Winnipeg-based Great-West Lifeco.JOHN WOODS/The Canadian Press
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.
Investors jumped on shares of Turquoise Hill Resources Ltd. (TRQ-T) Tuesday after the company's parent company, Rio Tinto Group, announced the signing of an agreement with the Mongolian government for the stalled $5-billion (U.S.) expansion of the massive Oyu Tolgoi copper-gold mine.
The underground expansion is expected to unearth 25 billion pounds of copper and 12 million ounces of gold reserves. Turquoise Hill holds a 66-per-cent stake in the project, with Rio Tinto controlling the mining operations through its 51-per-cent stake in the company.
In the wake of the lift in share price, Credit Suisse analyst Ralph Profiti said the positive reaction leaves little room for further upside. He said he is waiting for a "more compelling entry point" for investment.
Mr. Profiti said the deal is a "positive step" for the company and, overall, is a "win" for Turquoise Hill.
The analyst raised his target price to $6 from $4.80 (Canadian). The analyst consensus is $3.70, according to Thomson Reuters.
He maintained his "neutral" rating.
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Long-term investors could find the current share price for Onex Corp. attractive, according to RBC Dominion Securities analyst Geoffrey Kwan.
Mr. Kwan pointed to an 11-per-cent implied return on his 12-month target and exposure to the Onex's long-term investment track record that has delivered strong net asset value growth for shareholders.
He said: "Onex's shares are trading at net asset value and we believe investors waiting for a significant widening of the discount to NAV as a buying opportunity are likely to be disappointed, all else equal, as we think the shares are likely to trade closer to NAV than before for the following reasons: (1) we think investors increasingly invest in Onex longer-term than before [versus a historical strategy of buy OCX when Onex is monetizing investments and vice versa] which likely helps explain OCX's relative share price resiliency during periods of market volatility in recent years and arguably makes OCX a more defensive stock idea than before; and (2) Onex's high cash position, which can be used to support the stock via share buybacks."
While maintaining his "sector perform" rating, the analyst dropped his price target to $78 (Canadian) from $80 due largely to recent gains by the Canadian dollar versus the greenback. The analyst consensus is $75.89.
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Following its acquisition of Callinan Royalties Corp., Altius Minerals Corp. (ALS-T) may try to take advantage of the challenging financial conditions currently being faced by mining companies through further deals, said Raymond James analyst Alex Terentiew.
He estimates the Callinan deal and its 4-per-cent net smelter return on HudBay Minerals Inc.'s 777 mine in Manitoba has increased Altius's annual free cash flow by $9-million or 36 per cent. Along with subsequent debt reduction and the associated interest rate change, the analyst forecasts the company's quarterly free cash flow has doubled to $3.3-million for the next two years.
"We view Altius' asset base as one of the lowest risk in both the Canadian base metal mining and precious metals royalty sectors, with all of its cash flowing royalties located in Canada, and generally on stable, long-life producing mines," said Mr. Terentiew, who maintained his "outperform" rating. "The company's reduced debt level, improved cash flow, new dividend, growth strategy, and valuation position the stock as an attractive investment opportunity and we recommend investors add positions."
He raised his target price to $17 from $16 (Canadian). The analyst consensus is $14.10.
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Credit Suisse analyst Anjaneya Singh raised his estimates for Verisk Analytics Inc. (VRSK-Q) following the closure of its £1.85-billion acquisition of Wood Mackenzie Ltd..
Mr. Singh increased his 2015 EPS forecast for Verisk, a data analytics provider, from $2.78 (U.S.) to $2.85 and 2016 from $3.07 to $3.16 in response to the transaction, which was financed with both debt and equity.
"While WoodMac's high single-digit growth rates thus far into fiscal year15 are impressive, we continue to evaluate the possibility of dilutive growth in 2016/2017 due to its energy exposure," he said. "We are also uncertain of the timeline and materiality of synergies that VRSK can capture from leveraging WoodMac's international footprint."
He also raised his target price to $81 (U.S.) from $78. The analyst consensus is $81.46
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While he acknowledges there are significant risks remaining in Sarepta Therapeutics Inc.'s (SRPT-Q) plan to seek approval of a new treatment for a rare genetic disorder, Canaccord Genuity analyst Adam Walsh upgraded the company from "hold" to "buy."
Following a meeting with the U.S. Food and Drug Administration, Sarepta suggested its relationship with the regulatory body has improved, and it now plans to initiative a submission for eterplirsen, which treats Duchenne muscular dystrophy. Mr. Walsh said he has increased confidence that the filing will be accepted, estimating that will occur in the third quarter of 2015.
He raised his price target to $30 (U.S.) from $16. The analyst consensus is $25.50.
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Desjardins Securities analyst Keith Howlett said he continues to seek "signs of sustained operating momentum" across all sectors of SunOpta Inc. (STKL-Q)
The company reported first-quarter 2015 operating earnings per share of 8 cents (U.S.), lower than both Mr. Howlett's 9-cent forecast and the 10-cent result from the same period in 2014.
"SunOpta has made good operational strides at some of its businesses (eg international sourcing, sunflowers) but faces ongoing challenges in other businesses (eg healthy snacks, resealable pouch products)," he said. "Two significant initiatives, which have received substantial capital, have been very slow to generate any profits. These are the resealable pouch business and the juice extracting/bottling operation in California. It is necessary for these two businesses, in our view, to demonstrate their profit potential by the end of 2015."
He added: "SunOpta appears, in our view, to have another 12–18 months of trench warfare ahead of it as it grows into recent capacity expansions to support its plant-based (soy, almond, rice, etc) and juice beverage businesses, and as it works to solve operational challenges in its snack and resealable pouch products businesses. The international sourcing business within the Global Ingredients segment appears to have strong ongoing momentum."
Mr. Howlett reduced his EPS estimates for 2015 from 46 cents (U.S.) to 45 cents and 2016 from 55 cents to 54 cents. He also maintained his "hold" rating for the stock and $11 (U.S.) target price. The analyst consensus is $13.25.
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In other analyst actions:
RioCan Real Estate Investment Trust (REI.UN-T) was downgraded to "hold" from "buy" at Accountability Research. The target price is $31 (Canadian) per share.
Avnel Gold Mining Ltd. (AVK-T) was rated new "buy" at Salman Partners. The 12-month target price is 50 cents (Canadian) per share.
Great-West Lifeco Inc. (GWO-T) was rated new "neutral" at Macquarie. The 12-month target price is $39 (Canadian) per share.
Lions Gate Entertainment Corp. (LGF-N) was rated new "buy" at Jefferies. The 12-month target price is $37 (U.S.) per share.
Perseus Mining Ltd. (PRU-T) was downgraded to "market perform" from "buy" at Cormark Securities. The 12-month target price is 45 cents (Canadian) per share.
Achillion Pharmaceuticals Inc. (ACHN-Q) was raised to "outperform" from "market perform" at William Blair. The 12-month target price is $18 (U.S.) per share. But the stock was downgraded to "market perform" from "market outperform" at JMP Securities.
Comerica Inc. (CMA-N) was downgraded to "underperform" from "neutral" at Robert Baird. The 12-month target price is $44 (U.S.) per share.
Columbia Sportswear Co. (COLM-Q) was rated new "market perform" at Cowen. The 12-month target price is $59 (U.S.) per share.
Computer Sciences Corp. (CSC-N) was raised to "neutral" from "underweight" at JPMorgan. The 12-month target price is $66 (U.S.) per share.
Express Scripts Holding Co. (ESRX-Q) was rated new "neutral" at Robert Baird. The 12-month target price is $94 (U.S.) per share.
Fifth Third Bancorp. (FITB-Q) was downgraded to "neutral" from "outperform" at Robert Baird. The 12-month target price is $21 (U.S.) per share.
Flotek Industries Inc. (FTK-N) was rated new "buy" at GMP. The target price is $15 (U.S.) per share.
Keysight Technologies Inc. (KEYS-N) was downgraded to "neutral" from "outperform" at Robert Baird. The 12-month target price is $34 (U.S.) per share.
Southwest Bancorp Inc. (OKSB-Q) was rated new "outperform" at Hovde Group. The 12-month target price is $20 (U.S.) per share.
Swift Energy Co. (SFY-N) was rated new "neutral" at National Securities. The 12-month target price is $3 (U.S.) per share.
Splunk Inc. (SPLK-Q) was raised to "outperform" from "neutral" at Macquarie by equity analyst Aaron Schwartz. The 12-month target price is $87 (U.S.) per share.
Sarepta Therapeutics Inc. (SRPT-Q) was raised to "buy" from "hold" at Canaccord Genuity. The 12-month target price is $30 (U.S.) per share.
Stage Stores Inc. (SSI-N) was raised to "buy" from "neutral" at B. Riley. The 12-month target price is $20 (U.S.) per share.
SunTrust Banks Inc. (STI-N) was downgraded to "market perform" from "outperform" at Keefe Bruyette. The 12- month target price is $45 (U.S.) per share. The stock was also downgraded to "underperform" from "neutral" at Robert Baird. The 12-month target price is $41 (U.S.) per share.
SunEdison Inc. (SUNE-N) was rated new "outperform" at Robert Baird. The 12-month target price is $35 (U.S.) per share.
TerraForm Power Inc. (TERP-Q) was rated new "outperform" at Robert Baird. The 12-month target price is $45 (U.S.) per share.
Western Alliance Bancorp (WAL-N) was downgraded to "market perform" from "outperform" at Keefe Bruyette. The 12-month target price is $34 (U.S.) per share.
With files from Bloomberg News
David Leeder