Inside the Market's roundup of some of today's key analyst actions
A number of Bay Street and Wall Street analysts are handing out price target hikes to Canadian Pacific Railway Ltd. after a strong fourth quarter that showed continued improvement in its operating ratio under the guidance of newly installed CEO Hunter Harrison.
But the majority of them still think the stock is a hold.
The operating ratio – an important measure for a railway that calculates expenses as a percentage of revenue – improved to 74.8 per cent from 2011’s ratio of 78.5 per cent. Earnings per share of $1.28 met Street expectations and got a boost from a 6.7 per cent rise in revenues.
CP said it expected to see over 40 per cent earnings-per-share growth in 2013 – more than some analysts had expected – on strong revenue growth and better margins.
Upside: Canaccord Genuity analyst David Tyerman raised his target to $104 from $99, but continues to have a “sell” rating on the stock.
BMO Nesbitt Burns analyst Fadi Chamoun raised his target to $117 from $102, commenting that the “stage is set for a strong 2013,” especially given a pickup in deals to transport crude oil. He maintained a “market perform” rating.
Desjardins Securities analyst Benoit Poirier increased his target to $117 from $93 “to better reflect a positive outlook.” But he maintained a “hold” rating as he believes most of Mr. Harrison’s improvement plan is already price into the stock.
Raymond James analyst Steve Hansen raised his price target to $120 from $100 and maintained a “market perform” rating, commenting that “efficiency gains continue to impress.”
Overall, eight analysts rate the stock as a buy, 15 as a hold and two as a sell, according to Thomson/First Call data.
An expected shift to more risky, less defensive stocks has led RBC Dominion Securities analyst Robert Kwan to downgrade regulated utility Emera Inc.
“We believe that multiple expansion for regulated utility businesses will be challenged,” said Mr. Kwan, who lowered his rating to “sector perform” from “outperform.”
His reduced rating doesn’t reflect any forecast changes in the underlying business. And he believes that for investors looking to keep safer, regulated utility exposure, Emera is a solid choice because of likely continued modest earnings and dividend growth.
Upside: Mr. Kwan maintained a $37 price target.
Amazon.com Inc. is enjoying a flood of analyst price target hikes after the company impressed the Street with its operating margins in its latest quarter.
Margins were better than expected amid strong third-party business growth, even though earnings and revenue missed Street expectations, noted Canaccord Genuity analyst Michael Graham
Upside: Mr. Graham raised his price target to $300 (U.S.) from $290. Many other brokerage firms – including Bank of America, Barclays, Evercore Partners and Cantor Fitzgerald – raised their targets as well.
Metro Inc. enjoyed a good start to its new fiscal year, with operating earnings per share growing by 14.9 per cent, noted Desjardins Securities analyst Keith Howlett. Metro also hiked its dividend by 16.3 per cent and announced that it will purchase 2 million of its own shares.
“Metro continues to perform well in the very competitive grocery and pharmacy retailing segment, which features virtually no food inflation and ongoing expansion by Wal-Mart,” said Desjardins Securities analyst Keith Howlett. “The company has a long track record of effective capital spending, as well as selective, but highly productive, acquisitions. Management should be a reliable steward of shareholder money,” he said.
Upside: Mr. Howlett raised his target to $68.50 from $66 and maintained a “buy” rating.
SilverCrest Mines Inc. has provided estimates on what could become a higher-grade starter pit for its La Joya project in Mexico.
The resource for the pit is estimated at 27.9 million tonnes grading 112 grams per ton silver equivalent. A preliminary economic assessment on the property is expected to be completed in the second half of 2013, noted Canaccord Genuity analyst Nicholas Campbell.
Upside: Mr. Campbell raised his price target to $4.50 from $4.25 and maintained a “speculative buy” rating.
For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities