Inside the Market's roundup of some of today's key analyst actions
Well, so much for that Research In Motion Ltd. rally of late. The steady gains of the past week that brought the stock to four-month highs have been nearly wiped out today, with RIM’s TSX-listed shares trading down 67 cents, or 7.4 per cent, at $8.30 at mid-afternoon.
The culprit? The overall bearish tone of the market today hasn’t helped. But the main blame is being tied to a report from Pacific Crest Securities that contended the BlackBerry 10 software may be “dead on arrival.”
“We believe BB10 is likely to be DOA,” James Faucette, one of the more bearish analysts on the Street, said in a research note. “We expect the new operating system to be met with a lukewarm response at best and ultimately likely to fail due to the new and unfamiliar user interface, lack of complementary devices, relatively few applications and what we believe to be a general reticence by app developers to develop for the platform.”
He also believes the company may have run out of time to raise capital through asset sales, and notes that inventories of older BlackBerry devices are beginning to disappear.
“Our checks indicate inventories have begun to decline without any improvement in sell-through,” he said. “We believe U.S. sales were largely flat month-over-month (in October) amid sporadic discounting; we believe sales in Europe actually declined month-over-month despite aggressive discounting due in part to aggressive postpaid discounting of lower-end Android-based smartphones.”
He reiterated an “underperform” rating.
RIM shares had posted good gains over the last week after it said wireless carriers had begun testing of the new software, seen as critical for pulling RIM out of its slump. That news signalled that RIM was still a important player in the smartphone game and provided the market some assurance that the devices were on track for delivery early next year after numerous delays.
RBC Dominion Securities has sliced its price target on Bombardier Inc. after the company reduced its cash flow guidance this morning and announced a six-month delay to the first flight of its C Series aircraft.
“While the six-month delay was widely anticipated, the key question will be whether the project`s delay will indeed be limited to six months,” RBC analyst Walter Spracklin said in a research note. “It is our view that the shares are reflecting a 12-month plus delay, and we will be monitoring for news and updates as we head into 2013.”
But he notes Bombardier still has a `healthy cash buffer` on its balance sheet to carry it out to 2014.
Upside: Mr. Spracklin cut his price target by $1 to $4 but affirmed an`outperform`rating.
Read more: Bombardier delays first C Series flight
BMO Nesbitt Burns analyst Andrew Kaip believes the pullback in shares of Coeur D’Alene Mines Corp. has been overdone, and upgraded the silver producer to “outperform.” The company missed third-quarter earnings expectations, but Mr. Kaip thinks market concerns over operational issues at the Palmarejo mine in Mexico and higher costs at the Kensington mine in Alaska “are overdone.”
Upside: Mr. Kaip maintained a $31 (U.S.) price target.
Petrominerales Ltd.’s third-quarter earnings beat estimates, and the company plans to focus on development and lower risk exploration drilling for the rest of the year and into 2013, Raymond James analyst Rafi Khouri says.
In a note titled “Calm on the horizon after a choppy 18 months,” Mr. Khouri said the stock was trading in line with his estimates of core net asset value. “(That) would typically lead us to recommend investors buy the stock. However, we believe the upside potential from exploration does not outweigh the balance-sheet risk over the next six to 12 months,” he wrote, pointing to upcoming arbitration, debentures coming due in 2016, and the “slight” possibility of a dividend cut.
Upside: Mr. Khouri raised his target price to $9 from $7.50 and his rating to “market perform” from “underperform.”
Paramount Resources Ltd. stock is going to slide after the energy producer reported third-quarter results that fell “materially shy” of estimates, Canaccord Genuity analyst Steve Toth said.
Production was about 20 per cent lower than his estimates because of facility disruptions and maintenance work. “Despite this, we believe the company remains poised to more than double production in early 2014 upon completion of its deep-cut facility projects,” he said. “Execution and timing of its gas plant construction will be a key focus over the next 12 months, especially in light of the third-party processing interruptions the company has faced this year.”
Downside: Mr. Toth downgraded the stock to “hold” from “buy” and maintains a $35 price target.
Uranium One Inc. is attractively valued compared to its peers, but it will take “some time” for sentiment on the stock to improve, CIBC World Markets analyst Matthew Gibson said.
The miner’s third-quarter earnings matched Mr. Gibson’s estimates, while “lower-than-expected sales volumes in the quarter were offset by lower-than-expected cash costs,” he wrote. “Japanese restarts will be key to drive spot prices and rerate equities.”
Downside: Mr Gibson lowered his target price on the stock to $5 from $5.80, citing delays and deferrals in expansion and growth projects. He rates the stock “sector outperform.”
For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities
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