Inside the Market’s roundup of some of today’s key analyst actions.
Research In Motion Ltd. shares are unlikely to see any major catalysts over the next six months, so investors should stay on the sidelines for now, said Bernstein Research analyst Pierre Ferragu.
He downgraded the BlackBerry maker today to “market perform” from “outperform,” which had the stock under pressure, closing down 1.5 per cent on Nasdaq.
“With BlackBerry Live behind us, we see few additional positive catalysts coming through in the next six months and see a danger that the company misses more optimistic expectations,” Mr. Ferragu said in a research note.
BlackBerry Live is the company’s user conference going on this week in Orlando, Florida. On Tuesday, the first and only day announcements were expected from RIM, it introduced a new cheaper smartphone aimed at emerging markets that will run on the new BlackBerry 10 operating system. It also said its messaging service, BBM, will be available as a text-only application for competing smartphones in the next few months and a voice feature will be added later.
The stock has gained over 135 per cent since its lows of last year, but the rally has run out of some steam over the last couple of months, with shares largely trading in a fairly tight range of between $13 and $16.
Mr. Ferragu thinks this reflects the Street taking a more balanced view of how successful the new Z10 and Q10 smartphones will be. He believes the stock could trade between $20 and $25 if the new BlackBerry 10 smartphones successfully recharges the direction of the company, but that a failure to transition well to the new platform would usher in a stock dive to $10 or less.
That said, Mr. Ferragu thinks it would be dangerous to short the stock.
“BlackBerry is not a good short,” Barron’s online quoted him as saying. “The company remains in the middle of a platform transition that could result in continued good momentum and a stabilization of its operating model.”
Target: Mr. Ferragu slashed his price target to $15 (U.S.) from $22. The average target among analysts is $12.89 (U.S.), according to Bloomberg data.
CIBC World Markets analyst Mark Petrie upgraded Rona Inc. to “sector perform,” believing that the stock’s decline since February has made the risk-to-reward ratio more balanced.
“Though the immediate outlook remains challenging, there are reasons for optimism,” he commented. “Two key management appointments (CEO and CCO) have been made in recent months. Both executives are very strong and bring a new discipline and experience to merchandising and operations.”
But, noting that its first-quarter earnings were well below his forecast, he added that there is “no substantial near-term upside” in the stock.
Target: Mr. Petrie maintained an $11 (Canadian) price target. The average is $10.84.
GMP Securities analyst Stephen Boland bumped up his target for Fiera Capital Corp., saying the asset manager’s fund flows are beginning to improve as it searches for acquisitions to drive growth.
He forecasts net inflows of $2.4-billion, and growth of assets to increase by 11.8 per cent in 2014.
Target: Mr. Boland, who maintains a “buy” rating, raised his target price by $2 a share to $11.50. The average Street target is $10.94 a share.
Canaccord Genuity analyst Neal Gilmer slashed his target on Fortress Paper Ltd. after the producer of specialty pulp and security papers posted first-quarter results that fell below analysts’ expectations.
The preliminary capital expenditures for its mill in Lebel-sur-Quevillon (LSQ) is now $250-million with a further $70-million to $100-million needed for working capital, ramp up and other items, he noted.
Target: He downgraded Fortress to a “hold” rating, and cut his target by $5 a share to $13. The average Street target is $10.27 a share.
Home Capital Group Inc. has become the latest top stock pick of Industrial Alliance Securities Inc.
Last week, the holding company involved in mortgage lending and credit card issuance services reported first-quarter earnings that crushed Street expectations. Industrial Alliance analyst Fred Westra raised his earnings estimates for this year on expectations for higher loan fees and securitized lending.
He believes the quarterly results demonstrated that the decline in the stock during the first quarter was unwarranted.
Target: Mr. Westra, who upgraded the stock to “top pick" from “strong buy,” raised his price target to $79 from $75. The average target is $68.67.
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