Wednesday's analyst upgrades and downgrades

Share

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.

At least five analysts have raised their price targets on Suncor Energy Inc. in the wake of the company's surprisingly strong first-quarter results.

Raymond James hiked its price target to $51 (Canadian) from $48 and maintained an "outperform" rating and BMO Nesbitt Burns hiked its target to $52 from $47 and reiterated an "outperform" rating. Barclays raised its price target to $55 from $48 and reiterated an "overweight" rating, while National Bank raised its target to $49 and Canaccord Genuity increased its target to $50.

The median price target on Suncor is now $47.25, up from $45 prior to the earnings release, according to Thomson Reuters data.

Suncor reported cash flow per share of $1.96, surpassing the consensus view of $1.77, while operating earnings per share of $1.22 easily beat the Street expectation of 97 cents. The beat was primarily due to strong downstream operations, thanks in part to improved crude pricing in western North America and growing rail volumes to its Montreal refinery.

"We believe Suncor is successfully transitioning  into a premiere growth and income model, which we suspect will continue to be well received by investors," commented Raymond James analyst Chris Cox. "With the shares currently trading at the lowest EV/EBITDA valuation in the Canadian large cap energy space, we view the current price as an attractive entry point."

========

At least 16 analysts cut their price targets on Twitter Inc. after the social media giant revealed earnings late Tuesday that disappointed the Street because of underwhelming user growth. The stock is down about 10 per cent today to its lowest level since going public in November.

Among the most substantial cuts came from Evercore Partners (to $48 from $66); BMO Nesbitt Burns (to $42 from $53); and Macquarie (to $30 from $47).

The median price target on Twitter is now $42.50, down from $51.97 a month ago, according to Thomson Reuters data. While there were no ratings downgrades today, there have been several since the stock premiered last year. Of the 12 analysts who initiated coverage on the stock around the time of its premier, five have since downgraded their view, according to Reuters. There are now 7 ratings equivalent to a buy, 13 holds, and 11 sells.

"We continue to expect Twitter's stock to underperform the market in the face of (what is likely) a multiple-quarter transition on user engagement and ad product adoption," said UBS Equities analyst Eric Sheridan, who cut its price target on the stock to $35 from $42 and reiterated a "sell" rating.

Analysts are also worried the stock will come under pressure after May 5, when restrictions on the sale of shares by early investors will be lifted.

========

TD Securities analyst Greg Barnes downgraded uranium producer Cameco Corp. to "hold" from "buy" and cut his price target to $26 (Canadian) from $29.

He's concerned that uranium prices could continue to trend lower in the short- to medium-term because of market oversupply. Another negative for Cameco is the uncertainty related to a tax reassessment.

In the longer term, however, he remains bullish on uranium, noting that Japanese nuclear restarts are likely in the next 12 months and that utilities will need to increase their contracting activities for nuclear power over the next 24 months. "In addition, the supply discipline that is being enacted by uranium producers all combine to indicate that the uranium market is establishing a base from which a sustainable rebound in market prices is possible," StreetInsider quoted him as saying in a research note.

Cantor Fitzgerald Canada also today cut its price target on Cameco to $27.80 a share from $30.70 but reiterated a "buy" recommendation.

The median price target is $26.50, down $1 from a month ago.

========

AutoCanada Inc. is acquiring car dealerships at a quickened pace, leading to a significant price target increase by Canaccord Genuity.

On Tuesday, the company announced a deal to purchase a group of eight new locations, adding to what is already one of the largest dealership groups in Canada.

"We had been anticipating such an announcement, and, importantly, believe this should lead to an upward revision to AutoCanada's current acquisition guidance of 10 to 12 new dealership acquisitions over the next 24 months," analyst Derek Dley said in a note. He maintained his "buy" recommendation on AutoCanada stock and increased his price target to $71 (Canadian) from $63.

The company's share price has tripled over the last year as it has steadily acquired new dealerships, primarily in Western Canada. Analysts say that many private dealer-owners are ready to retire and are putting their franchises up for sale.

AutoCanada has consolidated mostly by scooping up dealerships one at a time, but are now beginning to grow through buying up multi-location groups.

Mr. Dley said he expects the company to provide updated guidance on acquisitions over the next couple of years when AutoCanada reports its first-quarter earnings next week.

Adding to the company's growth profile are encouraging signs in the auto sector.

"We expect AutoCanada's exposure to the robust western Canadian economies of Alberta and British Columbia will again lead to above-industry average new car sales growth," Mr. Dley said. "Meanwhile, Chrysler, which represents about 70 per cent of AutoCanada's new car sales, continues to gain market share."

The median price target is $71, up from $63 a month ago.

========

Trading volumes on the Toronto Stock Exchange are on the rise, increasing earnings potential at TMX Group Ltd., the owner of the TSX, according to CIBC World Markets analyst Paul Holden.

Share trading volumes and financings were weak through most of last year, but activity began to improve in the last quarter of 2013, Mr. Holden said in a note in which he reiterated his "sector performer" rating and raised his price target to $55 (Canadian) from $50.

"We believe recent data supports our view that the cash equities business is coming out of a trough, but that the recovery will be gradual," he said.

In the first quarter of this year, cash equity trading volumes were the highest in two years, rising by 19.2 per cent over the previous quarter.

Activity levels in financings and derivatives trading also picked up in the quarter, Mr. Holden said. As a result, CIBC raised its first-quarter earnings estimate from 90 cents per share to 98 cents. TMX is scheduled to report its first quarter results on May 9.

The median price target is also $55.

========

BCE Inc.'s Bell Media division has been pointed out as source of weakness by Canaccord Genuity analyst Dvai Ghose, echoing concerns raised in an RBC Dominion Securities downgrade earlier this week.

While Mr. Ghose expects strong first-quarter 2014 results from BCE's wireless business, Bell Media stands out as concern due to issues such as increasing programming costs, the loss of NHL playoff broadcasting rights and a CRTC mandated move to more a la carte programming.

Mr. Ghose maintained his "hold" rating and $48 price target on BCE.

On Monday, RBC Dominion Securities analyst Drew McReynolds lowered his rating on BCE to "sector perform" from "outperform" and cut his price target to $47 (Canadian) from $48, citing the deteriorating outlook for Bell Media.

The analyst consensus price target over the next year is $47.99, according to Thomson Reuters.

========

In other analyst actions:

Raymond James downgraded Methanex to "market perform" from "outperform" and cut its price target to $75 (U.S.) from $85, citing its "surprisingly lacklustre" first quarter results.

CIBC World Markets downgraded Parkland Fuel to "sector performer" and kept a $22.25 (Canadian) price target

Canaccord Genuity initiated coverage on CT REIT (Canadian Tire's real estate REIT spin-off) with a "hold" rating and $11.25 (Canadian) price target.

National Bank Financial upgraded Genworth MI Canada to "outperform" from "sector perform" and raised its price target to $43 (Canadian) from $40.