The Husky Energy tower in Calgary, Monday, Feb. 1, 2010.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.
Citibank has initiated coverage on Husky Energy Inc. with a "buy" rating, believing shares are too heavily discounted against global integrated oil company peers even with recent operational problems. Analyst Mohit Bhardwaj set a $39 (Canadian) price target, which would mean a nearly 25 per cent return to investors over the next 12 months.
"Husky has built a diverse portfolio of upstream assets through its strategic partnerships, exploration success and legacy position in Western Canada," Mr. Bhardwaj wrote in a research note. "Husky's upstream assets are complemented well by its diverse midstream and downstream assets."
"We believe the market is overestimating the start-up issues at Liwan and cost-over runs at Sunrise and are therefore underestimating the cash flow impact of the of these projects. Our thesis also incorporates the high-grading of Husky Energy's Western Canadian position through its opportunities set in thermal oil within the Lloydminster region and the impact of exploration success. Husky currently trades at one of the highest discounts to its Net Asset Value versus other global integrated oil companies and is a key rationale for our Buy rating," he added.
The analyst consensus price target over the next year is $39.26, according to Thomson Reuters data.
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Nevsun Resources Ltd.'s share price has been on a tear this year, having benefited from both strong operating performance and strong commodity prices.
As a result of a 30-per-cent run up year to date, the stock now has limited implied return, Canaccord Genuity analyst Rahul Paul said. He downgraded the stock to "hold" from "buy" and maintained a $5 (Canadian) price target.
The company, which owns and operates the gold-copper-zinc Bisha project in Eritrea, still trades at a discount to its peers, Mr. Paul said.
"Considering the company's status as a single-asset producer with 100 per cent exposure to Eritrea, we view the trading discount as appropriate," Mr. Paul said. "We anticipate that the cash could be deployed towards an acquisition that could help sustain/grow the company's cash flow levels … and also potentially reduce exposure to Eritrea. In our opinion, successful execution on this strategy may lead to a higher trading multiple in the longer term."
The analyst consensus price target over the next year is $4.97.
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Com Dev International Ltd.'s earnings miss is evidence of continued pressure on the company's civil and military businesses, CIBC World Markets analyst Stephanie Price said.
On Friday, the satellite equipment company reported third-quarter earnings that fell short of analyst expectations. While Com Dev's commercial segment, as well as its ship-tracking technology, continue to perform, the company's U.S. facility operated at a $1.5-million loss in the quarter.
Government and military budget pressures continue to weigh on Com Dev's military and civil revenues, Ms. Price said.
She downgraded the stock to "sector performer" from "sector outperformer," and reduced her price target to $4.50 (Canadian) $5.50.
Also today, Cormark Securities downgraded Com Dev International to "market perform" from "buy" with a 12-month price target of $4.25 (Canadian).
The analyst consensus price target for COM DEV International Ltd over the next year is $4.91.
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Canaccord Genuity analyst Aravinda Galappatthige initiated coverage on Loyalist Group Ltd. with a "buy" rating and 85 cents (Canadian) price target. Loyalist is an educational company that specialises in English language studies for foreign students, and has 25 compuses across Canada.
Mr. Galappatthige commented, "We see this as an attractive roll-up opportunity in a highly fragmented industry. Loyalist has already made 16 acquisitions over three years and is up to a run rate revenue level of just under $65M. The market size in ESL (English as a second language) alone is estimated at $788-million in Canada (of which $500-million is tuition fees), comprising mostly small single proprietor or "Mom & Pop" type operations that tend to be under-capitalised and without an exit strategy. Hence, there is significant room to consolidate a large part of this sector over time. The financial accretion through the roll-up process is very attractive."
The analyst consensus price target over the next year is 82 cents.
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Goldman Sachs analyst Richard Ramsden upgraded Bank of America to "buy" from "neutral" and raised his price target to $19 (U.S.) from $17.
He notes that the bank has now resolved many of its legal issues, which will bring its better-than-expected long-term earnings outlook and improved capital return back in focus.
"The major catalyst for shares in our opinion is the resolution of the bulk of BAC's legal issues with its AG settlement. Legal costs have obscured much of the fundamental improvement at BAC and with these costs now subsiding, we believe investors will turn their focus to BAC's fundamental improvement," Mr. Ramsden said in a research note, via StreetInsider.com.
The analyst consensus price target over the next year is $17.68.
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In other analyst actions:
Goldman Sachs raised its price target on Canadian National Railway to $76 (Canadian) from $72.
Goldman Sachs raised its price target on Canadian Pacific Railway to $245 (Canadian) from $222.
GMP downgraded Yamana Gold to "hold" from "buy" with a $9.75 (Canadian) price target.
Raymond James initiated coverage on Atico Mining Corp. with an "outperform" rating and $1.15 (Canadian) price target.
Euro Pacific Canada initiated coverage on Treasury Metals Inc. with a "speculative buy" rating and 12-month price target of 70 cents a share.
Clarus Securities initiated coverage on Panterra Resource with a "buy" rating and 65 cents (Canadian) price target.
Morgan Stanley downgraded Ford Motor to "underweight" and cut its price target to $16 (U.S.). It also cut its target on General Motors to $29 (U.S.) from $33 while reiterating an "underweight" rating.
Raymond James downgraded Bonanza Creek Energy to "outperform" from "strong buy" with a price target of $65 (U.S.).
Darcy Keith