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A Canadian Tire store in downtown Toronto.MARK BLINCH/Reuters

Inside the Market's roundup of some of today's key analyst actions

Following the release of its second-quarter financial results, Raymond James analyst Kurt Molnar upgraded Seven Generations Energy Ltd. (VII-T).

In justifying moving his rating for the stock to "strong buy" from "outperform," Mr. Molnar cited a trio of factors: stronger-than expected quarterly results; the pending acquisition of Kakwa River Project assets from Paramount Resources Ltd. and his "expectation for success in getting vertically integrated into areas like the petrochemicals business."

On Thursday, the Calgary-based company reported quarterly production of 117,353 barrels of oil equivalent per day, ahead of its guidance of 115,000 boed. Mr. Molnar emphasized the beat was due to higher-than-expected condensate and natural gas liquids volume, noting the company achieved the result while spending less than forecast.

"The most common question we used to get regarding Seven Generations was how long would the Nest drilling inventory last relative to the pace of growth of the company," he said. "The announced transaction with Paramount fundamentally addresses that question by increasing the Nest drilling inventory by almost 50 per cent, while the share count to achieve this end only grows by 23 per cent. Add in the operational efficiencies in the field that come from increasing the contiguous nature of the land and infrastructure and we believe this transaction plainly has an outstanding likelihood to make an already impressive business even better. Finally, Seven Generations has gone out of their way to note that this transaction is also critical due to the scale of superior resource captured as it is seen as a tipping point for the size needed to achieve vertical integration into the likes of the power generation and petrochemicals industries. Seven Generations is already unique to the very high condensate ratios captured in its asset (and the returns on capital they provide) but getting vertically integrated could make Seven Generations' competitive position in North America fundamentally unique and firmly planted at the toe of the economic boot for gas supply cost in North America."

Mr. Molnar raised his cash flow per share forecasts for 2016 and 2017 to $2.31 and $3.36, respectively, from $2.14 and $3.31. His revenue projection for 2016 fell slightly to $1.235-billion from $1.372-billion and increased for 2017 to $2.065-billion from $2.035-billion.

He raised his target price for the stock to $37 from $34. The analyst consensus price target is $33.38, according to Thomson Reuters.

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After a "meaningful" second-quarter core miss, CIBC World Markets analyst Robert Sedran downgraded his rating for Manulife Financial Corp. (MFC-T) to "sector performer" from "sector outperformer."

The Toronto-based life insurance company reported headline earnings per share of 34 cents, below Mr. Sedran's forecast of 28 cents. Core earnings were 40 cents, missing the 40-cent estimate of both the analyst and the Street.

"Overall, this is a meaningful miss against expectations and so a compelling long-term valuation means little in the near term," said Mr. Sedran. "Though we do not expect straight-line earnings progress, this quarter is a bigger step down than we would like to see.

"We have no desire to overreact to a weak quarter. However, with poor earnings visibility, underlying growth that is being held back by a weak macro environment (and low interest rates, in particular), volatile core earnings and little apparent prospect of that changing in the near term, a compelling long-term valuation alone is not enough to sustain a sector outperformer rating. As such, we have reduced our earnings estimates to reflect these results."

Mr. Sedran lowered his 2016 and 2017 EPS projections to $1.78 and $2.03, respectively, from $1.86 and $2.07. His book value per share estimates fell to $19.82 and $20.99 from $19.63 and $20.89.

He also lowered his target price to $19 from $21, versus the analyst average of $20.59.

"We still believe that there is long-term opportunity offered by this company's business and geographic mix," he said. "Our confidence in the timing and path of that realization is not high enough to recommend adding to positions today."

Elsewhere, the stock was downgraded to "neutral" from "outperform" by Macquarie analyst Jason Bilodeau. He lowered his target to $21 from $24.

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Highlighting its "solid" growth and "attractive" multiple from the release of "positive" second-quarter results, BMO Nesbitt Burns analyst Tom MacKinnon upgraded Industrial Alliance Insurance and Financial Services Inc. (IAG-T) to "outperform" from "market perform."

IAG reported quarterly earnings per share of $1.35, well ahead of the projections of both Mr. MacKinnon ($1.11) and the Street ($1.09) as well as the company's guidance of $1.05 to $1.15.

"Results did include exceptionally strong policyholder experience gains amounting to 7 cents EPS, but these are now becoming the norm and are testament to an improved book of business," the analyst said. "Fundamentals were solid. Expected profit (up 6 per cent over a very strong Q2/15 and up 11 per cent over a mixed Q1/16) was better than expected."

In explaining his rating change, Mr. MacKinnon pointed to "improving fundamentals in its mutual fund and group businesses (solid 47-per-cent growth in expected profit year over year and quarter over quarter, much better than expected, along with a continued trend of policyholder experience gains), good earnings visibility all round and an attractive valuation (9.4 times 2017 estimated EPS, versus its 10.6 times NTM [next 12 month] average since the credit crisis, 1.17x BV [book value], versus its 1.31x average since the credit crisis)."

Mr. MacKinnon raised his target to $51 from $46. The average is $48.

Elsewhere, Scotia analyst Sumit Malhotra also upgraded the stock, moving it to "sector outperform" from "sector perform" with a target of $51 (from $45).

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Mr. MacKinnon lowered his rating for Great-West Lifeco Inc. (GWO-T) to "market perform" from "outperform" based on "decreasing" earnings visibility.

On Wednesday, Great-West reported EPS of 67.4 cents, compared to the consensus of 68 cents and Mr. MacKinnon's 70-cent projection. He said the misses was due largely to a 2-cent impairment charge as well as weaker-than-anticipated equity markets, margins at Putnam and results at Empower.

"Overall, we'd classify this as a mixed quarter," the analyst said. "The combination of expected profit, strain and earnings on surplus were lower than our estimates for both Canada and Europe, and Putnam and Empower results were below expectations."

He lowered his 2016 and 2017 EPS projections to $2.70 and $3.06 from $2.81 and $3.19, "reflecting lower expected profit margins for Canada and Europe, and lower margins at Empower and Putnam."

"With decreasing earnings visibility and a potentially longer-than-expected timeframe to see any meaningful contribution from either Empower or Putnam, as well as potential overhang related to Brexit (despite management being cautiously optimistic) we are downgrading GWO," he said.

His target fell to $35 from $40. Consensus is $35.10.

"GWO trades at 11.2 times NTM [next 12 months] EPS (versus MFC at 9x, IAG at 9.7x and SLF at 10.7x), generally in line with its 11.5x average since the financial crisis," he said. "On this measure it's traditionally been a 5 per cent to 7-per-cent premium to the group average, and it's currently a 9 per cent to 10-per-cent premium to the group average. While its 4.3-per-cent dividend yield does provide some support, as does its $2.3-billion in excess capital, given the decreasing earnings visibility and the longer timeframes we now expect for both Empower and Putnam, we believe its current larger-than-normal premium to the group could more than likely decline."

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CIBC World Markets analyst Todd Coupland expects the share price of Sierra Wireless Inc. (SWIR-Q) to fall in reaction to a lower-than-expected second-half outlook.

Though the Richmond, B.C.-based company's second-quarter results topped forecasts, Mr. Coupland lowered his rating to "sector underperformer" from "sector performer."

For the quarter, Sierra reported adjusted earnings per share of 20 cents (U.S.), or 14 cents following adjustments for legal reimbursements. Mr. Coupland had expected 16 cents, while the Street projected 13 cents.

However, Mr. Coupland pointed to the company's third-quarter sales guidance and outlook as a cause for concern. Sales are estimated to be $145-million to $155-million, versus his estimate of $163.6-million and the consensus of $167-million. EPS guidance is 6 cents to 13 cents, compared to Mr. Coupland's 25-cent forecast and the consensus of 22 cents.

"Our main takeaway is that Sierra continues to be troubled by inconsistent results. We continue to believe investors should wait for a more attractive entry point," he said.

Mr. Coupland lowered his target price for the stock to $13 from $14. Consensus is $16.91.

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Veresen Inc. (VSN-T) is now trading at a level that is not compelling enough to warrant a "buy" rating, said Desjardins Securities analyst Justin Bouchard.

The energy infrastructure company reported second-quarter operational results which largely met Mr. Bouchard's expectation. He noted it increased its 2016 distributable cash flow per share guidance to $1.03-$1.13 from 98 cents to $1.08, adding "the difference largely stems from a higher cash distribution from Alliance rather than an improvement in operations—thus, this change has no impact on our valuation."

"Most importantly, VSN also announced it is suspending its DRIP [dividend reinvestment plan] program and will instead look to sell its power-generation assets to fund its remaining growth capex program within Veresen Midstream," he said. "Given our estimate that the sum-of-the-parts valuation for VSN is in the range of $12–14/share, the DRIP was arguably destroying shareholder value. From this perspective, selling the power assets at fair value is unequivocally positive. The decision is also prudent from a risk management perspective—as a result of suspending the DRIP, VSN is no longer susceptible to potential dilution associated with the confluence of its DRIP and a low share price."

Adding the move away from the reliance on DRIP "significantly desrisks the story," Mr. Bouchard lowered his rating to "hold" while raising his price target for the stock to $13 from $11. Consensus is $11.95.

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Maintaining a positive thesis on Canadian Tire Corporation Ltd. (CTC.A-T) in the wake of better-than-anticipated second-quarter results, Raymond James analyst Kenric Tyghe anticipates earnings momentum is "poised to accelerate through our forecast window."

On Thursday, the retailer reported earnings per share of $2.46, topping Mr. Tyghe's forecast of $2.40 and the consensus estimate of $2.33. He said the beat reflected higher-than-expected revenue of $3.352-billion as well as the impact of a favourable tax rate.

"Within the retail segment, the performance of Mark's was the positive surprise, which recorded a particularly strong SSS increase of 4.6 per cent (we were expecting a very modest 0.5-per-cent increase)," he said. "The strong SSS growth reflected continued strength in key casual wear categories (denim, casual footwear, outerwear), which is at odds with the macro backdrop in Alberta, as it reflected people returning home to rebuild in Fort McMurray."

He added: "While the plethora of planned e-commerce initiatives are intriguing (and a strategic imperative to execute against in a timely manner), we are encouraged by the tangible impact on promotional effectiveness of (early stage) loyalty and data analytics initiatives. The new card acquisition and transaction values growth within the Financial Services business is we believe noteworthy, highlighting the increased resonance of the card products, given the higher perceived value of the loyalty offering (and increased product innovation)."

Mr. Tyghe highlighted a trio of factors for his maintained optimism: continued gains to market share in sporting goods; increased traction with its digital initiatives as well as continued "solid" expense leverage.

He raised his 2016 and 2017 EPS projections to $8.95 and $9.61, respectively, from $8.82 and $9.58. His revenue forecasts rose to $12.781-billion and $13.536-billion from $12.668-billion and $13.462-billion.

Mr. Tyghe kept his "outperform" rating for the stock and raised his target price to $165 from $160. The analyst average is $158.77, according to Bloomberg.

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Amid "increased future uncertainty," Industrial Alliance analyst Michael Charlton downgraded his rating for RMP Energy Inc. (RMP-T) to "sell" from "buy."

On Thursday, the company announced the initiation of a strategic review and the reduction in its bank facility.

"Tough macroeconomic forces and pressure from the bank appears to be forcing RMP to put it all on the table in an effort to maximize value of its high quality asset base," said Mr. Charlton. "We see that the monetization of any one asset, be it Gold Creek, Waskahigan or the Ante Creek water flood, would enable the company to pay down debt and increase capital flexibility to continue development in a conservative and concentrated manner. While a corporate sale is not out of the realm of possibilities, it may be just what is needed to maximize shareholder value in the current economic operating environment the company is facing."

Mr. Charlton also lowered his target price for the stock to $1.05 from $2.30 "to reflect lower production, planned outages and strategic alternatives." Consensus is $1.93.

"We derive our target price based on the proven producing reserve value of $1.37/sh, discounted for timing and market conditions, as we believe this is the approximate value a corporate sale would bring in today's marketplace," he said.

He added: "We believe RMP offers investors exposure to the oilier side of the Montney, particularly within our coverage universe. We like RMP for its countercyclical strategy of acquiring land, adding additional upside opportunities rather than focusing on drilling at a time when commodity prices remain depressed. For long-term holders seeking oily exposure within the Montney, investors need look no further."

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In other analyst actions:

SNC-Lavalin Group Inc. (SNC-T) was downgraded to "hold" from "buy" at Canaccord Genuity by analyst Yuri Lynk with a 12-month target price of $58 (up from $57). Alta Corp analyst Chris Murray also downgraded the stock (to "sector perform" from "outperform") while raising his target to $56 from $53. The average is $62.39.

GMP analyst Stephen Boland moved IGM Financial Inc. (IGM-T) to "hold" from "buy" and lowered his target price to $39.50 from $42.25. The average is $38.28.

B2Gold Corp. (BTO-T) was raised to "buy" from "market perform" at Cormark Securities by Richard Gray. His target price rose to $5.35 from $4. The average is $5.02.

Newalta Corp. (NAL-T) was downgraded to "reduce" from "hold" by GMP analyst Scott Treadwell. He raised his target to $2.20 from $2, versus the average of $3.23.

Macquarie analyst Matthew Brooks downgraded SeaWorld Entertainment Inc. (SEAS-N) to "neutral" from "outperform." and lowered his target to $13 (U.S.) from $19. The average is $15.61.

Citing its traffic "problem,"Deutsche Bank cut its rating for TripAdvisor Inc. (TRIP-Q) to "hold" from "buy" and cut its target to $63 (U.S.) from $71. The average is $64.12.

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