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Exterior view of a Jean Coutu store on Nun's Island in Montreal, Aug. 21, 2013.Christinne Muschi/The Globe and Mail

Inside the Market's roundup of some of today's key analyst actions. This file will be updated often during the trading day so check back for new details.

Quebec legislation aimed at reducing the cost of generic drugs for both public and private payers will likely have the greatest impact on small generic-drug manufacturers, said Desjardins Securities analyst Keith Howlett.

Accordingly, he is now valuing the franchise business for Jean Coutu Group PJC Inc. (PJC.A-T) separately from its Pro Doc generic-drug manufacturing business.

"The Minister of Health of Quebec has introduced draft legislation in the National Assembly which would enable generic-drug prices to be established by having qualified manufacturers bid for exclusive supply rights in the province for a defined period," said Mr. Howlett. "Wholesale distributors would also bid for exclusive distribution rights. The objective is to lower generic-drug prices for both public and private payers. While potential changes, if indeed ever enacted, are some months away (and would likely be phased in), our initial view is that Pro Doc is particularly vulnerable as a small legal manufacturer who often subcontracts physical production of generic drugs to others."

He added: "It is not possible to predict the outcome and timing of proposed health-care reforms in Quebec. The issues involved have been the subject of ongoing intense discussion, ever since originally surfacing in Ontario in 2006. Governments are focused on reducing health-care costs while simultaneously encouraging a competitive and innovative patient-focused and aligned private health-care industry. The draft legislation introduced in Quebec this week would, if implemented, likely compress profitability of generic-drug manufacturers. The impact would be greatest, in our view, on smaller legal manufacturers such as Pro Doc."

Maintaining his "hold" rating for the stock, he lowered his price target to $21 from $23, noting the components of the target are franchising ($18), Pro Doc ($2) and cash ($1). The analyst consensus target, according to Thomson Reuters, is $21.70.

BMO Nesbitt Burns analyst Peter Sklar maintained his "market perform" rating for the stock while lowering his target to $20 from $23.

"We do not believe that sufficient detail has been provided by the Quebec government to quantify the potential financial impact on Jean Coutu," said Mr. Sklar. "However, Jean Coutu's Pro Doc generic-drug manufacturing/wholesale business could be negatively impacted by lower generic-drug prices and the loss of generic-drug volumes, and Jean Coutu could be negatively impacted if it provides further financial support to its franchisee pharmacists."

He sad: "Given the rapidly changing environment surrounding generic-drug and pharmacy reform in Quebec, it is difficult to determine whether Bill 81 will ultimately be enacted or whether there are further unanticipated measures to come. Due to the uncertainty raised by Bill 81 and the increasingly uncertain backdrop to the overall Quebec generic-drug manufacturing and pharmacy sectors, we are lowering our target price."

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Following "mixed" drilling results, Desjardins Securities analyst Jamie Kubik downgraded Striker Exploration Corp. (SKX-X) to "hold" from "buy."

The Canadian oil and natural gas exploration, development and production company reported third-quarter cash flow per share of 12 cents, ahead of Mr. Kubik's 9-cent estimate and the consensus of 10 cents. Production of 2,842 barrels of oil equivalent per day (boe/d) beat his projection of 2,741 boe/d though slighly below the consensus of 2,879 boe/d.

"Volumes remained strong relative to the second quarter. However, they are expected to trend downward in fourth quarter as production declines will likely exceed replacements," he said.

Mr. Kubik said the early results from the company's Wilson Creek "look positive," but he noted exploratory drilling into the Belly River at Thorsby came up "short."

"While we continue to see Striker's strategy as attractive for a producer of this size, until repeatable well results are demonstrated for its Belly River program in order to provide greater visibility over future drilling targets, we expect valuation could remain compressed," he said. "Although well costs are relatively inexpensive, given commodity prices have constrained capital budgets, the ability to demonstrate repeatability could take longer in this environment than in the past."

He reduced his price target for the stock to $1.50 from $2.50. Consensus is $2.46.

"While we consider the current discount to the stock as being overdone relative to its underlying reserve value, we believe this experienced team will continue to find ways to surface value for shareholders," said Mr. Kubik. "That said, we expect that the overhang in valuation could persist until repeatability in its drilling inventory is demonstrated. We acknowledge that Striker is at the early stage of its growth cycle and variability is therefore expected. However, we have reduced our rating to hold to monitor further well results from its 2H15 drilling campaign and what it could mean for inventory headed into 2016; we will reassess our view in due course."

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Credit Suisse analyst Moshe Orenbuch raised his financial estimates for Credit Acceptance Corp. (CACC-Q) following  Tuesday's announcement of a buyback of 1 million shares.

The shares will be repurchased on the open market or through private transactions. The auto finance company did not provide a timeline.

"We believe that the buyback will occur over the course of a year and have modeled in repurchase activity over the next four quarters, with 250K share buybacks in the fourth quarter of 2015 and the rest over the following three quarters of 2016," the analyst said. "Buybacks were partially offset by a $200-million increase in debt."

Mr. Orenbuch raised his earnings per share estimate for 2015, 2016 and 2017 to $14.67, $17 and $19.60 from $14.59, $16.68 and $18.94.

He did not change his "neutral" rating for the stock or his $245 (U.S.) target price. Consensus is $192.43.

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