Desjardins Raises Target While acknowledging Aecon Group Inc. has already been “a stellar performer” in his coverage universe, Desjardins Securities analyst Benoit Poirier predicts there is “further momentum ahead” as “the 202425 worst-case scenario in relation to legacy projects released in 2Q has derisked the story in investors’ minds, acting as a clear demarcation point.”
“We believe most are now pricing on 2026 estimates as the legacy noise should dissipate, giving a more normalized view of ARE’s earnings potential,” he added in a research note.
Introducing his 2026 forecast for the Toronto-based construction company, Mr. Poirier said he expects “a step-up in 202526 when progressive design-build contracts (GO Rail, Scarborough, Contrecur, Virgin Islands, Darlington and Winnipeg) begin construction.”
“We believe ARE’s backlog could double over the next two years,” he said. “Excluding legacy charges, ARE has delivered 8.0-per-cent TTM [trailing 12-month] construction EBITDA margin (highest level since 2008)—combined with improved project selection and the new non–fixed price model, this gives us greater confidence that ARE can achieve at least 7 per cent in 2026 (we conservatively estimate 7.3 per cent, providing a buffer for some potential execution risk).”
Arguing sector returns “should be favourable” and touting bullish internal signals, the analyst hiked his target for Aecon shares to $27 from $19 with a “buy” rating after rolling his valuation forward. The average on the Street is $22.09.
“U.S. contractor peers are up 116 per cent over the last year, outperforming the S&P 500 (35 per cent),” he said. “Sentiment toward the industry has shifted as cost inflation is now in check, project borrowing costs are down, government spending continues to be a tailwind and investors rotate into smaller caps. Moreover, we believe ARE is well set up to outperform given its expertise in demand sectors—utilities (22 per cent of revenue) and nuclear (19 per cent of revenue).”
“ARE repurchased 53,000 shares in August and 98,000 shares in September. Additionally, several insiders have purchased shares in the open market, most notably newly appointed CFO Jerome Julier ($310,000) and board member Eric Rosenfeld ($324,000).”