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A Blackberry logo hangs behind a Canadian flag at their offices on the day of their annual general meeting for shareholders in Waterloo on June 23.Mark Blinch/Reuters

Inside the Market's roundup of some of today's key analyst actions. This file will be updated often during the trading day so check back for new details.

Touting its cash "flexibility" and the opportunity for operational spending cuts, Morgan Stanley analyst James Faucette upgraded his rating of BlackBerry Ltd. (BBRY-Q, BB-T) to "equal weight" from "underweight."

Though he said there is no evidence of a "fundamental business turnaround," Mr. Faucette said the company's cash balance has grown in recent quarters.

"While many one-time benefits the company could pull forward (e.g. asset sales, licensing) has been realized, we believe the company still has significant opportunity to add to that cash balance through headcount reductions or other reallocation of resources," said Mr. Faucette, according to Benzinga.com. "It is reported that the company recently underwent a reorganization; while acknowledging, the company did not disclose headcount involved."

Mr. Faucette did not change his price target of $7 (U.S.). The analyst consensus price target is $8.58, according to Thomson Reuters.

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Initial steps taken by new chief executive officer Alain Bellemare will improve execution and profitability at Bombardier Inc. (BBD.B-T), according to Desjardins Securities analyst Benoit Poirier.

However, ahead of the release of the company's second-quarter results on July 30, Mr. Poirier adjusted his delivery forecasts for the Global family of aircraft in the wake of "cautious" comments made by several market participants. He also lowered his estimates for the quarter as well as 2015 and 2016 as a whole.

For the second quarter, he now projects revenue of $4.5-billion (U.S.) and adjusted earnings per share  of 5 cents, down from $4.6-billion and 6 cents respectively. His adjusted EPS forecast for 2015 and 2016 dropped to 21 cents and 19 cents from 23 cents and 24 cents.

"We expect Bombardier to end 2016 with an adequate financial cushion, although we are lowering our cash forecast by about $1.4-billion to $2.4-billion, down from $3.8-billion previously," he said.

Though Mr. Poirier said Mr. Bellemare has built a "very impressive" senior management team since taking over in February, he said it is too early to accurately assess his performance. Further, he does not expect specifics in terms of direction upon the release of the quarterly results.

"While we would like BBD to clear the doubts surrounding its liquidity and financial strategy, we believe the recent appointment of John Di Bert as Senior-Vice President and CFO (effective Aug. 10) will likely delay the financial review process as we believe he will plant his feet on the ground first before committing to long-term projections," he said. "For the same reason, we do not expect much colour regarding plans for a partial [initial public offering of Bombardier Transportation] in 4Q."

He noted that communication around the second quarter results and outlook will be important, but he does expect investors to give Mr. Bellemare and his team time in their new positions.

Mr. Poirier said: "Although we do not expect the results themselves to be an issue, we suspect investors and analysts will focus on potential CSeries orders, the review of the Global 7000/8000 program and the BT IPO process. On the financial front, we expect management to reiterate its positive view on the company's financial position. We note that new CFO John Di Bert will assume his new role on August 10, 2015. As a result, it would be surprising if the firm disclosed a significant new financial plan without the new CFO in place. Likewise with the Global 7000/8000, [new president of business aircraft David] Coleal officially joined the company one month ago, which may not be enough time for him to complete his review of the Global 7000/8000."

The analyst maintained his "buy" rating for the stock, but he lowered his price target to $4 (Canadian) from $4.50. The analyst consensus price target is $2.89.

"We also expect the partial IPO of BT to be successful and believe further value-creation opportunities will occur in the future," he said. "While it will take time to make progress, we expect shareholders to be rewarded in the long term."

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Though the impact of foreign exchange on the financial results of Restaurant Brands International Inc. (QSR-N, QSR-T) remains "punitive," RBC Dominion Securities analyst David  Palmer expects continued same-stors sales momentum and "dramatic" year-over-year cost reductions through 2015.

On Monday, the company reported a better-than-expected second-quarter profit as comparable sales at Tim Hortons rose 5.5 per cent and at Burger King by 6.7 per cent during the quarter. Its net profit attributable to shareholders was $9.6-million, or 5 cents per share, compared with a loss of $8.1-million, or 4 cents per share, in the first quarter. Adjusted profit was 30 cents per share, beating the consensus of 25 cents.

Mr. Palmer said the impact of the weak Canadian dollar could drop earnings before interest and taxes by 9 per cent in 2015 and 2 per cent in 2016. However, he increased his same-store sales growth projections for the second half for Burger King to 3.6 per cent from 2 per cent and Tim Hortons to 4.1 per cent from 2.5 per cent.

He said the purchase of Tim Hortons by Burger King's parent company will bring efficiencies that will drive earnings growth further going forward.

"Burger King's 100-per-cent franchised business model offers stability and predictability of earnings and cash flows with low capital requirements and insulation from input costs," said Mr. Palmer. "In addition, international unit growth has been accelerating — to 10 per cent from 6 per cent in 2011—and the company's domestic sales momentum seems to have improved in recent months. With the addition of Tim Hortons, we believe the new company can create additional value by employing cost discipline, returning capital to shareholders, and accelerating international unit growth."


Mr. Palmer did not change his "outperform" rating for the U.S. issue of the stock, but he bumped his price target to $48 from $46 (U.S.). The analyst consensus price target is $44.80.

He said: "We believe Restaurant Brands International (RBI) will enact several strategies over the next 3-4 years that should lead to significant value creation at Tim Horton's. These include: (1) rapid overhead reduction; (2) reduced capital spending; (3) streamlined logistics; and (4) new market development with careful selection of both locations and franchisee partners. We estimate these strategies will help enable RBI to grow free cash flow over the next few years, and ultimately pursue additional acquisitions.`

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As Capital Power Corp. (CPX-T) is highly contracted through 2016, it is well-positioned to weather the current downturn in the power market in Alberta and possesses "upside" in the event of a recovery, said CIBC World Markets analyst Paul Lechem.

On Monday, the company released second-quarter earnings that fell below expectations. It reported earnings before interest, taxes, depreciation and amortization of $92-million and normalized earnings per share of 10 cents compared to a consensus forecast of $107-million and 22 cents. The shortfall, according to Mr. Lechem, was due largely to a 28-day unplanned outage at its Shepard Energy Centre facility at the same time as hot weather and other outages brought a price spike.

Despite the miss, Capital maintained its funds from operation guidance even though the market is weaker. Mr. Lechem noted: "Cash flow is more than sufficient to support the dividend increase and modest capex."

He added: "The increased level of contractedness limits downside risk in a weak power market, but the lower hedged prices reduce our mid-term earnings and cash flow outlook. We are reducing our financial forecast accordingly."

He lowered his price target to $26 (Canadian) from $28. The consensus is $25.71.

His "sector outperformer" rating did not change.

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By selling its generics unit to Teva Pharmaceutical Industries Ltd. for $40.5-billion (U.S.), Allergan PLC (AGN-N) is shedding itself of a slower growing business that will have no pricing power left in the near future and should be longer-term accretive to growth, said Canaccord Genuity analyst Corey Davis.

Given the reluctance of Allergan to sell in the past, Mr. Davis suggested price "made the difference" in securing a deal.

"Indeed at $40.5-billion, it is [approximately] 6 times revenue of $7-billion and about 25 times on a [price/earnings]basis, which seems expensive compared to most historical deals in the space around 3 times revenue (although to be fair it is probably a better than average generics asset, just as is Par Pharmaceutical Holdings Inc., also being acquired, by Endo International PLC at 5x revenue and a 25x P/E)," said Mr. Davis.

With the sale, Mr. Davis dropped his 2016 and 2017 earnings per share estimates to $17.96 and $20.09 from $22.60 and $25.22.

He raised his price target to $396 from $352, which he noted would be a 21-per-cent upside on Monday's closing price. The average analyst target is $361.33, according to Bloomberg.

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It remains a "little too soon" to invest in Norfolk Southern Corp. (NSC-N), said Credit Suisse analyst Allison Landry.

After the bell on Monday, the railway company reported second-quarter earnings per share of $1.41, beating Ms. Landry's estimate of $1.38 but below the consensus of $1.42.  

"Although NSC put up modestly better numbers than expected in Q2, and is beginning to see signs of life on the service front, the company continues to lag behind its peers in terms of getting its network back in order," she said. "Indeed, absent from this quarter's call was any definitive timeframe on when the company would be able to return velocity and terminal dwell to prior peak levels."

"This comes amidst the backdrop of an already challenging volume backdrop, with a worsening export coal situation and expectations for CBR carloads to contract."

Ms. Landry lowered our 2015 EPS estimate to $5.34 from $5.54. Her 2016 and 2017 forecasts declined to $6.15 and $6.90, from $6.41 and $7.16, respectively.

"We also think there is downside risk to the company's domestic thermal coal guidance of [approximately] 20mt per quarter, given low natural gas prices and elevated stockpiles," she said. "To boot, fuel surcharges are expected to be lower than previous guidance in light of depressed WTI prices. While we think NSC has scope for improvement in 2016, the current setbacks give us pause in the near term - despite being the cheapest stock in the group on current 2016 consensus estimates."

Keeping her "neutral" rating, she lowered her target price to $85 (U.S.) from $87. Consensus is $95.95.

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In other analyst actions:

Aegerion Pharmaceuticals Inc (AEGR-Q) was raised to "buy" from "hold" at Jefferies by equity analyst Eun Yang. The 12-month target price is $26 (U.S.) per share.

AutoNation Inc (AN-N) was raised to "buy" from "neutral" at Sterne Agee CRT by equity analyst Michael Ward. The 12-month target price is $76 (U.S.) per share.

Baidu Inc (BIDU-Q) was downgraded to "hold" from "buy" at Brean Capital by equity analyst Fawne Jiang.

Encana Corp (ECA-N) was raised to "outperform" from "market perform" at FirstEnergy Capital by equity analyst Michael Dunn. The 12-month target price is $11.50 (U.S.) per share. It was lowered to "hold" from "buy" by Desjardins Securities analyst Kristopher Zack.

Emerald Oil Inc (EOX-N) was raised to "hold" from "sell" at Wunderlich by equity analyst Jason Wangler. The target price is $2 (U.S.) per share.

Kaiser Aluminum Corp (KALU-Q) was downgraded to "sector weight" from "overweight" at KeyBanc by equity analyst Philip Gibbs.

LinkedIn Corp (LNKD-N) was rated new "buy" at MKM Partners by equity analyst Rob Sanderson. The 12-month target price is $285 (U.S.) per share.

News Corp (NWSA-Q) was raised to "outperform" from "neutral" at Macquarie by equity analyst Timothy Nollen. The 12-month target price is $16.43 (U.S.) per share.

Robert Half International Inc (RHI-N) was downgraded to "underweight" from "equal-weight" at Barclays by equity analyst Manav Patnaik. The target price is $55 (U.S.) per share.

Teva Pharmaceutical Industries Ltd (TEVA-N) was raised to "outperform" from "market perform" at BMO Capital Markets by equity analyst David Maris. The target price is $80 (U.S.) per share.

Univar Inc (UNVR-N) was rated new "market perform" at William Blair by equity analyst Ryan Merkel.

With files from Bloomberg News

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