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.

RBC Dominion Securities today slashed its forecasts for gold and silver prices for the next three years as the sector continues to fall out of favour with investors. But the bank also thinks that the bullion price is close to hitting a floor.

In its broad review of the precious metals sector, RBC also made several ratings and price target changes for the gold and silver equities it follows.

"We are lowering our near-term gold and silver price forecasts, due to a combination of U.S. dollar strength, relatively soft physical demand and strength in the broader equity markets," said the RBC analysts in a research note. It now assumes a broad $1,150 to $1,350 trading range for gold for the next three years, and maintains a $1,400 long-term gold price forecast. It now predicts a range for silver of $19.50 to $21.75 over the next three years and a long-term price of $23.50.

RBC believes $1,180 will be a key technical support for gold in the near term, and from a fundamental perspective, strong demand from southeast Asia and the Indian sub-continent should provide support in the $1,180 to $1,200 range.

"Over the next 12 to 18 months we expect a choppy gold/silver price environment as the Fed's tapering program is completed and then the market begins to discount the expected Fed rate hike program. Longer term our forecast $1,400/oz gold price average beginning in 2018 reflects ongoing central bank buying, stable jewelery/investment demand from India/China in a benign geopolitical environment," it said.

Some of the rating and price target changes are as follows:

RBC downgraded Lake Shore Gold to "underperform" from "sector perform" with a price target of $1.15 (Canadian), expressing doubts about its ability to extend mine lives at a time when its paying down debt.

RBC downgraded Kinross Gold to "sector perform" from "outperform" with a price target of $4.50 (U.S.), citing few near-term catalysts for shares to outperform peers.

RBC upgraded Eldorado Gold to "outperform" from "sector perform" with a price target of $9 (U.S.).

RBC upgraded AuRico Gold to "outperform" from "sector perform" with a price target of $4.75 (U.S.)

RBC upgraded Newmont Mining to "sector perform" from "underperform" with a price target of $30 (U.S.).

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Teck Resources Ltd. may need to tap into its credit facility in order to maintain its dividend, says Canaccord Genuity analyst Gary Lampard.

"Based upon our assumptions of moderately improving commodity prices through 2015 and 2016, we believe that in order to maintain the current 90 cents (Canadian) annual dividend, Teck may need to begin drawing on its $3-billion (U.S.) credit facility from late 2015 or early 2016," says Mr. Lampard.

He sees fundamental share price support between $19 and $20, but in the absence of material growth prior to cash flows from Teck's Fort Hill oil sands operation, Mr. Lampard sees limited short- to medium-term upside from the current share price.

He maintained his "hold" rating and decreased his target price to $22 (Canadian) from $26. The analyst consensus price target is $28.35, according to Thomson Reuters.

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The outlook for Canadian Pacific Railway Ltd. may be even better than the company expects, says CIBC World Markets analyst Kevin Chiang.

CP stock jumped this week after chief operating officer Keith Creel outlined the company's plan to upgrade tracks and terminals and tear up underused railroads in an effort to boost train speed and improve service. Key targets include more than doubling EPS over the next four years, growing annual revenue to $10-billion and generating cumulative cash flow before dividends of $6-billion.

"Our first key takeaway from the investor day is that while CP's financial targets may seem aggressive, we believe management has been relatively conservative on forward guidance," said Mr. Chiang. "When considering future asset dispositions that could bolster cash flow, the opportunity for the share buyback program to improve and more room for leverage given its improved capital structure, we see the opportunity for CP to potentially exceed expectations."

He also sees a key revenue opportunity as CP transitions to a service oriented railroad that "sells service rather than price."

"Intermodal and merchandise will be significant drivers of growth and will provide a better balance on its revenue mix. On the former, CP will leverage its infrastructural advantages and improved service to drive market share gains as its rail proposition becomes more compelling versus the trucks. On the latter, CP is well positioned for the energy renaissance whether it is crude or [fracking] sands."

Mr. Chiang maintains his "sector outperformer" rating and raised his target price to $245 (Canadian) from $240.

Also today, Desjardins Securities hiked CP's price target to $256 (Canadian) from $219 and reiterated a "buy" rating. BMO Nesbitt Burns raised its price target to $260 (Canadian) from $240 and maintained an "outperform" rating.

The analyst consensus price target is $214.47, according to Thomson Reuters.

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In other analyst actions:

Canaccord Genuity upgraded Capstone Mining to "buy" on share price weakness and cut its target price to $2.80 (Canadian) from $3.

Canaccord Genuity cut its price target on Labrador Iron Ore Royalty Corp. to $31 (Canadian) from $40 but kept a "buy" rating.

Canaccord Genuity downgraded Vale to "hold" from "buy" and cut its price target to $12 (U.S.) from $17, citing balance sheet concerns.

Canaccord Genuity upgraded Imperial Metals to "speculative buy" from "hold" and cut its price target to $10.50 (Canadian) from $11.50.

Imperial Capital initiated coverage on Avigilon with an "outperform" rating and $25 (Canadian) price target.

Credit Suisse has removed Agrium from its U.S. Focus List - its top investment ideas. But it maintains an "outperform" rating and $110 (U.S.) price target.