As the most debt-heavy miner in the industry, Barrick has the most to lose as gold prices decline. It also has the most to gain.The Globe and Mail
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.
Canaccord Genuity downgraded Barrick Gold Corp. to "sell" from "hold" after analyst Tony Lesiak put together new estimates on potential reserve and mine plan changes at the struggling precious metals producer.
Barrick is developing new mine plans to reflect an ongoing lower gold price environment and to maximize cash flows. Mr. Lesiak projects that Barrick produced 6.36 million ounces of gold in 2013, 11 per cent lower than a year earlier. He projects cash operating costs were only modestly lower in 2013 at $585 (U.S.) an ounce, and estimates that operating reserves declined by 18 per cent.
Mr. Lesiak cut his price target to $17.50 (Canadian) per share from $20.50.
"Our target multiple fully reflects Barrick's numerous positive attributes; we just do not see the value proposition for Barrick at current metals prices," he said in a research note. "Barrick is currently trading at a 27 per cent premium to its gold peers on net asset value."
The average analyst target is $20.52, according to Thomson Reuters data.
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Canaccord's Mr. Lesiak upgraded Agnico Eagle Mines Inc. to "buy" from "hold," believing that the company's premium valuation next to peers is appropriate given that the stock has several potential catalysts ahead.
He raised his price target to $33.50 (Canadian) from $32 and raised his estimate for price to net asset value to 1.0 times from 0.9 times, the highest multiple Canaccord gives any of the larger gold producers.
"The multiple reflects the increasing importance of management and AEM's positive catalyst outlook, unlike many of its peers," explained Mr. Lesiak in a research note. "We see the potential for positive revisions to company guidance later this month and for year-end reserve replacement. We also see a declining risk profile at LaRonde, its development projects, and tailwinds from a weaker Canadian dollar. We believe AEM could outperform its peers in a stable and rising gold price environment."
The average analyst target is $33.69.
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After a year in which Air Canada shares soared 323 per cent, Canaccord Genuity analyst David Tyerman says the smart money will hang on to the stock.
While he acknowledges a near-term share price risk due to foreign exchange, fuel and weather headwinds, Mr. Tyerman believes there is substantial longer-term share price appreciation potential from Air Canada's three major initiatives.
The initiatives, (high-density B777s, rouge, and B787s), could boost earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs by $500-million or more by 2019, he says.
Mr. Tyerman maintained his "buy" rating and increased his target price to $12.00 from $7.50 (Canadian). The average analyst target is $8.46.
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Investors in Canadian Oil Sands Ltd. who have been waiting for the energy company to emerge from a period of sustained capital spending will be happy to hear Credit Suisse analyst Jason Frew's latest commentary.
"Our previous underperform thesis on COS was based on the company going through a period of heightened spending on four major capital projects," said Mr. Frew. "With two of the projects largely completed at the end of 2013 at or below cost and on schedule, we feel that capital risk is reduced."
He believes capital spending levels should taper off from more than $1-billion this year to about $600-million in 2015, when the funding profile becomes much more balanced.
Mr. Frew upgraded Canadian Oil Sands to "neutral" from "underperform" and maintained his target price of $20 (Canadian). The average analyst target is $21.08.
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The Obama Administration's decision not to renew CGI Group Inc.'s Federally Facilitated Marketplace contract for the Healthcare.gov website got lots of media attention, but shouldn't materially hurt the company's bottom line, according to Cantor Fitzgerald Canada analyst Justin Kew.
"While this news has pressured CGI's stock, we believe that the company's fundamentals remain solid and, in time, will be reflected in its share price," said Mr. Kew. He points out that that Centers for Medicare and Medicaid Services continues to work with CGI and has awarded approximately $37-million (U.S.) in contracts to CGI since October 2013. Further, the website contract only contributed approximately 1 per cent of CGI's revenue in 2013.
Mr. Kew maintained his buy recommendation and $46.00 (Canadian) price target. The average target is $44.23.
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In other analyst actions:
Oppenheimer downgraded BlackBerry to "underperform" from "perform" and said it saw the potential for 20 per cent to 30 per cent downside from current share levels.
Cowen & Co. downgraded Lululemon to "market perform" from "outperform" and slashed its price target to $48 (U.S.) from $90.
Credit Suisse downgraded Lightstream Resources to "underperform" from "neutral" and cut its target to $5 (Canadian) from $6.
Credit Suisse downgraded Baytex Energy to "neutral" from "outperform" and cut its price target to $42 (Canadian) from $48.
Credit Suisse cut its target on Cenovus Energy to $32 (Canadian) from $37 and maintained a "neutral" rating.
Raymond James downgraded North American Palladium to "underperform" from "market perform" and cut its target to 50 cents (Canadian) from $1.40.
Canaccord Genuity hiked its price target on Gluskin Sheff to $29.75 (Canadian) from $24.50 and kept a "buy" rating.
CIBC World Markets maintained a 40 cents (Canadian) price target on Candente Copper shares but lowered its rating to "sector underperformer" from "sector performer."
CIBC World Markets maintained a $2.50 (Canadian) price target on Northern Dynasty shares but increased its rating to "sector performer" from "sector underperformer."
CIBC World Markets lowering its price target on Western Copper shares to $1.40 (Canadian) from $1.85 and lowered its rating to "sector performer" from "sector outperformer."
CIBC World Markets raised its price target on Alliance Grain Traders to $20 (Canadian) from $16 and maintained a "sector performer" rating.
Belus downgraded Starbucks to "hold" from "buy" and cut its price target to $75 (U.S.) from $90.
Goldman Sachs raised its price target on Twitter to $65 (U.S.) from $46 and maintained a "buy" rating.
UBS raised its price target on Amazon to $465 (U.S.) from $400 and maintained a "buy" rating.
UBS raised its price target on TripAdvisor to $88 (U.S.) from $78 and maintained a "neutral" rating.
UBS raised its price target on Priceline to $1,300 (U.S.) from $1,220 and maintained a "buy" rating.
UBS raised its price target on Caterpillar to $94 (U.S.) from $84 and maintained a "neutral" rating.
UBS upgraded Jacobs Engineering to "buy" from "neutral" and raised its target to $75 (U.S.) from $60.
Citigroup upgraded Visa to a "buy" rating from "neutral" with a price target of $265 (U.S.).
BMO Nesbitt Burns raised its price target on Pandora to $38 (U.S.) from $32 and maintained an "outperform" rating.
SunTrust Robinson Humphrey upgraded Carnival to "neutral" from "reduce" and raised its price target to $40 (U.S.) from $28.
Jefferies downgraded Marriott International to "underperform" from "hold" and cut its price target to $41 (U.S.) from $44.
BMO Nesbitt Burns cut its target on Family Dollar Stores to $61 (U.S.) from $68 and maintained a "market perform" rating.
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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities
Darcy Keith