Analysts’ forecast returns and recommendations for all stocks in the S&P/TSX Composite Index

As the third-quarter earnings season ramps up, investors have been bidding up stocks.

Month-to-date, the S&P/TSX composite index is up 2.6 per cent. More importantly, there is strong breadth in the market with eight sectors in the green.

Six of the 11 sectors have month-to-date returns of 3 per cent or more, those being energy (up 10.4 per cent), consumer discretionary (up 5.2 per cent), real estate (up 4 per cent), industrials (up 3.7 per cent), consumer staples (up 3.3 per cent), technology (up 3.1 per cent), communication services (up 1.5 per cent) and financials (up 0.3 per cent).

While the S&P/TSX composite index remains in negative territory with a loss of 10.9 per cent in 2022, the loss may soon become just a single-digit decline. For many stocks, valuations have come down significantly and earnings growth forecasts are conservative.

According to Bloomberg, the S&P/TSX Composite Index is trading at a forward price-to-earnings (P/E) multiple of 11.4 times the 2023 consensus estimate – still near a 10-year low and well below its 10-year historical average of 14.4 times. With the Bank of Canada hiking interest rates five times so far this year, the multiple has compressed rapidly in 2022.

Anemic earnings growth is anticipated for the S&P/TSX composite index with just 2 per cent growth forecast in 2023. Over the past month, earnings expectations for the TSX Index have declined 1 per cent for the upcoming year.

To help investors navigate this challenging market, this report includes a link to a list of analysts’ target prices, recommendations, and forecast returns 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.

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.

All data is as of the close on Oct. 24.

Click here to download an Excel version of the report.

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