FILE - This Jan. 31, 2014, file photo, shows a Taco Bell facade behind a KFC drive-thru sign in Saugus, Mass. Yum Brands, the owner of KFC, Pizza Hut and Taco Bell, reports financial results on Wednesday, July 13, 2016. (AP Photo/Elise Amendola, File)The Associated Press
Inside the Market's roundup of some of today's key analyst actions.
Birchcliff Energy Ltd. (BIR-T) has just closed a $691-million equity financing related to its acquisition of EnCana's Gordondale Montney asset.
As a result, CIBC analyst Adam Gill is resuming coverage of the stock maintaining his "sector outperformer" rating but boosting his price target to $10 from $7. The consensus price target is $9.29, according to Thomson Reuters.
"There is a lot to like with the Gordondale deal in our view: 1) significant accretion to our 2017 CFPS estimate, increasing 9 per cent to $1.71; 2) balance sheet deleveraging to 1.0-times on 2017E D/CF [discounted cash flow] (1.2-times on strip); 3) corporate declines improved to 24 per cent from 27 per cent; and 4) big potential enhancement to drilling inventories with our strip IRRs [internal rate of return] for the D2 Montney oil window standing at 85 per cent (well ahead of 36 per cent oil play average). There is also additional upside from long-term improvements to the operating cost structure at Gordondale which we have not factored into our model at this time."
Raymond James, which has an "outperform" rating on Birchcliff, also boosted its target price to $10.50 from $8.50.
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With nitrogen prices taking time to rise, RBC Capital Markets analyst Andrew Wong has reduced his price target for CF Industries Holdings Inc. (CF-N).
"We forecast a near-term modest recovery in nitrogen prices and expect CF's Donaldsonville and Port Neal expansions to ramp up through [the second half of 2016] 2H/16. However, we think nitrogen price improvements will be short-lived and below market expectations due to a challenging S&D [supply and demand] outlook, which will continue to limit equity upside," he wrote in a note.
"We reduce our 2016E and 2017E EPS to $1.52 and $1.45, respectively. We are also changing our valuation to reflect weaker fundamentals — we lowered our EV/EBITDA nitrogen multiple to 6.5-times from 7-times and increased our DCF discount rate for cash flows through 2024 to 8.5 per cent from 6.5 per cent," he said.
He cut his 12-month price target to $26 (U.S.) from $30. The consensus is $30.28. His "sector perform" rating was unchanged.
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Secure Energy Services Inc. (SES-T) recent acquisition of the remaining 50-per-cent interests in its La Glace and Judy Creek full service terminal facilities, near Grande Prairie, Alta., "represents a low-cost, low-risk use of capital. We reiterate our view that Secure should be a core energy holding," said Raymond James analyst Andrew Bradford.
But he downgraded the company to "outperform" from "strong buy" and increased his price target to $10.75 from $10.50. The consensus is $11.31.
"Secure acquired the remaining 50 per cent of the Joint Venture assets in its LaGlace and Judy Creek Full Service Terminals that it did not already own for $27-million. Certain
assets within these two pipeline-connected facilities were held within Joint Ventures, each with Pembina Pipelines. We anticipate that facility throughput is somewhat cyclically suppressed at around 50 per cent to 70 per cent of design capacity (80 per cent usually signals the need for an expansion). At this level of activity, the EBITDA impact is likely $4-million to $5-million on an annualized basis, however, the impact could be closer to $7-million in a more normalized activity environment," he said.
"Our now-higher $10.75 target represents 11.1-times 2017E EBITDA and 9.5-times 2018E EBITDA. These multiples are within SES's historical trading range."
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Gold mining company B2Gold Corp. (BTO-T) "delivered another solid quarter of outperformance," say Clarus Securities analyst Jamie Spratt. The company's first-quarter production for 2016 yielded 135,000 ounces, 13 per cent more than the 120,000 ounces estimated for the period.
As a result of this, Mr. Spratt has increased his 2016 forecast to reflect the higher production and raised his target price to $3.50 from $3.25. The consensus is $3.67. His "hold" rating remains unchanged.
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Broadcasting company Corus Entertainment Inc. (CJR-T) had a weak quarter at Shaw Media which was a "surprise to us," said Canaccord Genuity analyst Aravinda Galappatthige. While revenues were up to $360.8-million, this was below Canaccord's estimate of $374.2-million and the consensus of $377.5-million.
Shaw's revenues were also down 9 per cent, which Mr. Galappatthige says is "mainly due to softer ad revenues in conventional TV." Both its "hold" rating and price target of $11 were unchanged. The consensus among analysts for the stock price is $12.41.
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In other analyst actions:
Jefferies upgraded GlaxoSmithKline (GSK-N) from "hold" to "buy."
Piper Jaffray analyst Alex Zukin reiterated an "overweight" rating and boosted his price target on HubSpot Inc. (HUBS-N) to $65 (U.S.).
Imperial Capital upgraded Range Resources (RRC-N) from "in-line" to "outperform" with a price target of $55 (U.S.), up from $45, suggesting 25 per cent upside.
BMO Capital reiterated an "outperform" rating on Pinnacle Foods (PF-N), and raised the price target to $56 (U.S.), as the company continues as a "top pick" for 2016.
Wells Fargo analyst, Jeff Farmer reiterated his "market perform" rating on Yum! Brands (YUM-N) but raised his 2016E EPS to $3.68 (U.S.) from $3.67 and 2017E EPS to $4.19 from $4.18. He also raised his price target range to $85 to $89 from $82 to $84 to reflect an increase in his 2016E earnings before interest and taxes (EBIT).
Meanwhile, Nomura Securities reiterated a "buy" rating on Yum! Brands, and raised its price target to $96 from $95, following the company's second-quarter earnings report. The company reported earnings per share of 75 cents, 1 cent above the consensus of 74 cents.