Encana CEO Doug Suttles.
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.
Encana Corp. shares have risen sharply since the company announced early Tuesday a sweeping restructuring that involves layoffs and a dividend cut, but Deutsche Bank analyst Stephen Richardson is still urging caution before investors load up on its shares in hopes of a turnaround.
He's more optimistic about the natural gas producer - upgrading his rating to "hold" from "sell" with a price target of $22 (Canadian) - but believes the stock is still set for more volatility.
"While we see a number of potential outcomes from this review, we struggle to define a near-term path that is tangibly accretive to equity holders. The first changes are likely positive (and overdue) for Encana Corp., but may entail some near-term pain (dilution) for shareholders (and the dividend)," Mr. Richardson was quoted by StreetInsider.com as saying.
Credit Suisse analyst Jason Frew maintained a "neutral" rating on Encana as he raised his price target to $21 (U.S.) from $19.
"Overall, our take on Encana's new strategy is positive as the concentration of capital for liquids and dividend reset should close the funding gap in the near term," Mr. Frew said in a research note. "However, we note the development risks associated with investing in newer plays (e.g. Duvernay, San Juan and TMS) where current production levels are low in the context of the company's total liquids production. As such, we remain neutral on Encana as we await further evidence of success in new plays."
In other analyst actions on Encana today, Merrill Lynch upgraded its rating to "neutral" from "underperform." And National Bank Financial upgraded the stock to "outperform" from "sector perform," with a price target of $22.50.
The average price target among analysts is $21.92 (Canadian), according to Bloomberg data.
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Several analysts this morning raised their price targets on WestJet Airlines Ltd. after its third-quarter earnings modestly beat Street expectations mostly thanks to successful cost-cutting efforts.
Canada's second largest air carrier reported earnings per share of 50 cents, two cents above consensus views
"WJA's valuation is approaching the top end of where it has traded over the past four to five years, but we do not believe this represents a glass ceiling," commented CIBC World Markets analyst Kevin Chiang as he raised his price target to $31 (Canadian) from $25.50 and reiterated a "sector outperformer" rating.
"WJA continues to execute its strategy: load factors out of Encore are less dilutive than originally expected; the $100-million cost savings target is a year ahead of schedule; market share amongst business travelers is increasing; and ancillary revenue is trending higher," he added. Encore is WestJet's new regional airline.
RBC Dominion Securities analyst Walter Spracklin raised his price target to $31 (Canadian) from $28 and maintained his "outperform" rating.
"WestJet posted another solid quarter which clearly highlighted management's execution success on planned cost cutting and growth initiatives; as well as a still robust demand environment," Mr. Spracklin said in a research note. "No question, with the WJA shares up over 32 per cent in the past three months, expectations were high. However, management clearly did enough to assuage any near-term concerns and to maintain positive operating momentum."
Raymond James also raised its price target to $31 from $25.75 while maintaining a "market perform" rating.
The average target among analysts is $31.18.
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Analysts are adjusting their ratings and price targets on Cineplex Inc. after the movie chain Tuesday reported third-quarter earnings below Street expectations.
Industrial Alliance analyst Steve Li downgraded the stock to "hold" from "buy," noting that the adjusted net income of 39 cents per share, down 20 cents from a year ago, easily missed his forecast for 59 cents. Higher depreciation and amortization, losses on disposal of assets, and higher income taxes were largely to blame.
"While we believe Cineplex is a fantastic operator, we suggest investors to wait for a better entry-point due to its hefty valuation," said Mr. Li, who has a $42 (Canadian) price target.
CIBC World Markets analyst Robert Bek downgraded Cineplex to "sector performer" from "sector outperformer" as he came off restriction on covering the stock today.
"While we believe the model remains solid (strong balance sheet, low payout ratio, attractive yield), the shares are basically at our $42 target," he commented.
Elsewhere, Euro Pacific Canada downgraded its rating to "hold" from "buy" with a price target of $43.
The average Street target is $42.08.
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Canaccord Genuity analyst Nicholas Campbell downgraded Timmins Gold Corp. to "sell" from "hold" after the company released a disappointing reserve and resource estimate for its San Francisco gold mine in Mexico.
The mine is now estimated to contain 1.59 million ounces of proven and probable gold reserves. That was below Mr. Campbell's forecast for 1.84 million ounces. Meanwhile, a new mine plan calls for lower-than-expected throughput and grades, he said.
"Given the current costs of the San Francisco mine, with grades expected to decline and the strip expected to climb, we continue to expect production to fall short and costs to come in higher than the revised guidance for San Francisco," Mr. Campbell said in a research note. Strip is short for strip ratio, which is a measure of how much waste material has to be mined to get to the mineralized ore.
Mr. Campbell cut his price target to $1.20 (Canadian) from $1.65. The average target on the Street is $2.55.
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Growth in online revenues is accelerating at Yellow Media Inc. and are set to equal print sales by the second quarter of next year, said Canaccord Genuity analyst Aravinda Galappatthige. He raised his price target on the stock to $18.70 (Canadian) from $14.50 and reiterated a "buy" rating.
In this third quarter just past, Yellow Media's online sales totaled 43 per cent of total revenues, up from 34 per cent a year ago. It reported an 11.1 per cent drop in total revenues and a nearly 26 per cent decline in EBITDA - but those results still beat Mr. Galappatthige's estimates.
"A key positive in the quarter was the strong free cash flow number," he commented. Free cash flow came in at $64.1-million, a big jump from $39.9-million last year.
"We have revised up our forecasts for all years to reflect a couple of factors," he said. "Firstly, online revenues appear to have more momentum. We are thus forecasting 8 per cent growth in digital in 2014 and 10 per cent in 2015; this is still below the third-quarter growth rate. Secondly, the incremental digital investment (going through operating expenditures) is expected to be lower than we originally envisaged."
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In other analyst actions today:
RBC Dominion Securities initiated coverage on Twitter with a `buy`` rating and $33 (U.S.) price target.
M Partners upgraded Wajax to "buy" from "hold" and maintained a $39 (Canadian) price target.
RBC Dominion Securities hiked its target on Canadian Tire to $114 (Canadian) from $93 and maintained an "outperform" rating.
Raymond James upgraded Strad Energy Services to "outperform" from "market perform" and raised its price target to $4.40 (Canadian) from $4.10.
Canaccord Genuity raised its price target on Paladin Labs to $100 (Canadian) from $63 after Endo Health's announcement it plans to take over the company. But Canaccord continues to rate the stock as a "hold" after its rally Tuesday. RBC Dominion Securities downgraded Paladin to "sector perform" and raised its target also to $100.
Barclays initiated coverage on Shaw Communications with an "equalweight" rating and $26 (Canadian) price target; on Rogers Communications with an "equalweight" rating and $48 (Canadian) price target; and on Telus with an "overweight" rating and $39 (Canadian) price target.
CIBC World Markets raised its price target on Open Text to $95 (U.S.) from $80 and maintained a "sector outperformer" rating. Raymond James raised its price target to $91 (U.S.) from $80 and maintained an "outperform" rating.
Wedbush cut its price target on Tesla Motors to $205 (U.S.) from $240 and maintained an "outperform" rating. Goldman Sachs raised its price target to $104 from $95 and maintained a "neutral" rating.
Canaccord Genuity downgraded Halcon Resources to "hold' from "buy" and cut its price target to $6 (U.S.) from $7.
Canaccord upgraded T-Mobile to "buy" from "hold" and raised its price target to $33 (U.S.) from $25.
TD Securities upgraded Louisiana-Pacific to "hold" from "reduce" and raised its price target to $16.50 (U.S.) from $16.
JPMorgan downgraded AMR Corp. to "neutral" from "overweight" and raised its price target to $10.50 (U.S.) from $9.50.
Canaccord Genuity raised its target on Michael Kors Holdings to $96 (U.S.) from $90 and maintained a "buy" rating.
RBC downgraded Tornier to "sector perform" from "outperform" and cut its target to $17 (U.S.) from $21.
Jefferies raised its price target on AOL to $60 (U.S.) from $55 and reiterated a "buy" rating.
M Partners initiated coverage on Golden Queen Mining with a "buy" rating and $1.90 (Canadian) price target.
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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities
Darcy Keith