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The Maple Leaf Foods plant in Kitchener, Ont. is seen in this 2011 file photo.Tim Fraser/The Globe and Mail

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.

The first-quarter results for Pason Systems Inc. exceeded expectations, but Industrial Alliance Securities analyst Elias Foscolous is downgrading the stock from "buy" to "hold" in part due to a reduced outlook for U.S. drilling activity.

Pason reported revenue of $99-million for the quarter, ahead of both Mr. Foscolous's estimate of $88-million and the consensus of $96-million. Earnings before interest, taxes, depreciation and amortization fell to $44-million, ahead of his forecast of $38-million but well below the results of the first and fourth quarters of 2014 at $53-million and $94-million respectively.

Mr. Foscolous notes Pason's short-term finances are "strongly correlated" with North American drilling rig counts. His second-quarter forecast for U.S. average rig count is 875, which is both approximately 50 per cent below the start of the first quarter and the second quarter of 2014.

"Our 2016 forecasted rig counts for the U.S. have been reduced to reflect the fact that we do not foresee U.S. production of light oil increasing to previous levels and we believe production (and drilling) will have to be curtailed to maintain an adequate supply demand balance in the blend of crude API gravity that refiners require," he said.

The analyst lowered his price target to $21 from $26.50 (Canadian). The analyst consensus is $23.

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Raymond James analyst Ben Cherniavsky said he likes the long-term possibilities for Finning International Inc., but prefers a lower entry point for the stock. As such, he downgraded the company from "outperform" to "market perform."

"Our Finning upgrade ... was explicitly premised on valuation parameters and a detailed analysis that suggested limited downside to the stock below $23 with 'free optionality' for upside," he said. "We hate to 'nickel and dime' our target prices or swing our ratings around, but the fact is that recent share price strength (+12 per cent vs. -1 per cent for the TSX), weak 1Q15 results, and prevailing uncertainty about end market demand (especially in an NDP Alberta) have changed the risk-reward profile enough to warrant a downgrade."

Finning reported a first-quarter earnings per share of 31 cents, lower than both Mr. Cherniavsky's estimate of 35 cents and the consensus of 34. The EPS for the same period in 2014 was 39 cents. Its earnings before interest and taxes was $94-million, below the analyst's $103-million forecast and a decline of 18 per cent year over year.

"Tough market conditions were reflected across the table at Finning in 1Q15, but the news was not all bad," said Mr. Cherniavsky. "For example, Finning reported progress on its "operational excellence agenda" and a related improvement in service margins. The business is being restructured not only for softer demand, but also to be more efficient for the next upturn. Management remains focused on what they can control."

Though he is positive about the company's recent acquisition of Kramer Caterpillar in Saskatchewan, saying it's a vote of confidence for the company's new strategic direction, he does feel the near-term impact is large enough to alter his forecasts. He does note that, historically, Caterpillar dealer acquisitions do have a positive impact on share price for the company.

He maintains his price target of $26 (Canadian). The consensus is $25.95.

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Restructuring being undertaken by Redknee Solutions Inc. is starting to have a positive impact, according to Beacon Securities analyst Gabriel Leung, who upgraded the stock from "hold" to "buy."

Redknee reported first-quarter revenue of $53.7-million, below Mr. Leung's estimate of $58.4-million. He attributes the shortfall to foreign exchange and lower-than-expected hardware revenue.

"While revenues were light (not surprising given strong forex headwinds), this was more than offset by cost restructurings, which we believe could continue into fiscal year 2015," he said. "With the lower cost base and a healthy pipeline of deal opportunities, we believe significant operating leverage could materialize as these opportunities close over the next 12-24 months."

He points out that the company's earnings before interest, taxes, depreciation and amortization was $10.5-million, ahead of his $7.5-million forecast.

"We believe this is attributable to the early impact of the previously announced restructuring initiative (notably on R&D and cost of goods), along with the positive impact of forex on international expenses," Mr. Leung said.

He raised his target price to $5.25 from $5.00 (Canadian). The analyst consensus price is $4.84.

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Killam Properties Inc. provides investors "an attractive return" at its current price, said Canaccord Genuity analyst Mark Rothschild in upgrading the stock from "hold" to "buy."

Killam reported first-quarter funds from operation per share of 15 cents, an increase of 17 per cent from 13 cents in the same period in 2014 and in line with consensus expectations. Its same-property net operating income rose to $17.9-million from $17.0-million a year ago, as same-property revenue increased 2.4 per cent and expenses decreased 0.2 per cent.

"The strong growth was primarily due to impressive internal growth, as well as interest expense savings from refinancing mortgages at lower rates," Mr. Rothschild said. "The positive factors were somewhat offset by an increase in G&A expense."

He added: "Management of Killam believes that lower oil prices are leading to a drop in migration from Atlantic Canada to Western Canada, which should boost rental apartment demand in Killam's core markets. As well, management expects further population growth in some of its core markets, as a result of the ship building contract and a number of other large energy related projects underway."

He maintained his price target of $11.50. The analyst consensus is $11.69.

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Credit Suisse analyst Nathan Littlewood downgraded Labrador Iron Ore Royalty Corp. to "neutral" from "outperform" in the wake of an earnings miss in the first quarter and what he sees as recent outperformance  of the share price.

The company announced royalty income of $23.3-million during the three-month period, compared to $26.9-million in the same period in 2014 and below the consensus estimate of $28-million. Its share of of the loss experienced by Iron Ore Company of Canada - in which it holds a 15.1-per-cent equity interest - totaled $2.7-million.

"The short interest in LIF is anticipating an IOC closure or renegotiation of LIF's 7-per-cent sales royalty," he said. "We put a very low probability on both outcomes. Rather; we expect a long-anticipated (and until now poorly executed) improvement in volume  together with cost-cutting efforts to drive an improvement in IOC's unit costs through 2015 and ensure the continued operation of this asset."

He maintained a price target of $15 (Canadian). The analyst consensus price is $16, according to Thomson Reuters.

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In other analyst actions:

Alibaba Group Holding Ltd (BABA-N) was rated new "hold" at TH Capital by equity analyst Tian Hou.

Maple Leaf Foods Inc (MFI-T) was downgraded to "hold" from "buy" at Octagon by equity analyst Robert Gibson. The 12-month target price is $24.00 (Canadian) per share.

Parkland Fuel Corp (PKI-T) was downgraded to "hold" from "buy" at Haywood Securities by equity analyst James Reid. The 12-month target price is $26.00 (Canadian) per share.

Assurant Inc (AIZ-N) was raised to "neutral" from "underperform" at Macquarie by equity analyst Sean Dargan. The 12-month target price is $70.00 (U.S.) per share.

Canexus Corp (CUS-T) was raised to "sector perform" from "underperform" at National Bank by equity analyst Patrick Kenny. The 12-month target price is $2.25 (Canadian) per share.

Dick's Sporting Goods Inc (DKS-N) was raised to "outperform" from "market perform" at BMO Capital Markets by equity analyst Wayne Hood. The 12- month target price is $63.00 (U.S.) per share.

Enerflex Ltd (EFX-T) was downgraded to "sector perform" from "outperform" at RBC Capital by equity analyst Dan Macdonald. The 12-month target price is $16.00 (Canadian) per share.

Fiserv Inc (FISV-N) was downgraded to "hold" from "buy" at Argus by equity analyst Stephen Biggar.

First Quantum Minerals Ltd (FM-T) was downgraded to "sell" from "hold" at Haywood Securities by equity analyst Kerry Smith. The 12-month target price is $12.00 (Canadian) per share.

Twenty-First Century Fox Inc (FOXA-N) was downgraded to "neutral" from "overweight" at Atlantic Equities by equity analyst Hamilton Faber. The 12-month target price is $37.00 (U.S.) per share.

Synageva BioPharma Corp (GEVA-N) was downgraded to "hold" from "buy" at Canaccord Genuity by equity analyst Adam Walsh and downgraded to "Neutral" from "Outperform" at Robert Baird by equity analyst Christopher Raymond. The 12-month target price is $217.00 (U.S.) per share.

Genworth Financial Inc (GNW-N) was downgraded to "underperform" from "outperform" at Macquarie by equity analyst Sean Dargan. The 12-month target price is $7.00 (U.S.)  per share.

Goldman Sachs Group Inc (GS-N) was rated new "overweight" at Atlantic Equities by equity analyst Christopher Wheeler. The 12-month target price is $228.00 (U.S.) per share.

Just Energy Group Inc (JE-N) was rated new "buy" at MLV & Co by equity analyst Carter Driscoll. The 12-month target price is $7.00 (U.S.) per share.

Linamar Corp (LNR-T) was raised to "buy" from "hold" at Canaccord Genuity by equity analyst David Tyerman. The 12-month target price is $82.00 (Canadian) per share.

Laredo Petroleum Inc (LPI-N) was maintained "outperform" from "sector perform" at IBERIA Capital Partners by equity analyst Blaise Angelico. The 12- month target price is $17.00 (U.S.) per share.

Morgan Stanley (MS-N) was rated new "neutral" at Atlantic Equities by equity analyst Christopher Wheeler. The 12-month target price is $41.00 (U.S.) per share.

Pacific Rubiales Energy Corp (PRE-T) was raised to "speculative buy" from "reduce" at Cormark Securities by equity analyst Garett Ursu. The 12-month target price is $6.50 (Canadian) per share. It was also downgraded to "neutral" from "buy" at Banco BTG Pactual by equity analyst Gustavo Gattass with the same 12-month target price.

Torstar Corp (TS/B-T) was downgraded to "market perform" from "buy" at Cormark Securities by equity analyst David Mcfadgen. The 12-month target price is $6.60 (Canadian) per share. It was downgraded to "underperform" from "sector perform" at National Bank by equity analyst Adam Shine with a  12-month target price of $6.00 per share.

With files from Bloomberg News

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