Overview

As the market prepares for key earnings reports, analysts are weighing in on several major companies, making significant adjustments to their forecasts amid concerns about tariffs and upcoming elections.

Freight Cycle Rebound?

Scotia Capital analyst Konark Gupta is optimistic about a potential rebound in the freight cycle after nearly two years of decline. He attributes this potential recovery to a combination of rate cuts, the exit of excess capacity, and labor stability.

Gupta mentions that while the industry is positioned for growth—with key companies focusing on organic expansion, M&A, and shareholder returns—uncertainties related to U.S. tariffs and early Canadian elections have led him to reduce his earnings outlook for 2025-2026 by an average of 2%.

Despite these adjustments, Gupta projects an overall 10% year-over-year earnings increase for the group in 2025, primarily driven by Canadian Pacific Kansas City Ltd. (CP-T) and TFI International Inc. (TFII-T), which he expects to gain 16% each.

Insiders say Canadian railroads may be particularly vulnerable to tariff impacts due to their high dependency on cross-border traffic. In a complex market environment, Gupta’s top picks remain TFII, CNR, and CP based on their anticipated growth trajectories.

ATB Capital Insights

In a related note from ATB Capital Markets, analyst Chris Murray expressed concerns regarding both Canadian National Railway Co. (CNR-T) and Canadian Pacific Kansas City Ltd. (CP-T), expecting continued volume pressures.

Murray downgraded both companies’ target prices—CNR from $168 to $165 and CP from $134 to $129—citing weak trade volumes influenced by work stoppages at Canadian ports and slow industrial production.

He predicts that while CNR might guide for stronger growth in 2025, conservative estimates are expected due to the macroeconomic climate and looming tariff threats.

Conversely, CP’s slight growth of 1% year-over-year reflects its strong market position driven by grain and automotive sectors.

Shopify Under Scrutiny

Turning to the tech sector, National Bank Financial analyst Richard Tse has reaffirmed Shopify Inc. (SHOP-N, SHOP-T) as a "Top Pick" for 2025 despite concerns about tariffs impacting its business model.

With many of Shopify's merchants sourcing from China, Tse estimates a potential 4.9% contraction in gross merchandise volume if the proposed tariffs are enacted.

However, he believes the impact will be less severe than perceived, given Shopify's diversified growth vectors.

Tse reiterated an “outperform” recommendation with a target price of $140, significantly higher than the average target of $119.54 among analysts, underscoring the company’s robust international growth strategies.

Energy Sector Outlook

In energy, RBC Dominion Securities analyst Michael Harvey has noted that concerns about tariffs are overshadowing growth expectations for Canadian exploration firms.

With Q4 estimates projecting cash flow per share up by 1% quarter-over-quarter, Harvey sees a positive trajectory despite low AECO gas prices.

He adjusted target prices for several companies, including Arc Resources Ltd. (ARX-T) to $32, reflecting its solid operational position.

Restaurant Chains and Their Challenges

As for MTY Food Group Inc. (MTY-T), National Bank Financial analyst Vishal Shreedhar suggests challenging market conditions, particularly in international territories, but anticipates positive sales trends in North America.

The stock's target price was kept at $57, reflecting Shreedhar's expectation of organic growth across its restaurants.

Stocks in the Spotlight

Among other notable changes, analysts initiated coverage and made target adjustments for various companies:

- Headwater Exploration Inc. (HWX-T) received an “outperformer” rating from CIBC World Markets.

- Canaccord Genuity's Matthew Lee rated Sprott Inc. (SII-T) with a "buy" after its strategic evolution in asset management.

Conclusion

As analysts refine their strategies ahead of earnings season, investors should remain vigilant about macroeconomic indicators and sector-specific developments influencing company performances.

The ongoing narrative around tariffs and their potential impact cannot be ignored as key decisions loom on the horizon. Stay tuned!