Skip to main content

Canadian Pacific Rail workers stand on a locomotive at the company's Port Coquitlam yard east of Vancouver, B.C., in this file photo.DARRYL DYCK/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 analyst Christian Wetherbee raised his price target on Canadian Pacific Railway Ltd. after the company announced late Monday an accelerated share buyback program.

The railway is more than doubling the ceiling on its share repurchase program, to about 12.7 million common shares, from 5.3 million. It had already bought back the maximum number of shares allowed under the current plan, which kicked in on March 17, purchasing about 3 per cent of its outstanding common shares. The amended plan goes into effect Oct. 2 and allows the buyback of up to 5 per cent of its outstanding shares.

"This move is even ahead of our targets and implies an annual repurchase run rate well above $3-billion (Canadian)," Mr. Wetherbee said as he reiterated a "buy" rating and raised his price target to $235 (U.S.) from $205. "We are raising our 2015 and 2016 EPS estimates to $11.30 (Canadian) and $13.45, from $11.15 and $13.30, respectively. We now stand 5 per cent above consensus in each period."

CP Rail will hold an investor meeting later this week. Mr. Wetherbee said he expects the company to lay out a long-term capital allocation strategy, which should include aggressive plans for more share buybacks. He thinks buybacks could exceed $10-billion (Canadian) from 2015 through 2018, "with further upside possible depending on the size of land/asset sales in the coming years."

The analyst consensus price target for Canadian Pacific Railway over the next year is $208.01, according to Thomson Reuters data.

======

Analysts have been busy since Ford Motor Co. revealed on Monday that record profit in North America won't be enough to offset trouble in South America and Russia. The company provided updated 2014 guidance and an initial outlook for 2015 which were below consensus estimates.

"We attended Ford's analyst day in Detroit on Monday," said Credit Suisse analyst Dan Galves. "Unfortunately, our positive experience on a product ride and drive and management's positive long-term outlook was overshadowed by a substantial guide-down for 2014 (total pre-tax profits of $6-billion vs. prior guidance of $7-billion to $8-billion) and initial 2015 outlook which was well-below the Street."

UBS analyst Colin Langan shared Mr. Galves' sentiment, and added that 2015 guidance for Ford's North American business is "overly conservative and reflects little benefit from the F-150 launch."

Mr. Langan maintained his "buy" rating and cut his target price to $19 (U.S.) from $22.

Mr. Galves maintained his "neutral" rating and reduced his target price to $15.50 from $18.00.

Analysts at Craig Hallum Capital Group, meanwhile, downgraded the stock to "hold" from "buy" and cut their target price to $17 from $22.

The analyst consensus price target for Ford Motor is now $18.66, according to Bloomberg data, down from about $20 last week.

======

The share price of Labrador Iron Ore Royalty Corp. has overreacted to recent weakness in spot iron ore prices, creating an attractive entry point for investors, said Desjardins Securities analyst Jackie Przybylowski.

"Iron ore spot prices have dropped 12 per cent in the past month but we remain constructive in the longer term, as we are forecasting modest positive demand growth for the commodity and continued curtailment of higher-cost mines to balance the market. We believe that prices are near the floor, and that they will rebound after China's Oct. 1–7 National Day holiday, when port inventories will be down, and as a liquidity injection has helped to control the economic slowdown in the country," she said in a research note.

Ms. Przybylowski reiterated a "buy" rating and $36 (Canadian) price target. The analyst consensus price target over the next year is $34.21, according to Thomson Reuters.

======

Tricon Capital Group Inc. provides investors a chance to own "a hybrid real estate vehicle unlike anything else in Canada," said Raymond James Ltd. analyst Ken Avalos.

Mr. Avalos explained that Tricon generates cash flows from five difference sources, including asset management fees, performance fees, capital gains from co-investments, single-family rentals and a newly added manufactured housing community rental stream.

"Intriguingly, Tricon offers investors exposure to the U.S. housing recovery," he says. "About 85 per cent of its exposure is south of the border, in key growth markets (Arizona, California, and Texas). We believe the U.S. housing market is in the fourth or fifth inning of a recovery and as such, Tricon should enjoy a long runway of above-average growth."

Mr. Avalos initiated coverage of Tricon Capital Group with an "outperform" rating and a $9.50 (Canadian) target price. The analyst consensus price target is $10.19, according to Thomson Reuters.

======

Buy shares of Valeant Pharmaceuticals International Inc. before the market stops undervaluing them, says Canaccord Genuity analyst Neil Maruoka.

"We think it's time to start getting more aggressive in buying VRX in front of the Q3 (results)," said Mr. Maruoka in a note. He believes the stock should have responded better when the company pre-announced some of its third-quarter results, but was hampered by its ongoing attempts to acquire Allergan Inc.

"Once the Street starts to refocus on the fundamentals and less on the Allergan circus, the stock can trade well on its own merits."

Mr. Maruoka maintains his "buy" rating and $168 (U.S.) price target. The analyst consensus price target $157.22, according to Thomson Reuters.

======

In other analyst actions:

AltaCorp Capital Research hiked its price target on Encana to $32 (Canadian) from $27.50 and reiterated a "buy" rating.

Credit Suisse initiated coverage on DHX Media with a "neutral" rating and price target of $9 (Canadian).

AltaCorp Capital Research cut its price target on Black Diamond Group to $34 (Canadian) from $40 and reiterated an "outperform" rating.

TD Securities initiated coverage on Dream Unlimited with a "buy" rating and $17.50 (Canadian) price target.

AltaCorp Capital Research initiated coverage on Progressive Waste Solutions with an "outperform" rating and $36 (Canadian) price target.

CIBC World Markets initiated coverage on PolyMet Mining with a "sector outperformer" rating and $2 (Canadian) price target.

Craig-Hallum downgraded Ford to "hold" from "buy" and slashed its price target to $17 (U.S.) from $22. Credit Suisse cut its price target to $15.50 from $18 and maintained a "neutral" rating. UBS cut its price target to $19 from $22 and maintained a "buy" rating.

Merrill Lynch upgraded Alcoa to "buy" from "neutral" and raised its price target to $18 (U.S.) from $16.

Jefferies initiated coverage on Apple with a "hold" rating and $110 (U.S.) price target.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe