Inside the Market's roundup of some of today's key analyst actions
Given their wildly different takes on Research In Motion Ltd.’s future, you never know if the day is going to bring an analyst upgrade or downgrade of the BlackBerry maker’s stock.
On Wednesday, the stock rose more than seven per cent after Morgan Stanley upgraded its rating to “overweight” – effectively a buy – while substantially increasing its price target to $22 (U.S.).
Today? It’s a downgrade from Byron Capital Markets, lowering its rating to a “hold” from a “buy.”
Byron analyst Tom Astel has a price target of $18 on RIM, not far from today’s trading price of about $16.30, and he made clear his action was more linked to the stock approaching his target rather than a fundamental change in his views.
He thinks the company is still a turnaround story, but advises investors to buy on the dips, reports Streetinsider.com.
In the shorter term, he’s also concerned that unit sales in the February quarter, which will be reported at the end of this month, “will not be that exciting,” given the new BlackBerry 10 devices were launched in stages across the globe.
“We had modelled 1 million BB10 units for that quarter, but we expect something less than that now,” the website quoted Mr. Astel as saying. “We are more hopeful for margins as we think initial sales of the Z10 have carried strong ASPs (average selling prices),” he said.
Investors seem to be shrugging off the downgrade, with the stock trading up nearly two per cent at mid-afternoon.
It’s worth noting that when taken as a whole, analysts are still pessimistic on RIM. Only seven recommend the stock as a buy, according to the latest Bloomberg data, with 17 rating rating it as a hold and 21 as a sell. The average price target is $12 (U.S.), roughly 25 per cent below the current trading price.
RBC Dominion Securities downgraded Corus Entertainment Inc. to “sector perform” from “outperform,” citing the stock’s recent share price appreciation.
“In the absence of a stronger advertising market recovery in Canada, we don’t see a major near-term catalyst for the shares,” said RBC analyst Haran Posner.
“While our downgrade reflects a short-term view, we remain positive on the stock longer-term, and we continue to view Corus as a core holding for investors in the Canadian media sector.”
Corus shares rose more than 15 per cent over the past six months, far outpacing the TSX composite gain of only 3 per cent.
Target: Mr. Posner maintained a $26 price target. The average analyst target on Corus is $25.67.
Recent U.S. housing data suggest spending on home improvement is going to go up – good news for Home Depot Inc., notes Canaccord Genuity analyst Laura Champine.
The company continues to benefit from more convenient locations as well as merchandising and supply-chain improvements, which she points out come at a time when rival Lowe’s is still in the early stages of its strategic initiatives.
“This has resulted in 10 consecutive quarters in which HD’s same-store sales have outpaced LOW on a two-year basis, a trend we expect to continue through fiscal year 2014,” Ms. Champine said.
Target: Ms. Champine raised her price target to $61 (U.S.) from $54 but maintained a “hold” rating. The average Street target on Home Depot is $72.13 (U.S.).
Canaccord Genuity analyst Neil Maruoka believes Valeant Pharmaceuticals International Inc. made a good move in buying Obagi Medical Products this week.
“We believe that Obagi’s aesthetics and skin therapeutic products are a good fit with Valeant’s large dermatology franchise,” Mr. Maruoka said. “Given Valeant’s efficient tax structure, its strong position in dermatology, and its core strength in integrating acquisitions (and driving synergies), we believe that this deal has a high probability of completion.”
Target: Mr. Maruoka raised his price target to $83 (U.S.) from $79 and maintained a “buy” rating. The average target on Valeant is $78.13 (U.S.)
Oracle Corp., which is down about 9 per cent in late afternoon trading, reported revenues way short of expectations in its last quarter. But RBC Dominion Securities analyst Matthew Hedberg still recommends the stock, believing the miss was due to poor execution of its sales force rather than
“macro” issues that will linger.
“”We expect many investors will come back to the name in the low-$30 range as the company enters the seasonally strong fourth quarter,” he said.
Target: Mr. Hedberg cut his price target by $2 to $37 (U.S.) and reiterated an “outperform” rating. The average target on Oracle is $37.97 (U.S.).
For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @ eyeonequities