Friday's analyst upgrades and downgrades

Share

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.

Saputo Inc. (SAP-T) was raised to "buy" from "hold" at TD Securities by equity analyst Michael Van Aelst in the wake of the company's third-quarter results this week. His 12-month target price is $40 (Canadian) per share.

The stock was also raised to "sector outperform" from "sector perform" at CIBC by equity analyst Mark Petrie. His 12-month target price is also $40.

The results beat many analysts expectations on both the top and bottom line.

"The key driver was the U.S. segment, which saw revenues up 13 per cent based on impressive volume growth in both retail and food service, and boosted by FX. Canada and International were modestly better than expected and showed improvement from the depressed levels of recent quarters," commented Mr. Petrie in a research note. "In today's choppy markets, a steady ship like Saputo is a safe haven, and we're comfortable pushing our target multiple to 13-times EV/EBITDA (was 12.5-times). This is clearly a premium valuation, but we believe justified by improving earnings growth, solid cash flows, an under-levered balance sheet and M&A optionality," he said.

***

A legal claim against Primero Mining Corp. (P-T, PPP-N) from the Mexican tax authority (SAT) has led Canaccord Genuity Corp. analyst Rahul Paul to lower his recommendation for the stock to "hold" from "buy."

While Canaccord considers the legal claim to be "without merit," Mr. Paul said the SAT's efforts to nullify the 2012 APA (Advance Pricing Agreement) ruling lowers the likelihood that the ruling can be extended beyond 2014.

"We have updated our valuation and forecasts to assume that the company would pay taxes at spot silver prices going forward (2015 and beyond) but no additional taxes payable for the period covering the duration of the APA ruling (2010 - 2014)," Mr. Paul wrote in a report. "We estimate an additional $30-$35 million in annual cash outflow going forward under this scenario (vs. our prior published forecasts), which lowers our NAVPS estimate by 45 per cent to $3.74/share (Canadian)."

An out-of-court settlement is the preferred means to settle the issue, "whereby Primero negotiates a compromise (going forward) with the SAT and the current claim is withdrawn," Mr. Paul wrote. Such an agreement would eliminate "negative overhang on the stock."

Failure to do so, he warned, could result in the nullification of the APA ruling, which would leave Primero "fully liable for taxes at spot for 2015 and beyond (worst-case scenario)," he wrote.

Mr. Paul lowered his price target from $4.75 to $2.75.

***

Citing fourth-quarter results that beat expectations on most metrics, Canaccord Genuity Corp. analysts Doug Taylor and Andrew Khov raised their recommendation for Wi-LAN Inc. (WIN-T, WILN-Q) from "hold" to "speculative buy."

The communications technology company benefited from one-time lump-sum license payments, and "these are likely to be a bigger part of the model going forward," the analysts wrote in a research note.

While there is "low visibility into the revenue profile of the company going forward," the analysts noted Wi-LAN has done an "admirable job" reducing operating expenses, which puts more confidence in the balance sheets. In addition, Wi-LAN has been "very active in signing a higher volume of new licenses with many of the payments being received up front," they wrote.

"The stock is, in our view, very cheap at 1.6-times forward EBITDA. A simple rerate to two-times, where we have set our target, drives $2.50/share and a 54-per-cent return from current levels," the analysts wrote.

The analysts raised their price target for the stock from $2 (Canadian) to $2.50.

***

In other analyst actions:

MEG Energy Corp. (MEG-T) was downgraded to "Speculative Buy" from "Buy" at TD Securities by equity analyst Menno Hulshof. The 12-month target price is C$11.00 per share.

Integra Gold Corp. (ICG-X) was rated new "Strong Buy" at Raymond James by equity analyst David Sadowski. The 12-month target price is C$0.70 per share.

Abbott Laboratories (ABT-N) was raised to "Buy" from "Hold" at Argus by equity analyst David Toung. The target price is $50.00 per share.

Coca-Cola Enterprises Inc. (CCE-N) was raised to "Neutral" from "Negative" at Susquehanna by equity analyst Pablo Zuanic. The 12-month target price is $43.00 per share.

Comcast Corp. (CMCSA-Q) was raised to "Buy" from "Hold" at Argus by equity analyst Joseph Bonner. The target price is $72.00 per share.

Kohl's Corp. (KSS-N) was downgraded to "Underweight" from "Neutral" at Atlantic Equities by equity analyst Daniela Nedialkova. The 12-month target price is $36.00 per share.

LinkedIn Corp. (LNKD-N) was downgraded to "Market Perform" from "Strong Buy" at Raymond James by equity analyst Aaron Kessler. It was also downgraded to "Market Perform" from "Outperform" at Cowen by equity analyst John Blackledge. The 12-month target price is $140.00 per share. It was downgraded to "Sector Perform" from "Outperform" at RBC Capital by equity analyst Mark Mahaney. The 12-month target price is $156.00 per share. It was also downgraded to "Neutral" from "Overweight" at Atlantic Equities by equity analyst James Cordwell. The 12-month target price is $155.00 per share.

Marathon Petroleum Corp. (MPC-N) was downgraded to "Neutral" from "Overweight" at JPMorgan by equity analyst Phil Gresh. The 12-month target price is $44.00 per share.

Whole Foods Market Inc. (WFM-N) was raised to "Neutral" from "Underperform" at Longbow Research by equity analyst Alton Stump.

Weatherford International PLC (WFT-N) was raised to "Strong Buy" from "Market Perform" at Raymond James by equity analyst Marshall J Adkins. The 12- month target price is $12.00 per share.

With files from Bloomberg News