Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
Desjardins Securities has a "cautiously optimistic" outlook for the Canadian retail property market, analyst Michael Markidis said in a note initiating coverage on a number of retail-focused real estate investment trusts (REITs).
"Retail landlords have generally exhibited a solid track record of maintaining high occupancy rates, and we note that developers have typically been disciplined in bringing new supply to the market," Mr. Markidis said.
In addition, the lower site densities characteristic of retail properties compared to other classes of real estate is creating intensification opportunities in growing markets, he said.
"We believe that land and fiscal constraints are becoming increasingly important in shaping how municipalities plan to accommodate future growth," he said. "The implication for well-located properties, particularly those near a major transit node, is that the underlying land should only become more valuable with the passage of time."
Some Canadian retail REITs are considering "large-scale redevelopment and intensification" at select properties, Mr. Markidis said. "Westside Mall is one such example."
Located in midtown Toronto, Westside Mall is owned by Calloway REIT, which Desjardins rates as a "buy" at a $30 (Canadian) price target. With WalMart as its largest tenant, Calloway also has the benefit of strong geographical presence and a solid balance sheet, Mr. Markidis said.
His second pick in the space is Crombie REIT, which has Sobeys as its dominant tenant. "A key pillar of our positive stance is management's strategic focus on grocery retail," Mr. Markidis said in placing a $14.50 price target on the stock. "We believe the stock could receive a boost as additional details pertaining to the redevelopment and intensification potential at 14 urban properties in western Canada are articulated to the market."
The analyst is less optimistic for Choice Properties REIT, CT REIT, and Plaza Retail REIT, all of which have "hold" ratings at price targets of $11, $12 and $4.25, respectively.
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Morgan Stanley analyst Joseph Moore downgraded Intel Corp. to "underweight" from "equal weight," believing that this is "as good as it gets" for the chip maker that reported better-than-expected third-quarter earnings late Tuesday.
Mr. Moore is primarily concerned with growing inventories at Intel at a time when PC market demand is weak. He thinks there is a risk of an overbuild of chips in the second half of this year, and continued declines in average selling prices and pressure on gross margins could mean limited upside for the stock.
His price target remains $30 (U.S.).
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While the market may be undervaluing Occidental Petroleum Corp.'s shale oil assets in the Permian Basin, the upside is limited compared to other energy stocks, Credit Suisse analyst Edward Westlake said.
"The volatility in the space has created better opportunities (albeit riskier) in low cost shale rich exploration and production," Mr. Westlake said.
He downgraded Occidental's stock to "neutral" from "outperform" and lowered his price target to $105 (U.S.) from $115.
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U.S. markets are a bright spot for Caterpillar Inc., but sluggish growth overseas has resulted in a price target cut from Credit Suisse analyst Jack Cook.
A Credit Suisse survey of Caterpillar dealers found that 95 per cent of U.S. dealers polled said machine sales remain strong thanks in part to the broader housing recovery.
However, overseas growth is dismal. Indonesia markets fell 15 per cent in 2014 and are down 42 per cent from the peak, while China is down 15 per cent in 2014 with no indication of a recovery in the near term.
Mr. Cook maintains his "outperform" rating and lowered his target price to $108 (U.S.) from $119. The analyst consensus price target is $109.52, according to Thomson Reuters.
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In other analyst actions:
Jennings Research upgraded Semafo to "buy" from "hold" and maintained a price target of $5.75 (Canadian).
Beacon Securities downgraded Goldrock Mines to "hold" from "buy" with a price target of 50 cents (Canadian).
Sterne Agee & Leach upgraded Baker Hughes to "buy" from "neutral" with a price target of $72 (U.S.)
Mackie Research Capital initiated coverage on CERF with a "buy" rating and $5 (Canadian) 12-month price target.
Axiom Capital upgraded Cliffs Natural Resources to "hold" from "sell" with a price target of $9 (U.S.).
Sterne Agee & Leach upgraded Sun Bancorp to "buy" from "neutral" with a price target of $21.50 (U.S.)
Northland Securities initiated coverage on Sierra Wireless with an "outperform" rating and 18-month price target of $30 (U.S.).
Piper Jaffray upgraded United Natural Foods to "overweight" from "neutral" with a price target of $74 (U.S.).
With files from Bloomberg