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Thorsten Heins, CEO of Research in Motion, introduces the BlackBerry 10, Wednesday, Jan. 30, 2013 in New York. (Mark Lennihan/AP)
Thorsten Heins, CEO of Research in Motion, introduces the BlackBerry 10, Wednesday, Jan. 30, 2013 in New York. (Mark Lennihan/AP)

RIM shares jump on rare two-notch upgrade from SocGen Add to ...

Inside the Market’s roundup of some of today’s key analyst actions. This post will be updated with more analyst commentary during the trading day.

Shares in Research In Motion Ltd., widely now known as BlackBerry, shot up 6 per cent today after being treated to a rare two-notch upgrade to a “buy” rating from "sell" at Société Générale.

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Analyst Andy Perkins said recent channel checks at retailers suggest that the new BlackBerry 10 models “are selling well” and estimates that the company will report more than 5 million in sales of its models as it reports fiscal first-quarter results on June 28.

“We believe that this is above consensus which is between 3 million and 4 million units for the quarter; As for the older units, we still believe there is demand for the 9220, 9320 and 9900 handsets but that this is falling rapidly," Barrons.com quoted him as saying.

Société Générale also reportedly raised its 2013 earnings estimate for RIM to 85 cents per share from 71 cents.

Shares closed at $14.70 on the Toronto Stock Exchange, up 83 cents.

Target: Mr. Perkins raised his price target to $17 (U.S.) from $13. That's well above the average analyst target of $12.96, according to Bloomberg data. Nine analysts rate it as a buy, 13 as a hold, and 21 as a sell.

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BMO Nesbitt Burns analyst Wayne Hood has given his vote of confidence in the turnaround of Canadian iconic retailer Hudson’s Bay Co., upgrading the stock to an “outperform” rating today in the wake of its impressive first-quarter results on Wednesday.

The company, which went public last November at an initial public offering price of $17, posted a 7.6 per cent gain in sales at outlets open a year or more, as its losses from continuing operations were sliced by more than half from a year earlier.

“We believe first quarter 2013 showed solid improvement in the Canadian business, as comparable-store sales at Hudson's Bay posted their strongest two-year rate in five quarters,” Mr. Hood said in a research note. “Moreover, the year-over-year increase in gross margin rate was the first year-over-year gain in more than one year, giving us added confidence that the company may have finally turned a corner with regard to inventory levels and clearance markdowns.”

One troubling spot was its U.S. division, where it operates as Lord & Taylor; same-store sales there dropped 1.4 per cent. But Mr. Hood said the sales decline was driven mostly by adverse weather that stalled sales of seasonal product.

He also cites valuations as a reason investors should get into the stock now. It’s still below its IPO price and trading at 11.5 times his fiscal year 2014 earnings per share estimate - which is a 23 per cent discount to the average Canadian consumer discretionary stock.

“We expect the stock should trade more in line with the average of other Canadian consumer discretionary companies” as the company improves its financial state, including growing its margins and pays off debt, he said.

Separately, CIBC World Markets reiterated its "sector outperformer" rating on the stock, with analyst Perry Caicco commenting: "clearly, the company's sales-building strategies are working and gross margins are under control."

Target: Mr. Hood raised his price target by $2 to $21. Mr. Caicco maintained a $20 price target. The average target on the Street is $18.33.

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CIBC World Markets analyst Mark Kennedy downgraded Norbord Inc. to "sector performer" from "sector outperformer" because of a downturn in prices for oriented strand board, an engineered wood product it produces.

He still sees modest price gains ahead for the company, however, and sees little risk that its 60-cents-per-share quarterly dividend will be cut. He calculates Norbord will pay out 49 per cent of free cash flow as dividends in 2013, declining to 45 per cent in 2014.

"We continue to see reasonable returns in NBD with just under 10 per cent capital upside to our price target plus the dividend yield, but expected returns are below the 35 per cent - 60 per cent returns in our sector outperformer-rated lumber names," he said.

Target: Mr. Kennedy maintained a $37.50 price target. The average target is $36.69.

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Detour Gold Corp. has closed a $176-million equity financing, removing an overhang on the stock and allowing the company to focus on its ramp-up to commercial production later this year at its Detour Lake operation, noted Raymond James analyst Brad Humphrey.

“Although perhaps undesirable to come to market at these levels, eliminating the potential working capital challenges should now position the company to outperform as it achieves the various upcoming operational milestones,” Mr. Humphrey said. “For management, it is critical that undistracted focus now returns to the ramp-up, where we anticipate ongoing news flow over the summer as the company meets its commissioning targets - vital to building momentum in the stock and bridging the valuation gap with its producing peers.”

Target: Mr. Humphrey cut his price target by $2 to $24. The average target is $22.69.

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Desjardins Securities analyst Jackie Przybylowski thinks Lundin Mining Corp. made a good move in acquiring the Eagle nickel and copper mine in Michigan from Rio Tinto for $325-million.

“We view the acquisition as positive, and we think it fits Lundin’s corporate objectives, including filling the company’s project pipeline and being value accretive to shareholders in the near term,” she said.

Target: Ms. Przybylowski increased her target by 10 cents to $6.10 and maintained a “buy” rating. The average target is $5.75.

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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @ eyeonequities

Follow on Twitter: @eyeonequities

 
  • BBRY-Q
  • HBC-T
  • NBD-T
  • DGC-T
  • LUN-T
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