Excavated potash pours from the tunnel ceiling into an underground storage area at a potash mine in this file photo.Andrey Rudakov/Bloomberg
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
The "renovations" underway at InnVest REIT have earned the trust a ratings upgrade from RBC Dominion Securities analyst Neil Downey.
InnVest is currently overhauling its management and portfolio, and is showing convincing signs that property renovations are driving higher operating cash flows, says Mr. Downey. In addition, the quality of its portfolio is increasing thanks to asset sales that are exceeding targets along with quality acquisitions.
"We see a reinvigorated management team which is showing signs of operational and financial discipline," he says. "Moreover, management is backed by a strong and independent board that has significant financial alignment and the ability to provide strategic direction and input."
However, InnVest is not with its risks, says Mr. Downey.
"The inherent cyclical nature of the lodging sector and the above-average financial leverage in the REIT's capital structure make the units not suitable for conservative investors, in our view."
Mr. Downey is upgrading InnVest to "outperform" from "sector perform" and boosting his price target to $6.50 (Canadian) from $6. The analyst consensus price target is $5.54, according to Thomson Reuters.
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An injection of capital from a private equity firm has elevated the prospects for IC Potash Corp., a small-cap exploration company, AltaCorp Capital analyst John Chu said.
On Wednesday, IC Potash announced that New York-based Cartesian Capital had made a $10-million (U.S.) investment in the company.
"The company has now secured the financial means to get to the next step of the development process," Mr. Chu said.
He raised his rating on the stock to "outperform" from "sector perform," while maintaining a $0.40 (Canadian) price target.
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Algonquin Power & Utilities Corp.'s investor day, held on Tuesday, reaffirmed the company's significant potential growth through power development projects, Desjardins Capital Markets analyst Bill Cabel said.
"Management did a good job of discussing the full pipeline out to 2018, which could drive a roughly 100-per-cent increase in adjusted earnings before interest, taxes, depreciation and amortization," the analyst said.
"In Algonquin, we believe investors will find long-term stable operations combined with significant and relatively low-risk growth and a strong likelihood for continued annual dividend increases to further fuel share price appreciation."
Mr. Cabel reiterated his "top pick" rating on Algonquin's stock, and a $10.50 (Canadian) price target.
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Great Prairie Energy Services Inc. met analysts' expectations for earnings, but is vulnerable to energy sector volatility, Canaccord Genuity analyst John Bereznicki said.
The small-cap energy services company reported third-quarter earnings in line with consolidated forecasts for earnings before interest, taxes, depreciation, and amortization, despite disappointing results in the company's recently acquired hydraulic fracturing fluid business.
"To reflect a more uncertain fundamental environment and higher depreciation charges, we are lowering our 2015 earnings-per-share outlook," Mr. Bereznicki said.
He reduced his target price on Great Prairie's stock to $0.50 (Canadian) from $0.60 and maintained a "buy" rating.
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Canadian Natural Resources Ltd. shareholders should be amply rewarded in a $70-$80 oil environment, says AltaCorp Capital Research analyst Nicholas Lupick.
Mr. Lupick says CNQ's free cash flow, strong liquidity and Horizon mine production all contribute to a strong balance sheet. A strategic review of the company's royalty fee lands also offers potential upside for the remainder of 2014 into early 2015.
He adds that the type of oil CNQ produces gives the company an advantage. "From a structural supply/demand perspective we continue to believe that North American heavy oil is far better supported than light oil going forward given the pending oversupply of light oil stemming from the US Shale Revolution," he says. "CNQ has enough thermal heavy in-situ planned projects to generate a 20 year compounded annual growth rate of 8 per cent."
Mr. Lupick maintains his $52 (Canadian) price target and "outperform" rating.
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In other analyst actions
Scotiabank downgraded Parallel Energy to "underperform" in the wake of the company announcing a cut in its dividend payout Wednesday night. It was also downgraded by National Bank Financial, to "sector perform" from "outperform," with a price target of $3 (Canadian).
Cormark Securities upgraded Lydian International to "speculative buy" from "market perform" with a price target of $1.05 (Canadian).
Macquarie upgraded ARC Resources to "outperform" from "neutral" with a price target of $32.50 (Canadian).
Cormark Securities upgraded Balmoral Resources to "speculative buy" from "market perform" with a price target of $1.60 (Canadian).
Tim Shufelt