Inside the Market's roundup of some of today's key analyst actions
The worst of the competitive and regulatory threats facing Rogers Communications Inc. has now passed – or at least peaked, believes BMO Nesbitt Burns analyst Tim Casey.
He upgraded Rogers today to “outperform,” while also raising his earnings and free cash flow estimates.
Mr. Casey believes the outlook for incumbent carriers in the wireless arena – of which Rogers is the largest – is attractive. In the meantime, he expects a positive shift in sentiment toward cable operators this year as they hold their own against new competition from Internet Protocol Television providers such as Bell.
“We expect a continued turn in sentiment on the name, and gradual multiple expansion,” he said.
Upside: Mr. Casey raised his price target to $52.50 from $47 (Canadian).
Raymond James analyst Aaron Kessler upgraded Facebook Inc. to “outperform,” from “market perform,” citing expectations for better monetization of the site, driven by mobile, new formats and international growth.
He also believes usage trends are showing signs of improvement, thanks largely to its mobile efforts, and thinks Street consensus estimates on the company may be too conservative.
Facebook reports its fourth-quarter financial results after markets close on Wednesday.
Upside: Mr Kessler set a target of $38 (U.S.) - the initial public offering price of the shares.
RBC Dominion Securities analyst Paul C. Quinn has cut his rating down on forest products firm Weyerhaeuser Co. to “sector perform” from “outperform.”
The action was largely linked to the company’s recent share price rally. “While we expect current high building material (lumber, OSB and plywood) pricing will translate into increased log prices over the next 3-4 years as sawmills ramp up production and Asian demand for logs grows, we believe the shares already reflect most of the upside,” he said.
Downside: Mr. Quinn raised his price target by $1 to $31 (U.S.).
Investors should refrain from buying shares in global mining equipment supplier Joy Global Inc., said Raymond James analyst Theoni Pilarinos. He downgraded the stock to “market perform” from “outperform,” noting that the outlook for Joy’s main end market, U.S. coal, “has grown increasingly glum” since November amid a decline in natural gas prices.
“A large part of our bullish stance on Joy’s stock was predicated on a bottoming out of U.S. coal markets as higher gas prices would lead to a reversal of coal-to-gas switching,” he said. But “uncooperative weather has kept gas prices sufficiently low to reduce expectations for a meaningful reversal in coal to gas switching.”
He also notes there are accounting uncertainties related to Joy’s $1.4-billion (U.S.) purchase of Chinese original equipment manufacturer International Mining Machinery Holdings Ltd. in July 2011.
Downside: Mr. Pilarinos cut his price target to $67 (U.S.) from $77.50.
Raymond James analyst Rafi Khouri has trimmed his net asset value estimates on PetroNova Inc. after the oil and gas company announced its Guasco-1 exploration well in Colombia’s Llanos basin is being abandoned.
“Market sentiment for exploration-stage companies is typically highly susceptible to drilling results, and Guasco-1 is PetroNova’s fourth consecutive dry hole,” Mr. Khouri said. “Going forward, we believe investors will be reluctant to ascribe material value to the company’s exploration portfolio – at least until positive results on upcoming lower-impact Llanos basin wells potentially re-establish a positive exploration track record.”
Downside: Mr. Khouri lowered his price target to 30 cents (Canadian) from 50 cents.
For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities