Tuesday’s analyst upgrades and downgrades

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

In the wake of its third-quarter earnings beat, National Bank Financial analyst Patrick Kenny emphasized Capital Power Corp.’s(CPX-T) “utility-like cash flow quality profile” after the Edmonton-based “reiterated its 75-per-cent contracted EBITDA profile with a weighted average contract duration of nine to 11 years, 90 per cent from A-rated counterparties.”

“Through 2025 / 2026, the company has successfully contracted 2 GW, with 3 GW of capacity available to contract prior to 2029 in addition to uprate opportunities representing $400-$550-million incremental EBITDA in addition to $375-$700-million upside from 5 GW of merchant upside in the AESO and PJM [Alberta Electric System Operator and Pennsylvania-New Jersey-Maryland],” he said in a client note titled Come for the stability, stay for the upside.

“Of note, the AESO continues to target ‘this fall’ for its Phase 2A application process, potentially unlocking 400+ MW of available capacity at Genesee.”

Capital Power shares rose 0.6 per cent on Monday following its premarket earnings release, which included quarterly adjusted EBITDA of $553-million, exceeding Mr. Kenny’s $485-million estimate and the Street’s $490-million projection. He attributed the beat to “stronger U.S. FlexGen contributions and higher dispatch at Goreway, partially offset by weaker Alberta spot power prices.”

The company also reiterated its full-year financial guidance, including adjusted funds from operations of $890-million to $1.010 -billion (versus Mr. Kenny’s $940-million expectation) on adjusted EBITDA of $1.565-billion to $1.765-billion (versus $1.718-million). It raised its full year 2026 sustaining capex to $350-million to $370-million (was $290-million to $330-million) “reflecting unplanned outage work at its U.S. facilities and the advancement of a planned outage from 2027 into Q4/26 while completing 68 per cent of planned outage days for the year.”

“Ahead of further longer-term recontacting and uprate opportunities, on top of pursuing single-unit M&A in 2027,” Mr. Kenny trimmed his target for Capital Power shares by $1 to $83 following “modest” near-term estimate revisions. The average target is $78.55.

“Combined with a refreshed $81 SOTP [sum-of-the-parts] valuation, and 20-per-cent valuation upside from unrisked growth opportunities, including data centre-related expansions, we maintain our Outperform rating,” he concluded.

Ventum Capital Markets analyst Rob Goff sees Exchange Income Corp. (EIF-T) as a “disciplined compounder playing offence” and poised to “harness generational tailwinds.”

“From 2019 (pre-COVID) through our 2026 forecast, EIC will have compounded revenue/EPS at 16.5 per cent/5.7 per cent, even while increasing its shares outstanding by 70 per cent and paying out $794-million or $18.45/shr in dividends (from 2019 to H1/26),” he said. “Dividend growth has been deliberately managed at 5 per cent annually to retain funds towards the $1.2-billion of strategic, accretive acquisitions, along with a similar amount of organic growth capital expenditures with both ruled by the 15-per-cent ROIC [return on invested capital] hurdle. EIC demonstrated its resilience during and after COVID, with the Company quickly regaining its momentum as it leveraged platform and scale efficiencies to drive organic growth”

Seeing it “poised for extended growth, ”Mr. Goff resumed coverage of Winnipeg-based company with a “buy” rating, seeing “generational tailwinds of defence, Northern infrastructure and data centre deployments represent roughly 60 per cent or $2.3-billion of consolidated revenues.”

“The largest revenue line, Aerospace & Aviation (A&A) represents 68 per cent/80 per cent of overall revenue/EBITDA,” he said. “We estimate revenues from remote, northern A&A services exceed $1.2-billion annually or just over 30 per cent of total revenues.

“A&A offers attractive leverage to the generational tailwinds for defence and the correlated Northern infrastructure spending. CEO Mike Pyle describes the northern opportunity as ‘they might have thrown out the ceremonial first pitch.’ We hold the same view across the segment, including revenue and cost synergies through the integration of Canadian North and Regional One/MACH 2. Contracted fleet deployments and anticipated contract ramps support an outlook for double-digit organic growth. The second revenue line, Manufacturing, offers leverage to the supply shortage of mats, with additional capacity coming onstream to meet Canadian demand with our national infrastructure build. The outlook also includes strategic, accretive M&A, backed by a robust pipeline and $2-billion-plus of available financial resources at an attractive cost of capital. We look for acquisitions to be accretive and positively received.”

Believing its “exceptional financial track record qualifies it as an elite compounded, fuelled by organic and inorganic growth governed by strict capital allocation discipline,” Mr. Goff set a target of $150 per share. The average on the Street is $149.

“The LTM [last 12 month] returns of approximately 49 per cent (despite the recent 15-per-cent retrenchment from highs) reflect positive moves across the defence sector and forecast upgrades as the consensus 2026 revenue/EBITDA have risen 21.5 per cent/16.2 per cent year-to-date,” he said. “Our 31-per-cent target return reflects baseline 2027 EPS growth of 14 per cent, and modest positive revaluation-related gains against the 2027/28 EV/EBITDA and P/E at 8.9 times/8.4 times and 21.6 times/18.4 times. We forecast a baseline EPS CAGR of 12.5 per cent over 2026–2029 and ROIC (ex. goodwill) rising from 8.7 per cent in 2025 to 9.8 per cent in 2026 and 10.1 per cent in 2027.”

Ahead of the release of its third-quarter results on Thursday, Desjardins Securities analyst Chris Li thinks macroeconomic headwinds “temper” the near-term outlook for Gildan Activewear Inc. (GIL-T), however he continues to see its long-term value “intact.”

“At 8-times forward P/E, we believe valuation largely reflects macro challenges weighing on demand, resulting in downward estimate revisions,” he said. “While limited visibility will likely keep the stock rangebound until macros improve, we believe the pressure is mostly cyclical, with the Hanes integration on track. We believe greater clarity on sales outlook, share buyback resumption (following the sale of HAA), Hanes integration updates and product relaunch will provide investors greater confidence.”

Mr. Li is now projecting quarterly sales of US$1.615-billion, up US$911-million a year ago and in line with the Street’s expectations. The result would be slightly below Gildan’s guidance of US$1.650-billion, which he reflects “ongoing macro pressure on demand.

“Focus will be on the outlook,” he said in a note. “Current FY26 sales guidance is US$6-billion vs consensus of US$5.9-billion, also reflecting ongoing macro pressure on demand (retail and wholesale); we are in line with consensus,” he said. “Given the share price decline (25 per cent vs S&P/TSX up 1 per cent) since 2Q results, we believe it is largely expected that guidance might be revised. For 2027, we now expect sales to be stable (vs 3 per cent previous) or up 2 per cent (same-week basis), and for sales to decline low-single-digit percentage in 1H before recovering in 2H as macros improve.

“Despite ongoing industry pressure, we expect GIL to continue to outperform the market. Key drivers include the completion of proactive destocking in 1H26 as part of the Hanes integration (sales declined 9 per cent), market share gain in key brands (Comfort Colors, American Apparel, Champion and ALLPRO), new product launches, and investment of tariff refunds in marketing, advertising, promo, etc. to stimulate demand in retail. Despite top-line pressure, we expect EBIT margin improvement of 100 basis points in 2027, mainly supported by another US$100-million of synergies.”

After reducing his revenue and earnings expectations through fiscal 2027, Mr. Li lowered his target for Gildan shares to $90 from $108, maintaining a “buy” rating. The average is $96.02.

RBC Dominion Securities analyst Sabahat Khan thinks the demand outlook for both Finning International Inc. (FTT-T) and Toromont Industries Ltd. (TIH-T) remain “supportive across infrastructure, resource development (energy/mining), and power-related demand across a variety of end-markets (data centers, energy, etc.).”

“Finning and Toromont have been among the names that have benefited from the broader thematics driving the market (resources, power-gen/data centers), and the demand outlook remains intact,” he added.

In a client report released before the bell, Mr. Khan revised his estimates for both companies “modestly lower” ahead of the release of their third-quarter earnings reports, but he reaffirmed his “view on demand through later this year and into 2027 remains unchanged.”

“Areas of focus heading into Q3 reporting – Across the two dealers, we expect areas of focus to include: 1) infrastructure-related outlook across Canada (i.e., any early progress on Build Canada initiatives); 2) power-related demand for both companies (focus for Toromont likely on the AVL business, while focus for Finning likely centers on power-gen demand in South America and expected timelines in Western Canada); 3) demand outlook in the O&G complex amidst the elevated WTI price environment; 4) outlook for investment across the mining space given supportive resource prices; and 5) capital allocation outlook for both given strong balance sheets,” he said.

Maintaining his “outperform” rating for both companies’ shares, Mr. Khan lowered his target for Toromont to $261 from $265 to reflect his new estimates. The average is $253.22.

“Our $261 price target (prev. $265) is based on 28.0 times our 2027 EPS forecast of $9.31 (prev. $9.48),” he said. “We believe our valuation multiple (above its 3-year NTM [next 12-month] P/E multiple and above what we use to value Finning) fairly reflects Toromont’s revenue growth outlook, the potential for further margin improvement, its strong ROE and ROCE metrics, and our expectation for strong FCF over our forecast horizon. Our price target supports our Outperform rating.”

His target for Finning remains $129, exceeding the $122 average.

“Our $129 price target is based on 25 times our 2027 EPS forecast of $5.14,” he said. “We believe our valuation multiple (above its 3-year NTM P/E multiple and at a slight discount to its closest peer, Toromont) fairly reflects the operating backdrop in Western Canada and South America, which includes a supportive commodity price environment and continued momentum for Product Support revenue. Our price target supports our Outperform rating.

While RBC Dominion Securities analyst Ryland Conrad made a modest reduction to his revenue forecast for Premium Brands Holdings Corp. (PBH-T) ahead of the release of its third-quarter results on Thursday, he thinks a recent decline in its share price “provides an attractive accumulation opportunity.”

“Despite the uncertain macro backdrop and customer-driven product delays, we believe management continues to execute on U.S. growth initiatives following a multi-year investment cycle with significant capacity expansion and moderating capex setting the foundation for a stronger financial profile beginning in earnest in 2026,” he said.

“Given the pullback in the stock despite improving visibility on both the FCF and de-levering trajectories, we see current valuation levels (8.1 times FTM [forward 12-month] EV/EBITDA versus a recent historical range of 8.0-12.5 times) as an attractive accumulation opportunity, particularly should management execute on the $1.0-billion-plus in targeted non-core asset monetizations.”

Projecting year-over-year gains in revenue and adjusted EBITDA of 22.2 per cent and 22.7 per cent, which fall in line with the consensus expectations, Mr. Conrad said he’s “watching for any signs of softness amidst ongoing macro headwinds” and sees the focus of the Vancouver-based company shifting “toward execution on non-core asset monetizations.”

“While 2026 revenue guidance was revised lower with Q2/26 results, management attributed the downward revision to customer-driven product launch delays, the exit of unprofitable sales tied to the closure of a legacy beef facility, and softer foodservice demand in Eastern Canada due to weather,” he said. “We have lowered our 2026 revenue forecast to the low end of the guidance range (from the midpoint) to reflect elevated promotional activity and ongoing pressure on discretionary spending, particularly given Stampede’s exposure to the more challenging foodservice channel. We will look for an update from management on the demand environment, U.S. sales initiatives and whether customers are delaying or scaling back new product launches in response to macro uncertainty.”

“Premium Brands’ shares have declined 28 per cent year-to-date versus a gain of 7 per cent for the S&P/TSX Consumer Staples Index. In light of the meaningful underperformance year-to-date and our view that H2/26 operating results are unlikely to serve as a positive catalyst, we believe the onus is on management to accelerate the timeline for completing the $1-billion-plus in targeted non-core asset monetizations relative to the ‘next couple of years’ time horizon previously communicated. In our view, any tangible progress on non-core asset monetizations (particularly a divestiture of the distribution business) would be well received by investors and could serve to meaningfully de-risk the balance sheet while also providing optionality for enhanced return of capital to shareholders.”

Reaffirming his “outperform” rating for Premium Brands shares, Mr. Conrad cut his target to $110 from $120. The average on the Street is $109.75.

In other analyst actions:

* In a report titled Weathering the storm until macro forces improve, RBC’s Sam Crittenden cut his Champion Iron Ltd. (CIA-T) to $4 from $8 with an “outperform” rating. The average is $4.57.

“We have lowered our estimates for production and increased costs given the recent run rate ... We continue to see value in Champion shares as they ramp up the DRPF sales to capture higher price and while the outlook remains muted for iron ore broadly, the higher grade portion of the market potentially can become a differentiator over time. For now, we believe they have adequate liquidity to weather the current challenging market conditions and the ramp up of the DRPF plant,” said Mr. Crittenden.

* TD Cowen’s Menno Hulshof raised his target for Imperial Oil Ltd. (IMO-T) to $164 from $158 with a “sell” rating. The average is $166.79.

“While several operational setbacks year-to-date (including third-party) have left IMO needing record 4Q26 volumes to reach the low end of annual guidance, the setup for 2027 looks considerably better,” said Mr. Hulshof. “The absence of major Kearl turnarounds in 2027/28, the start-up of East Pit mining and upside to refining margins from RD [renewable diesel] all point to stronger operational performance, while potential acceleration of Aspen Phase 1 related to progress on the ‘Grand Bargain’ could provide a medium-term catalyst. IMO also retains a pristine balance sheet and generous capital return framework. With $2.9-billion of quarter-end cash and commentary on the CC emphasizing timely shareholder returns, we now model a modest $1.5-billion SIB in 2Q27 (would be its fourth). However, 2027E strip metrics remain stretched, in our view, with IMO trading at 7.3 times EV/DACF [enterprise value to debt-adjusted cash flow] and an 11.0-per-cent FCF yield versus peers at 5.0 times and 16.3 per cent, respectively. With the shares materially above our $164 target, we see better risk-reward elsewhere.”

* TD Cowen’s Cheryl Zhang lowered her target for Pizza Pizza Royalty Corp. (PZA-T) to $11 from $12, which is the average keeping a “hold” rating.

“PZA is moving in the right direction, with Q3 SSSG [same-store sales growth] improving as traffic declines moderated,” she said. “However, consumer spending pressures and elevated costs continue to weigh on franchisee profitability and restaurant development. We remain constructive on PZA’s value positioning and royalty model, but see a HOLD as appropriate pending clearer signs of recovery.”

* Desjardins Securities’ Doug Young moved his Power Corp. of Canada (POW-T) target to $104 from $102 with a “buy” rating. The average is $104.19.

“We are publishing our monthly NAV update for Power Corporation (POW). We have also included our 3Q26, 2026, 2027 and 2028 estimates as POW is expected to report 3Q26 results on November 11. As of October 30, 2026, POW’s discount to NAV was 16.5 per cent, down from 20.6 per cent in the previous month. We increased our target price ... which now reflects our target price for IGM (previously we used consensus),” said Mr. Young.