Friday'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.

RBC Dominion Services analyst Haran Posner upgraded Cineplex Inc. to "outperform" from "sector perform," believing that the recent pullback in shares in the wake of its earnings miss is an opportunity for investors to buy "a good business at a good price."

He also raised his price target to $45 (Canadian) from $44.

Cineplex shares are down 10 per cent year to date, whereas the S&P/TSX composite index is up 7 per cent. While the stock is not cheap, with an enterprise value trading at 10.5 times estimated 2015 EBITDA, its valuation is still fair given a solid growth trajectory, attractive dividend, consistent execution and a moderate risk profile, he said.

"While earnings this quarter missed our expectations, results were negatively impacted by non-recurring items (extreme weather, infrastructure ramp-up, promotional spend)," Mr. Posner said in a research note. "Looking forward, consensus estimates around costs should properly adjust, profitability at Cineplex Digital Media should improve, and additional synergies should be realized with Empire hitting its full stride. Moreover, industry box office is pacing nicely ahead in the second quarter (+22 per cent year-over-year), domestic box office comparables should ease (after four consecutive quarters where Canada underperformed), and the film slate looks promising through 2015."

"CGX has emerged as the core holding for investors seeking exposure to the Canadian media sector and for good reason. With rapid structural change sweeping across the media industry, Cineplex increasingly stands out as a source of stability for investors," he added.

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Citing a weaker top and bottom line in its latest earnings, as well as a lack of short-term catalysts to bolster sentiment for the stock, BMO Nesbitt Burns analyst Tom MacKinnon downgraded Industrial Alliance Insurance and Financial Services Inc. to "market perform" from "outperform."

The insurer reported earnings per share of 83 cents, missing the consensus for its latest quarter by 2 cents.

"Sales were weak, and versus its lifeco peers it would appear IAG is losing momentum, especially in the mutual fund marketplace," Mr. MacKinnon commented.

He reduced his earnings estimates for the remainder of 2014 and for 2015, partly because of slightly lower assets under management.

"From a valuation perspective, we believe IAG, with lower growth in its wealth management business, a lower estimated 2015 return on equity and less return on equity expansion, a lower MCCSR (Minimum Continuing Capital and Surplus Requirements) and a lower dividend yield, should trade at a modest discount (on both a forward price to earnings basis and a price to book value vs. forward return on equity basis) to Manulife and Sun Life Financial, as opposed to in-line/modest premium it currently trades at," Mr. MacKinnon said in a note.

"We believe a key catalyst to the lifeco thesis is growing wealth management businesses, and IAG's momentum has been somewhat negative versus its peers in this regard. With less in terms of excess capital than its peers, and, being perhaps more confided to the more saturated and mature Canadian market, less in terms of redeployment of capital opportunities than its peers, we see less in terms of upside catalysts for IAG," he added.

He cut his price target to $49 (Canadian).

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In other analyst actions:

At least six analysts raised their price targets on Canadian Tire Corp. after the company agreed to sell a 20 per cent stake in its financial services company to Bank of Nova Scotia for $500-million in cash. The company also reported earnings Thursday that were slightly below Street expectations.

"We view the agreement with Scotiabank positively for Canadian Tire," said Canaccord Genuity analyst Derek Dley as he raised his target to $123 (Canadian) from $115 and maintained a "buy" rating.

"Importantly, Thursday's announcement allows Canadian Tire to free up some capital on its balance sheet, which had been management's goal when it first entertained the idea of developing a partnership for its Financial Service division. As such, Canadian Tire announced a 14 per cent dividend increase and an increase to its share buyback program," he added.

BMO raised its target to $124 from $110 and reiterated an "outperform" rating. RBC Dominion Securities raised its target to $139 from $126 and maintained an "outperform" rating. CIBC World Markets raised its target to $129 to $114 and maintained a "sector outperformer" rating.

But Desjardins Securities cut its price target on Canadian Tire to $118 from $125 while keeping a "buy" rating. Desjardins Securities analyst Keith Howlett said the structure of the deal with Scotiabank was substantially different than what he had expected.

"The credit card transaction did not provide the lift to share valuation that we had contemplated. The deal concluded was more about establishing a secure long-term funding platform than extracting the equity within the business and getting the receivables off the balance sheet," he said.

The median analyst price target on Canadian Tire is now $123.50, up from $115 a month ago.

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Raymond James upgraded Secure Energy Services to "strong buy" from "outperform" and hiked its price target to $24 (Canadian) from $18. At least seven other analysts raised their price targets.

BMO Nesbitt Burns downgraded Lucara Diamonds to "market perform" on share price appreciation and kept a $2 (Canadian) price target.

BMO Nesbitt Burns hiked its price target on Whitecap Resources to $17 (Canadian) from $15.50 and kept an "outperform" rating, saying the company's outlook remains strong. RBC Dominion Securities raised its target to $17 from $15.50 and maintained an "outperform" rating.

BMO Nesbitt Burns hiked its price target on Calfrac Well Services to $44 (Canadian) from $39 and kept an "outperform" rating.

BMO Nesbitt Burns hiked its target on Trican Well Service to $18 (Canadian) from $14 and maintained a "market perform" rating.

Longbow Research upgraded Louisiana-Pacific to "buy" from "neutral" with a price target of $20 (U.S.).

ISI Group downgraded Apple to "buy" from "strong buy" with a price target of $675 (U.S.), up from $600.