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Husky Energy CEO Asim Ghosh attends the company’s annual meeting in Calgary, May 7, 2013. The company said it earned $535-million in the first quarter, or 54 cents per diluted share, down from $591-million, or 60 cents per diluted share, a year ago.Jeff McIntosh/The Canadian Press

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 analyst Phil Skolnick upgraded Husky Energy Inc. to "buy" from "hold," impressed by the company's start-up this weekend of its $6.5-billion Liwan offshore project in the South China Sea.

Liwan is Husky's largest project to date and is operated in conjunction with Chinese-state-owned firm CNOOC Ltd. Located 300 kilometres southeast of Hong Kong, it taps into three offshore fields, with Husky operating the deepwater infrastructure.

"With Sunday's announced start-up of Liwan, Husky has demonstrated a dramatic improvement in its project delivery capabilities, particularly given this is an offshore project that was built in an area prone to volatile weather," Canaccord analyst Phil Skolnick said in a research note.

He thinks the market is "overly concerned" with Husky's ability to successfully startup the Sunrise SAGD (steam assisted gravity drainage) oil sands project in Alberta, which is slated to commence production late this year.

Meanwhile, Husky Energy has not participated in the recent rally in shares of other North American integrated oil companies. "Shares are trading at about 5.3 times on enterprise value/consensus EBITDA basis, which is cheap relative to peers who are currently trading at about 6.1 times," he said.

One potential catalyst for the higher share price will be Husky's investor day in June, which could reveal new growth prospects, as the company provides a deep dive of its full portfolio, including its Western Canada resources. This could "yield transparency of hidden value," Mr. Skolnick said.

He raised his price target to $38.50 (Canadian) from $35.

Those investors thinking of acting on Mr. Skolnick's advice may also want to take note of recent insider buying activity of Husky Energy shares. A separate report published by INK Research on Monday showed that over the past 12 months, five insiders of the company who are either senior officers or directors have spent $1.7-million buying shares in the public market. The most recent purchase took place on March 27, when chief operating officer Robert J. Peabody bought 6,000 shares between the prices of $32.67 and $32.71.

There has been no insider selling at Husky over the past 12 months, notes INK Research, which tracks the buying and selling of shares by officers and directors within their own companies. This runs in contrast to the energy sector as a whole, where insiders have been selling at an above-average clip in recent weeks.

The analyst consensus price target for Husky Energy over the next year is $36.33, according to Thomson Reuters.

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RBC Dominion Securities analyst Patrick Morton upgraded Sherritt International Corp. to "outperform" from "sector perform," citing increased confidence in the startup of the Ambatovy project, as well as an improving nickel market and a more positive outlook for its balance sheet.

He also raised his price target to $5 (Canadian) from $3.90.

"Sherritt has been challenged in recent years by a weak nickel market, uncertainty about the ramp- up at Ambatovy, senior management changes, and a tight balance sheet. But momentum is swinging in the company's favour, in our view, given a) positive progress at Ambatovy, b) nickel market momentum in light of the Indonesia export ban, and c) a potential debt refinancing in 2014," Mr. Morton said in a research note.

RBC analysts recently toured the Ambatovy project, which is a vertically-integrated nickel and cobalt mining, processing, refining and marketing joint venture between Sherritt, Japan's Sumitomo, Korea Resources and SNC-Lavalin. Sherritt is the operator of the facilities, located in Madagascar.

The analysts left the tour with more confidence that Ambatovy can achieve design capacity by 2015.

"Sherritt's operating team made a convincing case, in our view, that most of the critical systems at the Ambatovy mine and process plant are operating as planned and have ample redundancy capacity in order to continue ramping up production in spite of potential operating hiccups," Mr. Morton said.

RBC expects Sherritt to refinance its high-yield debentures by next year to provide the balance of capital for the project, without the need of issuing new equity, which would dilute shareholder value.

The project achieved commercial production in January, and the mine operated at 78 per cent of capacity in February. In March, problems with the ore scrubber in the ore preparation plant at the mine site caused a setback, but the company still expects overall production to improve in the first quarter of 2014 when compared to last year's fourth quarter, he noted.

The analyst consensus price target is $4.86.

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AltaCorp Capital Research analyst Don Rawson isn't terribly impressed by Surge Energy Inc.'s friendly deal to buy Longview Oil Corp. for $429-million under a share exchange.

He downgraded Surge Energy to "sector perform" from "outperform" and cut his price target to $6.50 (Canadian) from $7.

Longview shareholders are being offered 0.975 of a Surge common share. In addition, Surge will assume $150-million of debt owed by Longview. Based on the Monday closing price before the agreement was announced, the offer was worth $5.99 per Longview share. Longview shares closed Monday at $5.49. Longview shareholders will be asked to vote on the offer in June.

Surge Energy, in conjunction with the announcement, also said it would hike its dividend by 11 per cent to 60 cents a share annually.

The two Calgary-based oil and gas companies say they have complementary businesses in Western Canada, but Mr. Rawson is expressing doubt on the merits of the transaction.

"Because LNV has a relatively spread out asset base, with higher operating cost properties, it is difficult to see this as a strategic 'must have' for Surge Energy," he said in a research note. "Growth improves slightly on a per share basis, although we believe there is a cost in terms of asset quality."

While yield-focused investors may applaud the dividend increase, it may come at the expense of growth for the company, he added.

The analyst consensus target is $7.79.

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The risks facing shares of Martinrea International Inc. have been "meaningfully mitigated" following news Monday of solid progress on the company's accounting and legal issues and the resignation of president and CEO Nick Orlando, commented RBC Dominion Securities analyst Steve Arthur.

He upgraded the auto parts supplier to "outperform" from "sector perform" and hiked his price target to $15 (Canadian) from $12.

Martinrea, which has launched a search for a new president and CEO, announced Monday that a special committee of its board has concluded its review of earlier public disclosures. The review was launched after Nat Rea, a co-founder and former executive of Martinrea, alleged in September that certain members of management had breached duties to the company that could have affected previous financial reports.

Martinrea has said the claims are without merit and maintained that position on Monday. A forensic review has been completed by PricewaterhouseCoopers and the results largely supported management's claims.

"We cannot comment on the legal merits of the case or the likely outcome, but at this stage we believe that the risks are being reduced," Mr. Arthur said in a research note.

"With this, KPMG (Martinrea's auditor) and the special committee of the board were able to approve the financial statements for 2013, do not have to alter previous public statements as to the financial position of the company, and will not change their legal position against the claims of Nat Rea. The legal proceedings will continue through the courts, and carry with them headline and outcome risk, but we see the risk profile as diminished with the results of the forensic review," he said.

Canaccord Genuity also hiked its price target on Martinrea International to $13 (Canadian) from $10.25 and maintained a "buy" rating. It commented it expects "material improvement" in its financial results over the next year or two.

And CIBC World Markets reiterated a "sector outperformer" rating and $13.50 price target. "Investors can now focus on MRE's fundamentals, which should lead to higher valuation. We believe MRE is undervalued and should be bought," CIBC said.

The analyst consensus target is $12.04.

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Cantor Fitzgerald Canada analyst Peter Prattas downgraded Potash Corp. of Saskatchewan to "hold" from "buy", citing the stock's 19 per cent surge since Jan 30. He kept a $35 (U.S.) price target.

"The stock has now surpassed our target price, offering limited return factoring in the dividend. While we remain attracted to the quality of the company, the sustainability of the dividend and the optionality of a possible rekindling of Belarusian Potash Company (the potash cartel that Russia's Uralkali quit last year), the current valuation leads us to pause," he said.

The analyst consensus target is $33.23.

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In other analyst actions:

Credit Suisse upgraded Denison Mines to "neutral" from "underperform" and hiked its price target to $1.75 (Canadian) from $1.35. It cited better uranium market sentiment as well as greater exploration upside from its Wheeler River property and recently acquired projects.

Raymond James raised its price target on WSP Global to $42 (Canadian) from $33 and maintained an "outperform" rating. It cited the company's deal to pay $366-million for Focus Group, an Alberta-based oil and gas engineering services firm. TD Securities also raised its price target to $42 from $41 and reiterated a "buy" rating and CIBC World Markets raised its target to $40 from $38 and reiterated a "sector outperformer" rating.

M Partners cut its price target on Enterprise Group to $1.75 (Canadian) from $2.25 and maintained a "buy" rating.

Dundee Securities upgraded Strategic Oil & Gas to "buy" from "neutral" and reiterated a 65 cents (Canadian) price target.

UBS upgraded Laboratory Corporation of America to "buy" from "neutral" and raised its price target to $112 (U.S.) from $93.

Deutsche Bank downgraded Oasis Petroleum to "hold" from "buy" and cut its price target to $46 (U.S.) from $50.

UBS upgraded United Continental to "buy" from "neutral" with a price target of $50 (U.S.).

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

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