Inside the Market's roundup of some of today's key analyst actions
Facebook Inc. received at least three analyst upgrades to buy ratings today, including from giants Citigroup and Bank of America Merrill Lynch, which provided an extra shot of adrenaline to the powerful post-earnings rally.
Facebook’s quarterly profit, reported after markets closed on Tuesday, modestly beat expectations. But it was the company’s progress in the mobile arena that really ignited the bulls. Mobile usage of its social network grew 61 per cent year over year to a monthly average user total of 604 million people. Mobile made up 14 per cent of its revenue in the quarter, and is growing fast.
Citigroup analyst Mark Mahaney raised his 2012 adjusted earnings per share forecast by two cents to 52 cents, while jacking up revenue projections to $5.03-billion (U.S.) from $4.85-billion. But he actually cut his price target to $30 from $35, noting that advertisers pulled money out of desktop campaigns for mobile, causing desktop ad revenue to decline slightly from the previous quarter.
Bank of America Merrill Lynch analyst Justin Post raised his price target to $31 from $23. “What is different for Facebook vs. Google or Yahoo, in our view, is that the Facebook user experience, ad formats, and ad pricing may actually be better on mobile devices than on the PC,” he commented.
Stifel Nicolaus analyst Jordan Rohan, meanwhile, reiterated a $26 price target.
All three analysts had previously had hold or neutral ratings.
So how do the latest views on the Street stack up for Facebook? According to Bloomberg data, 25 analysts have buy ratings, 13 have holds and four have sell ratings.
And today’s rally has brought the shares, last traded at $23.65, not all that far off the average one-year price target among analysts of $28.50.
Canaccord Genuity analyst T. Michael Walkley was impressed by what he saw Tuesday as Apple Inc. unveiled its iPad Mini. “We believe the iPad Mini has raised the bar relative to lower-priced competing tablets, with impressive hardware specifications, competitive pricing, and the leading software ecosystem that includes over 275,000 iPad-specific application,” said Mr. Walkley. “We believe Apple will cement its dominant market share of the fast-growing tablet market despite increased competition.”
His latest store checks also indicate strong global iPhone sales following the record iPhone 5 launch.
Upside: Mr. Walkley nudged up his price target by $3 to $800 (U.S.) and reiterated a “buy” rating. He’s not alone in his enthusiasm for Apple. Some 53 analysts currently rate the tech giant as a buy, seven rate it as a hold, and only two as a sell, according to Bloomberg data. The average Street price target is $777.72.
Electronics manufacturer Celestica Inc., which this week reported a 13 per cent drop in third-quarter earnings, was downgraded to a “hold” from “buy” by Canaccord Genuity analyst Robert Young. “Celestica plans to maintain higher margin diversified segment growth while de-emphasizing revenue from unattractively priced new buinsess in other segments,” noted Mr. Young. “We believe the strategy is the right one for the medium and long term, but we are concerned that a lack of top-line growth and a weaker-than-expected margin structure in the near term will limit the share price,” he said.
Downside: Mr. Young cut his price target by $1.50 to $8 (U.S.).
CIBC World Markets analyst David Noseworthy has initiated coverage on Enbridge Income Fund Holdings Inc. with a “sector outperform” rating, recommending the pipeline and wind power project company as a low-risk, high-yield energy infrastructure investment. “In our view, ENF’s high-quality assets should provide predictable and sustainable cash flows to support its current dividend and future dividend growth,” he said.
Upside: Mr. Noseworthy set a price target of $26.25.
New Millennium Iron Corp.’s 20 per cent owned Direct Shipping Ore iron ore project in the Labrador Trough of northern Quebec has been “bit by the inflation bug,” cautioned Raymond James analyst Adam Low. The company now estimates capital expenditures of $560-million, compared to Mr. Low’s expectation of $425-million. But he notes New Millennium has $100-million in cash and equivalents on its balance sheet, helping to cushion the blow.
Upside: Mr. Low cut his price target by 10 cents to $2.90, but reiterated an “outperform” rating.
For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities