Monday's analyst upgrades and downgrades

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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.

National Bank Financial analyst Peter Routledge downgraded Bank of Nova Scotia to "sector perform" from "outperform" after what he termed was a "disappointing" miss in operating earnings in the fiscal fourth quarter.

He maintained a $68 (Canadian) price target.

"To fulfill our outperform thesis, we need to see BNS delivering on the earnings growth potential in its operating segments. This has not occurred for some time and we believe BNS' challenges will persist through the first half of fiscal 2014," Mr. Routledge said in a research note.

Scotiabank reported fourth-quarter core cash earnings per share of $1.31, up from $1.21 a year earlier and matching results in the third quarter of 2013. It was a penny below the Street consensus forecast.

Scotiabank, however, missed Mr. Routledge's estimates in two operating segments: Global Wealth & Insurance and Global Banking and Markets.

"Bigger than the earnings misses this quarter is the rather anemic earnings growth in all of BNS' operating segments since Q2 fiscal 2013," he said. "From this admittedly emergent trend, we conclude that BNS will continue to struggle in executing its line-of-business strategies for at least the first half of fiscal 2014."

He lowered his core cash earnings per share estimate for fiscal 2014 to $5.39 from $5.57, and for fiscal 2015 to $5.97 from $6.08.

Where are prospects better in the financial sector? Mr. Routledge believes it's Royal Bank of Canada, which he upgraded to "outperform" from "sector perform" and raised his price target to $75 (Canadian) from $73.

"After comparing BNS' and RY's performances over the past several quarters, we conclude that RY has executed its strategy more successfully than BNS," Mr. Routledge said in a separate note. "Moreover, we believe this performance differential will persist throughout fiscal 2014. Although we favour BNS' earnings growth potential over the long term given the broader geographic diversification of its earnings and its exposure to Latin American and Asian economies, RY's strategy execution is superior to BNS' and this will matter in fiscal 2014."

The average analyst target on Scotiabank is $68.11, while the average target on Royal Bank is $73.01, according to Thomson Reuters data.

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Raymond James analyst Andrew Bradford upgraded Precision Drilling Corp. to "outperform" from "market perform" after the stock took a drubbing last week on news that Alberta Investment Management Co. sold its 19 per cent equity stake in the company. He maintained an $11.50 (Canadian) price target.

The stock's 9 per cent plunge on the news Thursday represents a "provocative entry point for investors into Precision," Mr. Bradford commented in a research note.

The plunge left the shares trading with an estimated 2014 enterprise value of only 5.3 times EBITDA (earnings before interest, taxes, depreciation and amortization), he noted. That made the stock the cheapest among the contract drilling stocks followed by Raymond James.

"We don't think this sale is a reflection of AIMCo's view of Precision as an investment. But rather an opportunity for AIMCo to simply take profits on a successful investment," Mr. Bradford said, noting that AIMCo locked in a return of more than 200 per cent with the share sale.

"Indeed, AIMCo's CEO, Leo de Bever, offered that, 'It [the sale] has nothing to do with the quality of the company [Precision], which is quite good. You have to know when to buy and when to sell,'" Mr. Bradford pointed out.

The stock was trading near $10.20 (Canadian) prior to the AIMCo news. It plunged to below $9.40 as the sale was disclosed, but by the end of day on Friday, partially recovered to near $9.80. Today, the stock is trading up 1 per cent at $9.85.

The average analyst target is $11.85.

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Raymond James analyst David Sadowski upgraded Fission Uranium Corp. to "strong buy," urging investors to load up on the stock following the company's recent acquisition of Alpha Minerals.

With that corporate acquisition, Fission now holds 100 per cent of the Patterson Lake South project in Saskatchewan's Athabasca basin, which -- according to Mr. Sadowki -- is the last known high-grade, potential open-pit uranium asset in the world that has not been mined.

As such, he thinks takeover interest in Fission Uranium is "high - and climbing."

"Not only do we view the company's now wholly-owned Patterson Lake South as the most exciting and 'mineable' junior-controlled uranium asset globally, but the company is well-run, cashed-up and poised to take advantage of the project's superb exploration upside with resumption of drilling early-January," Mr. Sadowski said in a research note.

The Patterson Lake South project "has potential to host one of the lowest cash cost uranium operations globally; is now owned by a single, more acquirable entity; and has, in our view, immense upside remaining," he said.

"Such attributes make it a top prize for many suitors, including the basin's existing major producers, miners considering a maiden Basin foothold, or even Asian nuclear utilities. Assuming exploration momentum continues, we would be surprised if a bid did not materialize in the next two years, particularly with an initial 43-101 resource, a key de-risking event, due by early-2015 and our bullish uranium price outlook 2H14E-onwards," he added.

Mr. Sadowski raised his price target to $2 (Canadian). The average analyst target is $1.77.

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Dundee Securities has elevated SNC-Lavalin Group Inc. to a "top pick," believing a number of catalysts are on the horizon that should bolster sentiment in the stock.

Allegations of improper payments in North Africa have hampered share price performance over the last two years. But the resolution of these "ethical" issues should come near the beginning of the second quarter of 2014 and help remove an overhang on the stock, said Dundee Securities analyst Maxim Sytchev.

Meanwhile, the company is moving forward with monetizing its AltaLink electrical distribution company in Alberta, possibly through a partial or full sale or an initial public offering. Such a transaction could take place in the second half of next year.

And, he said the engineering and construction business should see additional awards over the next year as the company 's infrastructure and environment practice "is currently sitting on the largest possible pipeline of opportunities."

"SNC will provide its 2014 guidance when it announces its Q4/13 results," he commented. "We expect next year to be a rebuild year for the company (read: higher engineering earnings as we don't expect to see a repeat of a number of one-time charges in 2013). Note that as sell-side valuations roll over to 2015E over the coming months, investors should start anchoring to higher targets."

Mr. Sytchev rates SNC-Lavalin a "buy" with a $52 (Canadian) price target. The average analyst target is $49.41.

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RBC Dominion Securities analyst Irene Nattel raised her price target on Whistler Blackcomb Holdings Inc. to $17 (Canadian) from $15, noting that the company's recent refinancing of its debt will significantly reduce interest expenses.

She believes this refinancing will support the company's dividend yield of 5.8 per cent annually – an attractive payout that should continue to attract investors.

Ms. Nattel reiterated a "sector perform" rating.  The average analyst target is $15.81.

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In other analyst actions:

National Bank Financial downgraded Air Canada to "sector perform" from outperform, citing the lower Canadian dollar - which makes it more expensive to buy fuel - and concerns over the airline adding more capacity on competitive routes over the Atlantic. However, it raised its price target to $8 (Canadian) from $4.75.

Stonecap Securities downgraded Alexco Resource to "underperform" from "sector perform" and cut its price target to $1.20 (Canadian) from $1.70.

RBC Dominion Securities cut its price target on Sandstorm Gold Ltd. to $6 (Canadian) from $6.50 and maintained an "outperform" rating.

Raymond James hiked its price target on ADF Group to $4 (Canadian) from $2.75 and maintained an "outperform" rating.

BMO Nesbitt Burns raised its price target on Gilead Sciences to $114 (U.S.) from $90 and maintained an "outperform" rating.

Canaccord Genuity raised its price target on Altus Group to $19 (Canadian) from $16 and reiterated a "buy" rating.

Jennings Research initiated coverage on Hardwoods Distribution with a "buy" rating and $12.50 (Canadian) price target.

UBS raised its price target on AutoZone to $470 (U.S.) from $430 and maintained a "neutral" rating.

UBS raised its price target on Illinois Tool Works to $81 (U.S.) from $77 and maintained a "neutral" rating.

Morgan Stanley upgraded Kraft Foods to "overweight" from "equal-weight" and raised its price target to $60 (U.S.) from $55.

JPMorgan upgraded Marathon Petroleum to "neutral" from "underweight" and raised its price target to $81 (U.S.) from $67.

B. Riley upgraded American Eagle Outfitters to "buy" from "neutral" and raised its price target to $20 (U.S.) from $15.

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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities