Inside the Market’s roundup of some of today’s key analyst actions. This post is updated with more analyst commentary throughout the trading day.
Canaccord Genuity analyst T. Michael Walkley has slashed his first-quarter sales estimates for Research In Motion Ltd.’s BlackBerry 10 devices, citing global store surveys that suggest waning demand for the Z10 smartphone over the past month.
The Z10 smartphone comes with a touchscreen and was the first of the BlackBerry 10 operating system devices to premier.
RIM’s Q10 devices – which feature a physical keyboard that many BlackBerry users prize – have seen strong initial demand, Mr. Walkley said of the survey results. But initial supplies of that smartphone are low and limiting sales.
Overall, he lowered his BlackBerry 10 sales estimates for the first quarter, which started March 3, to 2.8 million units from 3.3 million. He also reiterated a “sell” rating on RIM shares.
“Our global surveys indicate mixed BlackBerry sell-through trends, with weakening sales of the Z10 over the past month but strong initial demand for the limited supply Q10,” Mr. Walkley said in a research note. “While we anticipate stronger near-term results for BlackBerry as higher margin BB10 smartphones sell into the channel, we do not believe BlackBerry can achieve sell-through market share levels to return to sustained profit levels,” he said.
He believes consumer demand for the Z10 could weaken further given increased high-end competition from the Samsung Galaxy S4 and the HTC One. But on the bright side for RIM, he anticipates a strong ramp up in Q10 sales over the next several months that could more than offset the slower Z10 sales.
On Friday, Jefferies analyst Peter Misek said the Q10 device is selling very well in both Canada and Britain, but also commented that it has been quick to sell out given its limited availability.
Target: Mr. Walkley kept his price target unchanged at $9 (U.S.). That’s well below the median price target of $17.50, according to Thomson First Call.
RBC Dominion Securities analyst Doug Freedman has upgraded Intel Corp., believing that the stock’s trading price already reflects the all-time low sentiment for the PC market. He also cited better-than-expected 2013 margins and increasing traction of Intel’s mobile platform.
“There has been feedback from our handset ecosystem checks suggesting that Intel’s 2014 ultra-mobile platform may be their best yet,” Mr. Freedman said in a research note. “This is especially encouraging given that the expectation on Intel’s success in ultra-mobile is very low.”
Mr. Freedman is also encouraged by the company’s recent leadership changes. “The impact of change to Intel’s vision with the appointment of Brian Krzanich should not be underestimated. ‘Steady as she goes’ is the consensus view; however, we see potential for visible changes sooner than most expect with software and a move to become a more vertical company becoming a greater part of its future.”
Target: Mr. Freedman raised his price target to $29 (U.S.) from $24. The median price target is $23.
RBC Dominion Securities analyst Dan Rollins downgraded Eldorado Gold Corp. to “sector perform” from “outperform,” citing concerns over permitting delays.
“Operationally, Eldorado appears on track to meeting full-year production and cash cost guidance,” said Mr. Rollins. “However, we remain concerned about ongoing permitting delays at Eastern Dragon and lack of clarity regarding approval for Perama Hill.”
Eastern Dragon, located in China’s Heilongjiang provice, is expected to start up in 2014; Perama Hill is a late-stage development project in Thrace, Greece that has not yet received final approval from the government.
Target: Mr. Rollins cut his price target to $9 (U.S.) from $9.50. The median price target is $13.90.
Just days before Canadian Tire Corp. releases its latest quarterly results, CIBC World Markets analyst Mark Petrie downgraded the retailer to “sector performer” from “sector outperformer.”
Retailers have faced a tough operating environment so far this year, and Mr. Petrie now expects the company’s merchandising unit, Canadian Tire Retail, to suffer a same-store sales decline of 3 per cent year-over-year for the first quarter.
“Shoppers remain hesitant to spend and the ongoing entry of new competitors accelerated with the opening of Target. Layered on top of that has been cold and wet weather which has hurt seasonal sales,” said Mr. Petrie.
“Canadian Tire will not be alone in feeling the impact, but it is certainly not immune...slow seasonal sales will weigh heavily,” he said.
Target: Mr. Petrie cut his price target by $1 to $80.
Barclays analyst Ben Reitzes, who just a couple of weeks ago slashed his price target on Apple Inc., has now done a reversal. He raised his price target on the tech giant today after becoming more optimistic about the company's margins and the ability of the iPhone to find new distribution channels.
Commenting that Apple is "taking control of the narrative" again after months of seeing its stock decline, Mr. Reitzes raised his estimates on this quarter's earnings to $7.15 from $7, and boosted his forecast for the year to $39.33 from $39.17.
"With new upcoming products, we believe Apple is set to better control its story after taking several hits lately," Barron's quoted him as saying.
Mr. Reitzes also foresees less pressure on margins should it start manufacturing a lower end smartphone.
"We are increasingly getting the sense that Apple’s low end phone might actually carry better margins than the market may expect - which could provide some relief to the worries about margins heading materially below 35 per cent long term. Moreover, we believe the level of shipments could still be relatively smaller in the beginning of the product - which may lead to less pressure on margins from a shift in mix," he said.
Target: Mr. Reitzes raised his price target to $525 from $465 and reiterated an "overweight" rating.
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