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Extendicare (Deborah Baic/The Globe and Mail)
Extendicare (Deborah Baic/The Globe and Mail)

CIBC downgrades two REITs; two upgrades for BlackBerry 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.

CIBC World Markets analyst Alex Avery downgraded Dundee Real Estate Investment Trust to “sector performer” from “sector outperformer,” citing concerns about the growing number of office properties competing for tenants in Canada.

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“While the units trade at a discount valuation and we expect solid operating and financial performance, Dundee faces rising medium-term new supply in core markets, and could deliver average returns,” he commented.

Target: Mr. Avery cut his price target to $32 from $36. The average target price among analysts is $35.38, according to Bloomberg data.

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CIBC’s Mr. Avery also downgraded Extendicare Inc. to “sector underperformer” from “sector performer,” believing that there is much more compelling value in other Canadian real estate investment trusts.

Extendicare is a provider of long-term senior care services and Mr. Avery notes that the operating environment in the U.S. continues to deteriorate. Meanwhile, the outlook is highly uncertain regarding the potential sale or corporate restructuring of the company, which reported lower-than-expected second-quarter funds from operations last week due to such factors as funding pressures in the U.S. and softening occupancy levels.

“Reflecting very limited visibility into restructuring options and/or pricing, high leverage, tough U.S. operating conditions, and potential insurance liabilities, we rate Extendicare sector underperformer,” he advised clients in a note.

Target: Mr. Avery maintained a $6.75 (Canadian) price target. The average target price is $6.94.

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News this morning that BlackBerry Ltd. has formed a special committee to explore “strategic alternatives,” including the possible sale of the company, has prompted two upgrades of the stock so far today.

S&P Capital IQ analyst James Moorman raised his rating to “hold” from “sell” and also increased his price target to $11 (U.S.) from $9.50.

Similarly, Evercore Partners analyst Mark McKechnie upgraded his rating to “equal-weight” and increased his target to $10.30 from $8.42.

Mr. McKechnie said the stock is now in a “special situation” and thinks new ownership could mean quicker monetization of its strategic assets, particularly when it comes to splitting the BlackBerry 10 hardware business from its enterprise services. He’s not assigning any value to the hardware business, but sees significant value in the company’s patents.

Target: The average Street target is now $10.26 (U.S.). There are now 6 analysts recommending the stock, 14 rating it as a hold, and 23 as a sell.

Shares in late afternoon trading are up 11.4 per cent at $10.88 on Nasdaq.

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Concerned about the increasingly competitive operating environment, Needham Research slashed its price target on Apple Inc. - but maintained its "buy" rating.

Needham, which has been bullish on Apple for some time, thinks the tech giant is at risk of a slower pace of innovation compared to when Steve Jobs was its leader. The U.S. research firm is especially concerned that a deterioration in iPhone market share could limit gains in Apple's stock price.

Target: Needham cut its target to $595 (U.S.) from $710. The average price target is $517.83.

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The steady increase in housing prices in the U.S. should encourage consumers to spend more on their homes, which should allow for a sturdy floor in the stock price of Lowe’s Cos., said Canaccord Genuity analyst Laura Champine.

She upgraded the stock to “hold” and raised her price target to a little above the current trading price.

U.S. home prices have increased year-over-year for four consecutive quarters, and Lowe’s same-store sales are already getting a boost. Ms. Champine forecasts sales will rise 2.7 per cent for fiscal 2013, which would be on top of the previous year’s gain of 1.4 per cent. That would be the strongest two-year performance since fiscal 2006.

But Ms. Champine notes the stock has already appreciated 29 per cent year-to-date, outpacing the S&P 500 index’s rise of 19 per cent.

“We expect Lowe’s will continue to benefit as the housing market recovery continues,” she wrote. “Our long-term projections calls for sales to increase at a five-year compounded annual growth rate of 4 per cent. This compares to the company’s five-year historical average of 1 per cent growth.”

Target: Ms. Champine raised her price target to $48 (U.S.) from $28. The average target is $45.32.

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Dollarama Inc. is performing smoothly as it grows at a fast clip and the retailer has the operating managers in place to ensure that performance will continue after the departure of chief operating officer Stephane Gonthier, said Desjardins Securities analyst Keith Howlett.

The company announced today that Mr. Gonthier is leaving to take on the CEO position of 99-cents Only Stores in the U.S. He will continue his job at Dollarama for a month or two and upon his departure CEO Larry Rossy will assume the role until a successor is found.

Target: Mr. Howlett reaffirmed his “buy” rating and $78 price target. The average target is $78.57.

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

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