Analysts raise targets for Precision Drilling and other energy service firms as sector outlook improves
National Bank Financial and ATB Capital Markets analysts upgraded several North American oilfield services companies, citing stable margins, rising activity and favorable macro conditions.
National Bank Financial analyst Dan Payne said oilfield services firms are priced for stability and poised for earnings growth of 10-15% per year, which could compress multiples and add value. In a client note titled Inflecting to Value, Payne highlighted macro and geopolitical factors, domestic policy support and new themes such as power/data centres and LNG as drivers for the sector. He forecast a 7% sequential earnings gain for the third quarter, supported by spot oil prices around $100 per barrel and stable margins.
Payne upgraded Precision Drilling Corp. to "outperform" from "sector perform" and raised its price target to $185, noting solid base business performance and expected margin improvements in both Canada and the United States. He also lifted targets for CES Energy Solutions, Enerflex, and Pason Systems.
ATB Capital Markets analyst Tim Monachello described the Canadian energy services sector as having "the best set up in years" ahead of earnings season, recommending an overweight position. He pointed to WTI strip prices above $70 per barrel, tightening service capacity and potential policy tailwinds such as the Canadian Productivity Mega Deduction. Monachello upgraded North American Construction Group to "outperform" with a $23.50 target, while downgrading CES Energy Solutions to "sector perform" despite raising its target to $23.50.
Desjardins Securities analyst Jerome Dubreuil saw potential value in Rogers Communications' partial sale of its sports assets, raising his target price to $57 and maintaining a buy rating. TD Cowen’s Vince Valentini increased his free-cash-flow forecast for Rogers and kept a buy rating with a $63 target.
National Bank Financial’s Alex Terentiew maintained an "outperform" rating on K92 Mining, raising its target to $39, citing the Kainantu mine’s growth potential. TD Cowen’s Cheryl Zhang initiated coverage of A&W Food Services with a buy rating and a $41 target, emphasizing the chain’s strong brand and expansion opportunities.
Other analyst actions included upgrades and target adjustments for Parex Resources, Alaris Equity Partners Income Trust, and GFL Environmental, reflecting sector-wide optimism and expectations of continued cash-flow generation.