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.

BMO Nesbitt Burns analyst Fadi Chamoun upgraded Canadian National Railway Co. to "outperform" from "market perform" with an unchanged price target of $82 (Canadian).

The action came after company executives from CN Rail held a series of meetings with institutional investors this week.

"We came away from the meetings and discussions with management with a greater sense of confidence in the company's growth opportunities, which we believe should support growth in earnings and shareholder distributions going forward. Combined with the recent pullback in the share price, we see the potential now for more than a 10 per cent return upside over the next twelve-month period," Mr. Chamoun said in a research note.

"We see several positives in the outlook, particularly for energy-related commodities (i.e., crude, frac sand), as well as segments tied to U.S. manufacturing and construction activities," Mr. Chamoun added . "In addition, we believe CN Rail continues to enjoy significant growth opportunities in the international intermodal market, supported by its positioning with the Port of Prince Rupert. As rail and trucking capacity continues to tighten, we believe this should lead to greater opportunities to improve pricing going forward."

He expects a combination of robust revenue growth, continued strong and improving margins and increased financial leverage will allow CN Rail to generate a compounded annual growth rate in earnings per share of 14 per cent over the next five years. He also expects dividends at the railway to grow at a faster rate than earnings per share, as the railway feels comfortable enough to increase its payout ratio in coming years.

Mr. Chamoun estimates CN Rail has up to $3-billion in spare debt capacity, which could be put towards share repurchases. "We estimate the incremental debt could add nearly a billion dollars in incremental value from a tax shield advantage standpoint, reduce the share count by about 5 per cent, improve return on equity, boost the EPS growth rate and still be able to maintain a strong investment-grade rating through the economic cycle," he said.

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Canadian Tire Corp. will walk a fine line in its campaign to attract  younger consumers without alienating its older base, says Credit Suisse analyst David Hartley.

Mr. Hartley says the key takeaway from the company's recent investor day is a push to gain market share in the 30- to 49 year-old age demographic while maintaining its core 50-65 year-old customer base.

"The former is becoming more important from consumer spending perspective," he says.

Mr. Hartley maintains his "underperform" rating and raised his target price to $105 (Canadian) from $97. The analyst consensus price target is $124.67, according to Thomson Reuters.

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In other analyst actions today:

RBC Dominion Securities downgraded Ainsworth Lumber to "sector perform" from "outperform" with a price target of $2.75 (Canadian).

Cormark Securities upgraded Fortuna Silver Mines to "buy" from "market perform" with a price target of $5.75 (Canadian).

Canaccord Genuity downgraded Manitok Energy to "speculative buy" from "buy" and cut its price target to $3 (Canadian) from $3.50.

BMO Nesbitt Burns initiated coverage on Canadian Energy Services & Technology with an "outperform" rating and price target of $11 (Canadian).

Societe Generale upgraded Halliburton to "buy" from "hold" with a price target of $75 (U.S.).

Maxim Group downgraded JC Penney to "sell" from "hold" with a price target of $4 (U.S.)

Raymond James upgraded Symantec Corp to "outperform" from "market perform" with a price target of $27 (U.S.).

Evercore Partners raised its price target on Twitter to $65 (U.S.) from $55 and reiterated a "buy" rating.

With files from Bloomberg