Canadians who sign a wireless contract after Dec. 2 will be able to pay off the full cost of their subsidized smartphones within two years.Reuters
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day. For breaking analyst actions prior to market open every day, read our Before the Bell morning report.
Macquarie Equities Research analyst Greg MacDonald downgraded Rogers Communications Inc. to "neutral" after the company reported weakness in its wireless revenue this morning.
But his action was also partly a valuation call: recent gains brought the stock price close to his $47 price target – which he reiterated today.
Rogers reported earnings per share of 97 cents in its third quarter and a 2 per cent bump in overall revenue from a year ago to $3.2-billion – results that were largely in line with Street expectations.
"However, despite an in-line quarter Rogers showed some weakness in wireless in postpaid net adds, ARPU (average revenue per unit) and network revenue. This is important because wireless is by far the most important driver of results and the most focused on by investors," Mr. MacDonald said in a research note.
Rogers blamed lower U.S. and international roaming rates as well as simplified share-everything plans for some of the revenue losses. Mr. MacDonald believes Rogers' discounted voice plans to encourage more data use was key to the soft numbers.
"In our view, weakness in the wireless revenue number will likely be construed as somewhat recurring," he cautioned.
Mr. MacDonald believes the company will continue to grow its dividend given a relatively low payout ratio, but, for investors, "better valuations may present themselves for those who are patient."
Target: The average analyst price target is $48.68, according to Bloomberg data.
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Wednesday it was Canadian National Railway Ltd. receiving the accolades of analysts, today it is Canadian Pacific Railway Ltd.
CP Rail so far today has seen at least two rating upgrades, and numerous price target hikes, after its third-quarter results early Wednesday revealed impressive gains in operating performance. Earnings per share of $1.88 easily beat the consensus forecast of $1.72.
"As impressive as CP's Q3/13 results were, the big news on the conference call was CEO Hunter Harrison's indication that the operating ratio could hit 65 per cent as early as next year," RBC Dominion Securities analyst Walter Spracklin commented as he upgraded the stock to "sector perform" from "underperform."
"If achieved, CP would realize their O/R target a full year ahead of schedule, which would be an impressive accomplishment considering the short time frame," he added.
The operating ratio, which compares operating expenses to net sales, is a key metric for railways and the lower the number, the better.
"Without a doubt, management has delivered efficiency gains that we did not think possible and we are recalibrating our estimates to reflect assumptions near the high-end of management's O/R guidance range, which brings our price target to $133 (from $116)," he said.
He noted he only upgraded CP Rail to a "sector perform" rating - the equivalent of a hold - because of RBC's cautious revenue growth outlook compared to what is implied in the stock price.
In other analyst moves, Desjardins Securities upgraded CP Rail to "buy" from "hold" and raised its price target to $162 from $123. Raymond James hiked its price target to $160 from $145 and maintained an "outperform" rating. Canaccord Genuity boosted its target to $146 from $131 and maintained a "hold" rating.
Target: The average analyst price target is $155.69.
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Analysts are taking the knife to their price targets on Wi-Lan Inc. today after a jury Wednesday found that Apple Inc. did not infringe on a patent from the Canadian technology licensing company.
CIBC World Markets analyst Todd Coupland downgraded Wi-Lan to a "sector underperformer" rating and slashed his price target to $3 (Canadian) from $7.25.
"Our view is there are limited licensing catalysts with the Apple loss," Mr. Coupland commented, noting that some premium had been built into Wi-Lan's share price in anticipation it would be awarded a settlement from Apple.
"We also expect investors will apply a further discount on WIN because of the two trial losses in 2013 which calls into question what types of infringement cases are being filed. This mindset is likely to bring WIN's share price down beyond what was assumed for the Apple case," Mr. Coupland said. "We believe that WIN's share price will be stuck at lower levels until the company can reset new and improved licensing programs. We will revisit this view as those plans emerge."
Cantor Fitzgerald also today cut its target on Wi-Lan to $4.80 (U.S.) from $6.
Target: The average analyst target is $4.91 (U.S.).
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At least two analysts upgraded their ratings on Agnico Eagle Mines Ltd. after the company's third-quarter earnings blew past Street expectations.
Adjusted earnings per share of 35 cents (U.S.) compared to the consensus of only 9 cents. The company also raised its 2013 production guidance by between 5 per cent and 9 per cent.
"Agnico Eagle continues to trade at a premium to many peers, but the strong operational results and relatively low perceived risks (operational and geopolitical) provide a catalyst for performance," commented BMO Nesbitt Burns analyst David Haughton in upgrading his rating to "outperform."
Desjardins Securities analyst Michael Parkin upgraded his rating to "buy" from "hold," commenting "the near-term outlook for the company on an operational basis is positive."
Targets: BMO raised its price target by 10 per cent to $35 (U.S.) a share while Desjardins maintained a $35 (Canadian) price target. The average target is $32.13 (U.S.)
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Recent strong housing data in Canada points to a continued positive outlook for mortgage lender Home Capital Group Inc., said M Partners analyst Patrick Ruiz as he significantly raised his price target on the stock.
He expects solid third-quarter results when they are reported Nov. 6 and reiterated a "buy" rating, given "solid business fundamentals, sustainable return on equity of over 20 per cent and stabilized housing related risks."
"Solid results from the quarter plus a positive housing outlook should provide more runway for valuations to continue on their upward trend. We believe loan growth will be further supported by a general expansion in the alternative lending space, namely due to banks exiting the non-prime market," he said.
Target: Mr. Ruiz raised his price target to $85 (Canadian) from $76. The average target is $77.71.
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In other analyst actions today:
JPMorgan downgraded Caterpillar to "neutral" from "overweight" and cut its price target to $90 (U.S.) from $105. Goldman Sachs raised its price target to $89 from $85 but maintained a "neutral" rating. Raymond James downgraded the company to "market perform" from "outperform" and cut its target to $89 from $93.75.
Citigroup upgraded Chesapeake Energy to "buy" from "neutral" and raised its target to $35 (U.S.) from $27.
Raymond James downgraded Essential Energy Services to "market perform" from "outperform: and raised its target to $3.20 from $3.
Raymond James boosted its price target on Canam Group to $15 from $12 and maintained a "strong buy" rating. RBC Dominion Securities upgraded its rating on the stock to "outperform" from "sector perform" and raised its price target to $13 from $11.
Canaccord Genuity boosted its target on Boeing to $150 (U.S.) from $140. Deutsche Bank raised its target to $156 from $130. Credit Suisse raised its target to $150 from $121.
Canaccord Genuity initiated coverage on Kinross Gold with a "hold" rating and $5.75 (Canadian) price target. It also initiated coverage on Iamgold with a "buy" rating and $6.50 (Canadian) price target and on Silver Wheaton with a "buy" rating and $31 (Canadian) price target. Eldorado Gold was given a "hold" rating and $7.75 (Canadian) price target.
AltaCorp Capital initiated coverage of Air Canada with an "outperform" rating and $8 (Canadian) price target. It also started coverage on WestJet Airlines, with an "outperform" rating and $31 (Canadian) target.
Credit Suisse raised its price target on Safeway to $45 from $40 and maintained an "outperform" rating.
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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities
Darcy Keith