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Brookfield Office Properties’ Bay Adelaide East tower in Toronto. (dbox)
Brookfield Office Properties’ Bay Adelaide East tower in Toronto. (dbox)

Inside the Market

Upgrades for Enbridge, Brookfield Office Properties Add to ...

Inside the Market's roundup of some of today's key analyst actions

Shares in Brookfield Office Properties Inc. have been in a steady decline since early July, but RBC Dominion Securities believes “the pressure point of pessimism may have passed.”

RBC analysts Neil Downey and Michael Markidis upgraded the stock to “outperform” from “sector perform” after the real estate company, which has been under pressure from a lack of large tenant leasing signings, held a conference call with investors on Friday.

“While not presenting any ‘new’ information on Friday’s investor call, we believe BPO did a credible job of highlighting the value proposition within the shares and alleviating concerns regarding corporate liquidity,” the analysts said in a research note today. “Hence, we expect investor confidence to rebuild with the passage of time, thus allowing for a narrowing of BPO’s discount to net asset value.”

While the business environment seems to be one in which only smaller sized tenants are signing deals, large block tenants can’t stay sidelined indefinitely, they point out. Already, there are been signs of early office leasing progress at its World Financial Center complex in New York.

Upside: RBC maintained a price target of $20 (U.S.).


Goldman Sachs analyst Theodore Durbin has upgraded Enbridge Inc. to “buy” from “neutral,” citing the massive growth in Western Canadian and U.S. oil supply that should drive increased oil infrastructure investments. Goldman also likes Enbridge for its large number of low-risk, fee-based organic growth projects.

Upside: Mr. Durbin has a $46 price target.


Thomson Reuters Corp. is facing “too many headwinds,” TD Securities analyst Vince Valentini said as he downgraded the stock to “hold” from “buy.” The information giant reported a 15 per cent fall in third-quarter operating profit last week amid stubbornly weak demand for global financial services. Mr. Valentini said there is “continuing evidence that it will be at least 2014 before we see a return to positive organic revenue growth for the company’s Financial & Risk segment,” which includes its trading business.

“Furthermore, it is looking less likely to us that revenue growth will accelerate above 3-4 per cent in 2014, which is the level need to exceed fixed-cost inflation and thereby drive positive operating leverage.”

Upside: Mr. Valentini also cut his price target by $3 to $31.


Fortress Paper Ltd. will need to give investors a reason to believe in the stock after missing third-quarter earnings expectations, Raymond James analyst Daryl Swetlishoff says.

“Repeated disappointing operational performances at the Landqart security paper and Thurso dissolving pulp mills have eroded investor confidence, putting the stock firmly into the ‘show me’ category,” he wrote in a research note. “While we do not regard the story as fundamentally broken, we acknowledge that a return in investor confidence will require a ‘break-through’ quarter, which, given operational and commodity price challenges we do not expect to be imminent.”

Investors would be relieved if Fortress sold the money-losing Landqart mill, which is possible in the first half of 2013, he said.

Downside: Mr. Swetlishoff cut his target price to $19 from $27 and his rating to “market perform” from “outperform.”


AltaGas Ltd. is taking steps to move its capital into higher-yielding investments while selling non-core assets, says RBC Dominion Securities analyst Robert Kwan.

“Although it is only a relatively minor review, the company is looking at the potential sale of smaller renewable power development projects,” Mr. Kwan said.

Upside: Citing “enhanced capital efficiency and the potential proceeds from the sale of development projects,” Mr. Kwan raised his target price to $36 from $35. He rates the stock “outperform.”


The TMX Group Ltd. is likely to announce “solid” third-quarter revenue when it reports this week, according to CIBC World Markets analyst Paul Holden.

“Equity financings picked up significantly in Q3 and represent a source of potential upside if there are indications that this trend could continue,” he said. Equity volumes, on the other hand, remain weak and derivative volumes also took a step back.

Upside: Mr. Holden raised his price target from $48.00 to $53.50 and rates the stock “sector perform.”


For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities


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