Market Roundup: Analyst Actions That Matter

As the Canadian real estate sector grapples with ongoing volatility, analysts at National Bank Financial, Matt Kornack and Giuliano Thornhill, see a glimmer of opportunity. They suggest the market is still ripe for recovery, provided we act before the contagion worsens and valuations plummet further.

In their latest report, they slashed target prices for equities in the real estate sector by an average of 9%. The duo acknowledges that economic turmoil is negatively impacting growth forecasts, while geopolitical tensions have sent long bond yields soaring.

The analysts underscore a shift towards institutional ownership in real estate, emphasizing the need for sound balance sheets in these uncertain times.

Five REITs Face Downgrades, Analyst Cautions Investors

In a bid to focus on more defensive investment options, Kornack and Thornhill downgraded five REITs on Monday, each showing alarming vulnerabilities:

1. Automotive Properties REIT (APR.UN)

Downgraded to 'sector perform' from 'outperform' with a revised target of $10.75, down from $12. Analysts warn that macro risks, particularly related to U.S. auto policies, could linger.

2. Boardwalk REIT (BEI.UN)

Reduced to 'sector perform' from 'outperform' with a new target of $72, down from $80. Boardwalk’s strong performance faces doubts due to its Western Canada focus and potential economic shocks.

3. InterRent REIT (IIP.UN)

Now rated 'sector perform', down from 'outperform', with a target of $11.75. Analysts note that high valuations compared to growth prospects could hinder any favorable trading.

4. Nexus Industrial REIT (NXR.UN)

Downgraded to 'sector perform' with a target slashed to $6.75 from $8.75. The industrial sector's current trading environment prompted a more cautious stance.

5. RioCan REIT (REI.UN)

Dropped to 'sector perform', with a revised target of $18. The tumult in its apartment and retail portfolios raises significant concerns about future performance.

Choice Properties REIT Gets Upgraded Amid Turmoil

In a rare optimistic turn, analysts upgraded Choice Properties REIT (CHP.UN) to 'outperform' from 'sector perform,' establishing a new target of $16. They cite its strong tenant profile and dominance in current markets as reasons for their optimism.

Food and Grocery Sector Thrives Amid Uncertainty

Meanwhile, RBC Dominion Securities analyst Irene Nattel stands firm on a 'stronger for longer' outlook for Canadian grocery giants. Highlighting Loblaw’s strategic position and robust loyalty program, she has upgraded their target to $234 from $215.

Nattel emphasized that as inflation continues to rise, Canadian consumers are gravitating toward value-driven retail options, enhancing Loblaw’s standing.

Gold Companies Brace for Earnings Season Amid Trade Concerns

Scotia Capital analyst Tanya Jakusconek focuses on North American gold companies, predicting that discussions around the ongoing tariff war will dominate first-quarter earnings reports.

She adjusted her 2025 gold price forecast to $3,000 per ounce, reflecting confidence in eventual margin expansion for many gold firms.

The Outlook for MTY Food Group Remains Positive

After MTY Food Group reported steady first-quarter results, analysts noted improved trends for the upcoming quarter. Adjustments to EBITDA expectations reflect confidence in future performance, despite macroeconomic uncertainties.

As multiple analysts adjust their targets and ratings, the message is clear: Despite volatility, savvy investors can find opportunities amid the chaos.

Stay updated as markets fluctuate and analyst insights shape the future of various industries!