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Since the beginning of the year, approximately 60 per cent of stocks in the S&P/TSX Composite Index have seen their average target prices increase. Stocks with the largest boosts to their target prices are from a number of sectors.

Right now, Celestica Inc. (CLS-T) is in the top spot with its average target price jumping 19 per cent. Last month, the company reported better-than-expected fourth quarter results and management provided a positive outlook. Year-to-date, the share price is up 37 per cent.

Other stocks that have seen their average target prices rise by 10 per cent or more since the beginning of the year include NexGen Energy Ltd. (NXE-T), Constellation Software Inc. (CSU-T), Brookfield Business Partners LP (BBU-UN-T), TFI International Inc. (TFII-T), Brookfield Asset Management Ltd. (BAM-T), Eldorado Gold Corp. (ELD-T), Colliers International Group Inc. (CIGI-T), Primo Water Corp. (PRMW-T), First Capital REIT (FCR-UN-T) and FirstService Corp. (FSV-T).

On the flip side, stocks in the S&P/TSX Composite Index that have seen their average target prices decline by 10 per cent or more since the start of the year are concentrated in two sectors – energy and materials. Stocks with lower average target prices include Lithium Americas Corp. (LAC-T), Birchcliff Energy Ltd. (BIR-T), First Majestic Silver Corp. (FR-T), Lithium Americas (Argentina) Corp. (LAAC-T), First Quantum Minerals Ltd. (FM-T), B2Gold Corp. (BTO-T), SSR Mining Inc. (SSRM-T), Enerplus Corp. (ERF-T) and Ballard Power Systems Inc. (BLDP-T).

This report includes a link to a list of analysts’ target prices, recommendations, forecast returns and yields for all securities in the S&P/TSX Composite Index grouped by sector and ranked according to their expected price returns (excluding dividend and distribution income). The posted target price for each security is an average of all available target prices from analysts. A target price typically reflects an expected share or unit price 12 months from now based on an analyst’s financial modelling, such as a discounted cash flow or sum-of-the-parts model. For the yield provided, Bloomberg calculates this figure by annualizing the most recent announced dividend or distribution value.

It’s important to note that high target prices, which imply stellar returns that seem unbelievable may be just that - unrealistic. At times, when a stock price falls analysts may maintain their bullish expectations, inflating the forecast return. In addition, an outlier (extreme target price) can skew the average target price, to the upside or downside, particularly when the number of analysts covering a stock is low. Don’t let a huge projected gain lure you into a position – it is critical to look at the company and industry fundamentals.

Click here to download an Excel version of the report.

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