Inside the Market's roundup of some of today's key analyst actions
Apple Inc. shares are edging up today after the tech giant received an analyst upgrade – marking a change of pace after the recent onslaught of Street downgrades and price target cuts.
BTIG analyst Walter Piecyk slapped a “buy” rating on the iPhone maker, with a price target of $540 (U.S.), after siding with the argument that the stock’s selloff over the past few months makes for a compelling investment idea.
“What better time to upgrade the stock,” Mr. Piecyk said. “We once again believe that investors need to take a deep breath during the rapid drop in the stock and leading into what could be a difficult quarterly to take a moment to consider the various and significant revenue and product opportunities available to the company, the lapsing of the tighter upgrade policies in the United States, its most important market, and the investment opportunities of $150-billion of cash.”
Mr. Piecyk, as Business Insider points out , was one of the first analysts to turn negative on the stock after he downgraded it to “neutral” last April.
Earnings per share expectations for this year have been declining amid slowing sales growth. But he thinks Apple could turn things around in 2014, especially given its knack for coming up with revolutionary products that sell extremely well. He also thinks a low-priced iPhone will present some interesting revenue opportunities.
Sell the stock now, Mr. Piecyk told CNBC this morning, and you could miss out on any pop that may result from the company announcing a plan for using its huge cash reserves, or Apple announcing a hot new product this summer. It’s also possible Samsung’s smartphone release this morning could be over-hyped and not pose a serious competitive threat.
“By not owning the stock, you’re taking the risk that Apple still won’t rally on other items that will take it higher,” he said.
Apple shares around the noon hour were up 1 per cent.
Target: Mr. Piecyk has a $540 (U.S.) price target. That’s still below the average Street target of $605.81.
JPMorgan Chase & Co. analyst Doug Anmuth downgraded Amazon.com Inc. to “neutral” from “overweight,” citing his expectations for slowing gross profit trends later this year.
While the company is likely to gain share in eCommerce and become more valuable over time, near-term risk and reward appears balanced, he said.
Target: Mr. Anmuth cut his target to $300 from $333. The average price target among analysts is $318.97, according to Bloomberg data.
Transcontinental Inc.’s decision this week not to raise its regular dividend came as a surprise to Canaccord Genuity analyst Aravinda Galappatthige, who thought free cash flow and debt levels would have justified it.
“We believe this reflects poorly on future dividend growth prospects, particularly on the back of the lower-than-expected dividend increase last year,” he said.
He downgraded Transcontinental to “sell” from “hold,” expecting soft returns in upcoming quarters due to revenue pressures arising from the loss of business from Zellers, recent contract renewals made at lower price points, and the soft ad market.
"While the company expects some reprieve toward the back end of this year, in our opinion, given the underlying structural pressure, it is difficult to have a longer term constructive view in this space," he said.
Target: Mr. Galappatthige cut his price target to $9.40 from $10.50, which partly reflected the company’s plans for a special dividend. The average price target on the Street is $11.94.
CIBC World Markets analyst Paul Holden upgraded Power Financial Corp. to “sector outperformer,” expecting Great-West Lifeco Inc.’s acquisition of Irish Life to improve its earnings growth.
Power Financial is the majority owner of Great-West Lifeco, and Mr. Holden notes that Power Financial’s net asset value discount to both Great-West and affliciated company IGM Financial Inc. is unusally wide right now.
Target: Mr. Holden raised his price target by $1.50 to $32.50. The average target is $30.93.
Uranium Energy Corp.’s Palangana project in south Texas is performing worse than expected in terms of production and costs, and there is a risk that its nearby Goliad project underperforms in a similar manner, said RBC Dominion Securities analyst Adam Schatzker.
Meanwhile, with a cash balance of only $12.3-million, ongoing capital spending and operating losses, Uranium Energy may require up to $20-million in new financing within the next six months, he warned.
Target: Mr. Schatzker cut his target to $1.25 from $1.75 and reiterated an “underperform” rating. The average target is $3.02.
For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities