BRENDAN MCDERMID/Reuters
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
Intact Financial Corp.'s efforts to raise premiums and deductibles helped the company post a big earnings beat on Wednesday, BMO Nesbitt Burns analyst Tom MacKinnon said.
Canada's largest property and casualty (P&C) insurer's third-quarter profits exceeded analyst expectations by a wide margin, rising more than fourfold over the prior year. Last year, the company's profitability was impaired by a series of weather-related losses in Toronto, Quebec and Alberta.
The company has "very good defensive characteristics, a best-in-class management team, improving fundamentals in commercial P&C and personal property, and the additional upside of a potential accretive acquisition in the highly fragmented Canadian P&C marketplace," Mr. MacKinnon said.
He raised his target price on Intact's stock to $87 (Canadian) from $80 and maintained an "outperform" rating.
Desjardins Securities analyst Doug Young also raised his target on the stock to $76 from $70, but questioned the sustainability of the company's results.
Among other challenges, he cited "pressure on Ontario auto insurance results over the next 12 to 24 months," as cause for caution. He reiterated a "hold" rating.
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A pair of big earnings beats among pressure pumpers wasn't enough to overcome the volatility and uncertainty that has stricken the energy services sector recently, as BMO Nesbitt Burns analyst Michael Mazar lowered his targets on both companies.
On Tuesday, Trican Well Service Ltd. reported third-quarter results that handily beat analyst forecasts. On Wednesday, Calfrac Well Services Ltd. did the same.
"The market's gaze is clearly fixed on oil prices and their anticipated impact on producer spending levels," Mr. Mazar said.
He reduced his target price on Calfrac to $18 (Canadian) from $25, while maintaining an "outperform" rating. "We expect further margin improvement in coming quarters as the benefits of recent infrastructure investments are realized," Mr. Mazar said.
Meanwhile, he lowered his target on Trican to $12 from $18 and reiterated a "market perform" rating. "While pumping valuations have certainly become more compelling recently, we remain cautious and believe a better risk-reward profile is available in the infrastructure group," he said.
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A delay in starting operations at a new bioenergy plant has reduced Conifex Timber Inc. to a "show me" stock, CIBC World Markets analyst Mark Kennedy said.
The third-quarter earnings release on Tuesday included an announcement that the restart of the company's 36-megawatt bioenergy plant in Mackenzie, B.C., which will produce energy using waste from its sawmill and timber harvest operations, would be pushed out to March 2015.
"With the failure to successfully commence operations of their bioenergy plant in early October, Conifex missed a significant operational deadline that they themselves had set," Mr. Kennedy said. "As a result, we are taking a more conservative approach to valuation on this name."
He downgraded the stock to "sector performer" from "sector outperformer" and lowered his target price to $7 (Canadian) from $13.
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With the decline in oil prices weighing heavily on the "junior/intermediate exploration and production dividend space," Long Run Exploration Ltd. is particularly vulnerable given its relatively high debt levels, Canaccord Genuity analyst Anthony Petrucci said.
Investors are also clearly questioning if Long Run's dividend is secure, Mr. Petrucci said, noting that share price depreciation has elevated the stock's yield to 14 per cent.
"Should oil prices remain at $80 a barrel for an extended period of time, we believe Long Run may want to consider revisiting its current dividend level," he said.
He downgraded the stock to "hold" from "buy" and lowered his target to $4 (Canadian) from $7.
"We continue to believe that Long Run offers significant long-term value, but in the face of current commodity prices, we believe better risk adjusted investments are available in the space," Mr. Petrucci said. "Should commodity prices rebound, Long Run is likely to be one of the biggest beneficiaries."
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A proposed transaction with Burger King offers compelling value for Tim Hortons Inc. shareholders, says Desjardins Securities analyst Keith Howlett.
Mr. Howlett says Tim Hortons posted exceptionally strong quarterly results, with operating EPS of $0.95 exceeding consensus of $0.89.
The company's board also declared what he expects to be its last dividend of $0.32, payable Dec. 5. 2014. "The shareholder meeting to approve the takeover by Burger King Worldwide, Inc. is scheduled for December 9, 2014 (record date of November 3, 2014)," noted Mr. Howlett. "We have to assume that 3G Capital, known for having created the world's largest (and highly profitable) brewer, has exciting plans for the combined entity."
Mr. Howlett maintains his "hold" rating and boosted his target price to $95.50 (Canadian) from $89. The analyst consensus price target is $87.83, according to Thomson Reuters.
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In other analyst actions today
TD Securities downgraded Industrial Alliance Insurance & Financial Services to "hold" from "buy" with a price target of $47 (Canadian). Cormark Securities also downgraded the stock, to "market perform" from "buy", with a price target of $49.
TD Securities downgraded Home Capital Group to "hold" from "buy" with a price target of $58 (Canadian).
FirstEnergy Capital upgraded Horizon North Logistics to "market perform" from "underperform" with a price target of $3.50 (Canadian).
Macquarie downgraded Tourmaline Oil to "neutral" from "outperform" with a price target of $54 (Canadian).
Raymond James slashed its price target on North American Energy Partners to $7 (Canadian) from $11 but maintained an "outperform" rating.
Raymond James slashed its price target on North American Palladium to 10 cents (Canadian) from 25 cents and reiterated an "underperform" rating.
Canaccord Genuity cut its price target on Tahoe Resources to $20 (Canadian) from $25.50 and maintained a "hold" rating.
Deutsche Bank downgraded IntercontinentalExchange to "hold" from "buy" with a price target of $230 (U.S.).
Deutsche Bank downgraded Duke Energy to "hold" from "buy" but raised its price target to $81 (U.S.) from $78.
BMO Nesbitt Burns downgraded Hormel Foods to "market perform" from "outperform" with a price target of $58 (U.S.).
Citibank downgraded AOL to "neutral" from "buy" and cut its price target to $45 (U.S.) from $49.
With files from Bloomberg
Darcy Keith