Major Analyst Upgrades and Downgrades in the Canadian Market: What You Need to Know!

As the Canadian banking sector gears up for another earnings season, analysts are making strategic moves that could impact investors significantly. Scotia Capital analyst Meny Grauman advises investors to prioritize the future guidance from bank management rather than just focusing on quarterly results. “The upward trend in bank stocks—an average of 9% since the Q3 reporting season—is notably being propelled by strong performances from BMO and BNS, which surged by 18% and 17% respectively, amid worsening credit fundamentals and stagnant loan growth,” he remarked.

Grauman believes that despite the current economic climate, there’s reason to stay optimistic. He predicts a turnaround, with the fiscal year 2026 set to see accelerated revenue growth. “The constancy of markets to look forward is especially accentuated during pivotal moments in the credit cycle. Investors tend to detach from current performance, concentrating instead on improving conditions on the horizon,” he said.

Moreover, Grauman projects Q4 earnings per share for the sector at $2.12, marking a 7% annual increase, though down 6% from the previous quarter. His focus on macroeconomic trends and capital stability suggests that despite anticipated sluggish growth, improvements are on the cusp in the latter half of fiscal 2025, with considerable hope resting on fiscal 2026.

In terms of stock recommendations, he flagged Canadian Imperial Bank of Commerce (CM), Royal Bank of Canada (RY), and Toronto-Dominion Bank (TD) positively entering the earnings season but expressed caution regarding BMO and EQB. He reported notable valuation adjustments, reflecting his 2026 forecasts, which are as follows:

Stock Recommendations and Target Adjustments

- **Bank of Montreal (BMO)**: Target adjusted to $147 from $112. - **Canadian Imperial Bank of Commerce (CM)**: Target increased to $108 from $85. - **Toronto-Dominion Bank (TD)**: Target raised to $98 from $86. - **Royal Bank of Canada (RY)**: Target adjusted to $197 from $167.

In retail, Dollarama Inc. (DOL) is marked as a favorable option amidst economic constraints. Analyst Irene Nattel sees it as an ideal retailer for value-seeking consumers. Anticipating earnings per share of $0.99, Nattel emphasizes sustained strong performance amid moderated consumer spending forecasts attributable to season timing changes related to Halloween.

Meanwhile, Jamieson Wellness Inc. (JWEL) remains on an upward trajectory, with analyst Zachary Evershed outlining the company’s strategy for revenue growth and profitability for the next four to six years, especially in China and the U.S. His target for the stock was raised to $42 from $36.50 following promising management discussions and objectives.

In the commodities market, Capstone Copper Corp. is gaining attention due to positive projections of near-term growth in copper production. Increasing expectations for free cash flow and the operational successes at Mantoverde mine position Capstone favorably, warranting an 'Outperform' rating with a target of $12.

The financial sector isn’t the only one getting market lifts; Bitcoin's surge towards $100,000 has analysts optimistic about top-line and margin expansions in their crypto coverage. Stifel analyst Bill Papanastasiou upgraded Bitfarms Ltd. to 'speculative buy', significantly raising his target to $3.50 due to better mining economics.

Lastly, in gold production, Barrick Gold’s downgrade to 'neutral' by CIBC reflects ongoing challenges but acknowledges the strength of Barrick’s assets. The shift underscores the need for the company to stabilize its investments in the challenging Nevada market.

In conclusion, from banking to retail and commodities, the market pulse as we await upcoming earnings reveals a complex tableau of optimism and caution. Investors should keep a keen eye on analyst ratings and sector performance that will shape the market dynamics in the months ahead.