Inside the Market’s roundup of some of today’s key analyst actions
Ahead of third-quarter earnings season for Canada’s railway companies, National Bank Financial analyst Cameron Doerksen is predicting a later grain harvest is likely to temper volume growth, leading him to reduce his near-term forecast.
“CN’s carloads so far in Q3 are up 4.6 per cent year-over-year while RTMs are essentially flat,” he said. “CPKC’s carloads so far in Q3 are up 4.3 per cent year-over-year with RTMs up 5.3 per cent year-over-year. Both railroads are benefiting from an easy comparable due to the labour disruptions last year.
“Offsetting some of this growth are some tougher comps on grain due to a later Canadian harvest this year versus a year ago. With what looks like a strong harvest this crop-year, we expect grain will be a solid revenue tailwind in Q4 and beyond, but we have trimmed our Q3 estimates for both CN and CPKC as overall volumes were slightly lighter than anticipated.”
In a client report released before the bell, Mr. Doerksen said he continues to prefer Canadian Pacific Kansas City Ltd. (CP-T) over Canadian National Railway Co. (CNR-T) from an investing perspective.
“With Q3 to-date RTMs up 5.3 per cent, CPKC is outperforming CN volume growth (0.1 per cent), a trend we expect to continue through Q4,” he explained. “Indeed, driven by new business wins and synergy-related gains, we expect CPKC volume growth will be higher than CN in 2026 and 2027 as well. Furthermore, while both railroads face risks around tariffs/trade changes, in the near-term we see CN more exposed to potentially weaker international intermodal due to a pull-forward of volumes and tariff impacts.
“On our updated 2025 CPKC EPS estimate, CPKC shares are tradingat 21.9 times P/E [price-to-earnings], which is a modest premium to the U.S. peer group, but no longer the richest valuation among the Class I railroads. With still strong organic growth prospects, we see CPKC as more compelling for rail investors looking to avoid the noise and risks around the merger regulatory process between UNP and NSC that is likely to persist into 2027.”
Mr. Doerksen raised his target for shares of CPKC to $124 from $119, maintaining an “outperform” rating. The average target on the Street is $122.37, according to LSEG data.
“Although its valuation is richer and trade policy changes remain a risk, we keep our Outperform rating on CPKC shares,” he said. “We also continue to see CPKC benefiting from new business wins and synergy-related growth in the coming years that should see it enjoying industry-leading growth that justifies the stock’s valuation premium. Furthermore, we see CPKC shares as a good alternative for railroad investors looking to avoid merger-related regulatory uncertainty with the regulatory process for the UNP-NSC merger likely to extend into early 2027.
“We previously valued the stock by applying a 22.0 times P/E multiple to our 2026 EPS estimate, but we are also rolling forward the basis for our valuation to 2027 but applying a more conservative 21.0 times P/E multiple. This results in a new target of $124.00 versus $119.00 previously.”
For CN shares, the analyst reaffirmed his “sector perform” rating and $150 target, which falls below the $157.33 average.
“We keep our Sector Perform rating on CN shares noting that Q3 volumes so far look to be coming in modestly softer than expected, mainly due to a later grain harvest this year,” he said. “While the stock’s valuation is relatively inexpensive, the company has largely under-performed growth expectations in recent quarters and lowered its 2025 guidance last quarter. We believe that until the company can demonstrate multiple quarters of meeting or exceeding expectations, investor sentiment around the stock seems unlikely to turn more positive.”
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RBC Dominion Securities analyst John Shuter sees Vitalhub Corp. (VHI-T)“well positioned” to sustain double-digit growth, pointing to its “deep domain expertise, a large database of potential M&A targets, and secular tailwinds in patient flow solutions.”
Also emphasizing its “proven track record of execution on its M&A model, while delivering consistent Rule of 40 performance on an organic basis,” he initiated coverage of the Toronto-based healthcare technology company with an “outperform” rating on Thursday in a research report titled Kickstart the heart, hope it never stops.
“VitalHub’s organic growth and M&A engine is focused on patient flow, operational visibility, and patient journey software solutions across the U.K., Canada, and Australia,” he said. “While relatively niche (est. $2.5-billion total addressable market), this segment is among the fastest growing HCIT markets (we estimate a 15-per-cent 5-year CAGR), as governments ramp investment in new technologies to address healthcare productivity challenges and improve patient experiences. Secular tailwinds in VitalHub’s key end markets support our outlook for double-digit revenue growth over the next two years."
"Since going public in 2017, VitalHub has scaled Annual Recurring Revenue (ARR) from $4-million to $92-million as of Q2/25 (53-per-cent CAGR), fuelled by a combination of organic growth (17 per cent year-over-year 3-year avg.) and acquisitions. Over that time, the company has deployed $194-million on 22 acquisitions. VitalHub’s value creation strategy relies on: 1) deep integration of acquisitions to realize cost synergies; and 2) cross-selling into existing customers and geographies. VitalHub’s M&A synergies drive economies of scale; adj. EBITDA margin expanded from 17 per cent FY18 to 25 per cent TTM [trailing 12 months]. ROIC has averaged 22 per cent over the last 3 years, above the mid-point of Canadian software consolidator peers (20-per-cent avg.)."
With those beneficial sector trends and “proven” M&A strategy, Mr. Shuter sees a “long runway” for the company to exceed $100-milllion in average recurring revenue, and he believes its “consistent Rule of 40 performance justifies premium valuation.
" VitalHub’s management team has deep domain expertise in HCIT and patient flow solutions as founders, operators, and acquirers,“ he said. ”With a growing database of over 400 potential M&A targets and $115-million cash, we believe the company has a long runway to consolidate the segment. Based on VitalHub’s past deal size, this implies these companies generate $1.7-billion annual revenue."
“VitalHub is currently trading at 18 times calendar 2026 estimated EV/EBITDA, a premium to Canadian software consolidators at 16 times. We believe the premium is justified, given consistent Rule of 40 performance (17-per-cent organic ARR growth and 25-per-cent adj. EBITDA margin 3-year avg.) and better visibility to the scalability and value creation potential of VitalHub’s M&A model.”
Assuming sustained double-digit growth, Mr. Shuter set a target of $15 per share. The average target is currently $15.48.
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Desjardins Securities analyst Allison Carson is taking a positive view on Minera Alamos Inc.‘s (MAI-X) US$115-billion acquisition of the Pan mining complex in Nevada from Equinox Gold Corp. (EQX-T), believing “it should generate cash flow to fund MAI’s growth strategy and adds a permitted development asset, Gold Rock, to the pipeline.”
“Upon closing, MAI will acquire a 100-per-cent interest in the operating Pan mine, the Gold Rock project and the Illipah project from EQX. Consideration for the transaction includes US $90-million cash and US$25-million equity,” she said. “MAI is expected to issue 96.8 million common shares at an average price of $0.355/share to EQX for a 9.99-per-cent interest in MAI. The transaction is expected to close in 4Q25, subject to conditions and regulatory approvals.
“Proposed acquisition will further diversify MAI’s portfolio outside of Mexico, with 75 per cent of core assets located in the U.S.. Upon closing, MAI’s four core assets will include the Pan mine, Copperstone, Cerro de Oro (Mexico) and Gold Rock. Cash flow from the operating Pan mine will be used to partially fund the development of Copperstone and Cerro de Oro. MAI is considering additional financing including a gold pre-pay.”
Coming off research restriction following the close of Minera’s $135-million private placement with proceeds being allocated to the deal, Ms. Carson maintained her “buy” rating for its shares while trimming her target by 10 cents to 90 cents. The average on the Street is 80 cents.
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Scotia Capital analyst Phil Hardie expects AGF Management Ltd.’s (AGF.B-T) third-quarter results to be "characterized by double-digit earnings growth, driven by robust market appreciation and aided by retail flows staging a strong rebound."
Ahead of its Sept. 24 earnings release, he’s projecting operating earnings per share of 45 cents, up 8 cents year-over-year and matching the consensus estimate on the Street.
“AGF has demonstrated strong operating momentum through its third quarter where it outperformed Industry AUM [assets under management] growth in June and July with robust market appreciation being the primary driver,” said the analyst. “We are forecasting Q3/25 mutual fund net sales of $161-million (0.5 per cent of Beg. AUM), compared to inflows of $14-million (0.1 per cent of Beg. AUM) in Q3/24 and inflows of $18-million last quarter.
“We expect this to be the strongest quarterly flows outside of RRSP season since the beginning of 2023, with AGF likely benefiting from solid demand for Global and U.S. Strategies (64 per cent of AGFs mutual fund AUM). A solid market rally has resulted in AUM growth of 6 per cent sequentially and 14 per cent from last year.”
Believing its valuation remaining discounted, Mr. Hardie raised his target by $1 to $15 with a “sector perform” rating. The average is $15.20.
"AGF’s high exposure to equities is likely to provide torque to the stock price in an upward equity market swing, supported by a strong balance sheet that provides a floor to the stock in the event of a sell-off,“ he noted. ”Given the transitioning market conditions we expect investors to be focused on what this means for the near-term sales outlook and capital allocation priorities.We also expect to see continued interest in AGF’s product development pipeline and growth strategy across its alternatives platform.
“We have made notable changes to our forecast given higher than initially forecast AUM for the quarter as well as improving market conditions evident by the strong market rally that characterized much of Q3. ... AGFs valuation continues to look attractive.”
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RBC Dominion Securities analyst Ryland Conrad said High Liner Foods Inc.’s (HLF-T) Investor Day on Tuesday raised his confidence in its ability to navigate the current macroeconomic environment.
“Management indicated that the industry could be approaching an inflection point for seafood consumption with: (i) room to increase ‘share of stomach’ as per capita consumption remains half that of beef and pork and significantly less than poultry (despite 88 per cent of consumers eating seafood in the past year); (ii) efforts to reduce perceived accessibility barriers to drive more in-home dining occasions (foodservice accounts for 70 per cent of seafood spend); (iii) younger demographics showing greater openness to seafood despite consumption still lagging older cohorts; and (iv) increased protein messaging on packaging to appeal to a more health-conscious consumer,” he said.
Mr. Conrad said the event, which included a tour of the company’s value-added frozen seafood manufacturing facility in Lunenburg, N.S., provided “incremental visibility on initiatives to drive operating efficiencies and deliver above-category growth and overall.” He also emphasized its innovation, which has led to above-category growth, while pointing to the United States as its largest opportunity for further expansion.
“Against the backdrop of a $23-billion North American frozen seafood category growing 1-2 per cent annually, management expects to deliver above-category growth over the medium-term underpinned by ongoing innovation and M&A,” he said. “The company is increasing its investment in innovation platforms, particularly through its breakthrough team that targets fewer and larger longer-term opportunities that address areas where seafood is under-developed. While still early days, management indicated that the company is expanding into fully cooked products, which account for only 4 per cent of seafood sales in the U.S. (predominantly surimi) versus 23 per cent for chicken and will unlock under-penetrated channels including convenience, QSR and ready-to-eat sections in grocery stores.”
“Following the recent acquisition of Mrs. Paul’s and Van de Kamp’s and in light of an already dominant position in Canadian retail with 41-per-cent market share (larger than the company’s four closest competitors combined), management indicated that U.S. retail represents the largest growth opportunity for the company with: (i) relatively modest market share of 13 per cent (up from 7 per cent pre-acquisition) despite the U.S. now accounting for 78 per cent of the company’s retail volumes; (ii) the addition of Mrs. Paul’s and Van de Kamp’s providing entry into the previously untapped mainstream segment (accounting for 57 per cent of category sales) alongside a more extensive product portfolio versus competitors; (iii) positive feedback from key customers post-acquisition (seafood was not a focus for the previous owner) and opportunities to leverage existing innovation and expanded distribution to cross-sell its retail portfolio; and (iv) ongoing innovation, particularly in under-indexed growth species including shrimp and salmon.”
Mr. Conrad reaffirmed his “sector perform” rating and $20 target for its shares. The average is $21.30.
Elsewhere, BMO Nesbitt Burns’ Nevan Yochim upgraded High Liner to “outperform” from “market perform” with a $20.50 target (unchanged).
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In other analyst actions:
* Following the release of the results of an updated Feasibility Study for its Bandeira Lithium Project in Brazil, Canaccord Genuity’s Katie Lachapelle raised her Lithium Ionic Corp. (LTH-X) target to $2.15 from $1.80 with a “speculative buy” rating. The average target on the Street is $3.73.
* Acumen Capital’s Jim Byrne trimmed his target for Sangoma Technologies Corp. (STC-T) to $12 from $12.50 with a “buy” rating. Other changes include: TD Cowen’s David Kwan to $10 from $11 with a “buy” rating and Canaccord Genuity’s Robert Young to US$8.50 from US$10 with a “speculative buy” rating. The average is $11.
“The anticipated growth in FY26 will now begin in fiscal Q2 and beyond as the company’s go-to-market strategy has encountered some longer sales cycles and implementations for their larger MRR projects,” Mr. Byrne said. “Management is encouraged by their forward-looking pipeline and the increased backlog. The company anticipates services revenue of 95 per cent of the total following the VoIP sale. Core services revenue (high margin SaaS) should account for 75 per cent of total revenue in FY26 and beyond.”
