, structural advantages, and potential Żabka synergies should support long-term double-digits EPS growth. Near term, however, the shares could remain rangebound, with few catalysts present unless consumer health improves and/or fuel prices decline,” said Mr. Lessard.

* National Bank’s Vishal Shreedhar to $101 from $102 with an “outperform” rating.

“The key for ATD is to deliver sustained growth via organic drivers, share repurchases and acquisitions. We believe that the company is on firmer footing to deliver growth as numerous revenue drivers/efficiencies are in place, and largely showing results,” said Mr. Shreedhar.

While Citi remains bullish on gold, “expecting prices to retrace back to $5000/oz during 2027,” equity analyst Alexander Hacking resumed coverage of Barrick Mining Corp. (B-N, ABX-T) with a “neutral” rating, emphasizing “the stock has the highest FCF yield amongst major gold miners but still faces challenges to unlock this value.”

“Positive factors include multiple Tier 1 gold mines, relatively low cost operations with significant FCF generation at current prices, exposure to copper and a strong balance sheet,” he said. “Negative factors include geopolitical risk, recent operating challenges and a general difficulty in growing production from such a large existing base. On balance, we see equal upside and downside at current levels.”

Mr. Hacking now sees the “most pressing task” for Barrick as “getting key operations to full potential.”

After updating his forecast to reflect second-quarter results, he raised his target to US$45 from US$41 previously. The average is US$52.57.

In a separate report on the sector released Thursday titled Citi Remains Bullish Gold; Equities Continue To Price Gold Prices Below Spot, Mr. Hacking said:

“We remain broadly positive on large cap gold equities (Newmont, Agnico), noting: 1. Gold equities continue to price a gold price $500/oz below spot levels, e.g., NEM offering more than 6-per-cent FCF yield at spot. This should allow equities to outperform during periods of stable prices. 2. Gold equities continue to outperform the underlying, with cost inflation under control. Costs are rising, but so far at a much lower magnitude than prices. 3. Capital allocation remains broadly sensible, with large caps balancing reinvestment with shareholder returns. Returning capital is critical, in our view, as yield differentiates the miners from the underlying and hedges the risk that investors will be left with nothing if prices revert (as happened in 2012-16). 4. Spot FCF yields are 7 per cent on Barrick, 6 per cent on Newmont, and 4.5 per cent on Agnico Eagle.”

In a client report titled Still a Good Fit, Ventum Financial analyst George Doumet said the debate surrounding Groupe Dynamite Inc. (GRGD-T) is “shifting from the pace of growth to the durability of the earnings algorithm” as comparable same-store sales has “now normalized.”

“We forecast Q2/F26 comps of 10.5 per cent, ahead of consensus, with an improving two-year stack and strong U.S. data pointing to healthy underlying momentum,” he explained. “Gross margin is now the key swing factor, supported by easier tariff laps and the U.S. distribution centre, with higher markdown rates the key risk. Meanwhile, cash generation should accelerate following a tax-heavy Q1, supporting an already active buyback. With the shares still reflecting a meaningful de-rating despite an intact growth and cash generation story, we remain BUY with a $95.00 target.”

Ahead of the release of the Montreal-based clothing retailer’s second-quarter results on Sept. 10, Mr. Doumet emphasized sales growth remains “strong” with the focus now turning to margins.

“We forecast Q2/F26 comparable sales growth of 10.5 per cent, ahead of consensus at 9.7 per cent and above the 9.0-per-cent pace (11-per-cent constant currency) disclosed six weeks into the quarter,” he said. “On our estimate, the two-year comp stack improves sequentially to 39 per cent from 36 per cent in Q1, which we view as the relevant indicator of underlying momentum. Bloomberg Second Measure data also points to upside, with observed U.S. sales up 47 per cent year-over-year in Q2 versus our 38-per-cent U.S. revenue growth estimate (vs. 42 per cent for consensus), while Q3-to-date is tracking 49 per cent against consensus of 34 per cent. We expect AUR to remain the primary comp driver, while units remain the pressure point, with softness concentrated in Canada and denim across both banners, the latter also impacted by a late spring.

“With comps now largely normalized, we expect investors to now shift to gross margin as the next key earnings driver. The setup is favourable, with GRGD lapping the peak 145-per-cent China tariff period that pressured margins last year; we forecast gross margin of 66 per cent, up 240 basis points year-over-year. H2 presents a tougher comparison, with GRGD lapping 360 basis points of expansion, although the full ramp of the U.S. distribution centre should provide an offset. We see markdowns as the key margin risk over the next few quarters, with rates already at historically low levels. Product costs remain stable, leaving freight as the main inflationary pressure. We forecast adjusted EBITDA of $161-million and a 40-per-cent margin, modestly ahead of consensus.”

Mr. Doumet’s $95 target for Groupe Dynamite shares exceeds the $89.23 average on the Street.

“Beyond the print, we see three key items to watch for,” he added. “First, the UK: Bluewater and Oxford Street were characterized as the two best openings in GRGD’s history, and we are looking for early evidence on store economics, in addition to the number/locations of additional sites in the UK. Second, Canada and denim: these remain the key pockets of weakness and, in our view, the primary drivers of the recent de-rating; signs of stabilization would be constructive. Third, the store pipeline: guidance was reduced to 8–10 net openings from 10–12 following two accelerated closures, putting greater focus on the F2027 pipeline and the path to 350 stores by F2028.”

In other analyst actions:

* Touting NexGen Energy Ltd.’s (NXE-T) Rook I in Saskatchewan’s Athabasca Basin as one of the world’s largest undeveloped high-grade uranium projects, Jefferies’ Laurence Alexander initiated coverage of the Vancouver-based company with a “buy” rating and $21 target. The average is $22.25.

MORE TO COME