Wednesday’s analyst upgrades and downgrades

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

Investor sentiment toward engineering and construction stocks has "markedly" improved since the U.S. presidential election on Nov. 8, said Canaccord Genuity analyst Yuri Lynk.

Saying SNC-Lavalin Group Inc. (SNC-T) is "gift wrapped" for investors, Mr. Lynk upgraded his rating for the stock to "buy" from "hold" based on its current valuation.

"A Republican-controlled Senate, House of Representatives, and, of course, White House increases the odds of a large infrastructure spending package getting passed," he said. "E&C stocks received a further boost on Nov. 30 when OPEC decided to cut oil production, sending the price of Brent crude oil 20 per cent higher since that time. Recall, Oil & Gas (O&G) is a major end-market for E&Cs that now faces perhaps less acute pressure.

"We would use SNC's material share price underperformance since Nov. 8 as an opportunity to add to positions. Since the election, E&C stocks have rallied 18 per cent on average while SNC shares have appreciated by just 5 per cent. Sure, the company has no meaningful U.S. infrastructure exposure but it is a dominant player in Canada, where the funding outlook is much more clear. In fact, SNC is shortlisted on $15-billion worth of transit projects set for award next year. This, combined with an interesting new build opportunity on the nuclear side in Argentina and green shoots in mining, potentially makes SNC a catalyst-rich story for 2017."

In the wake of SNC's share price underperformance, Mr. Lynk said it now trades at a 15-per-cent discount to its peers, adding: "SNC's closest comparables, Fluor (FLR-N, hold), Jacobs Engineering (JEC-N, not rated), and, to a lesser extent, KBR (KBR-N, not rated), trade at 16.4 times 2017 estimated EPS [earnings per share]. SNC trades at 13.9 times our 2017 E&C EPS estimate of $2.10. We view this discount as unwarranted given our forecast for SNC to post top quartile adjusted-EPS growth in 2017, the aforementioned potential catalysts, and the fact it has one of the strongest balance sheets in the industry."

He added: "This [discount to the group of 13.9 times] is in line with where E&C stocks have traded since 2010.. However, SNC, and other E&C's with larger market capitalizations, has generally received a one to two multiple point premium to the broader group. Furthermore, we note that in times of rising oil prices 'oily' E&Cs, such as SNC, can trade north of 20x forward EPS for prolonged periods of time reflecting the higher margin / lower risk nature of O&G work (although contract structures are less favourable now). Therefore, at current levels SNC shares appear cheap on both a relative and absolute basis."

Mr. Lynk said the stock's valuation is now "especially compelling" based on its "attractive" EPS growth profile in 2017. He expects 16.5-per-cent growth year over year, versus the E&C average of 7.5 per cent.

"Perhaps one reason SNC has lagged the group is its lack of U.S. infrastructure exposure," he said. "However, in our view, the Canadian infrastructure buildout could afford a more compelling investment backdrop. Recall, various levels of government in Canada have prioritized transportation infrastructure, which is a core competency for SNC. The company has been a major player in the design and construction of transit projects for over 40 years with a particular strength in light rail transit (LRT). Recent LRT projects completed by SNC include the Confederation Line, the Evergreen Line, and the Calgary West LRT. Currently, SNC is working on Canada's largest ever P3 project, the Eglinton LRT in Toronto. Given this impressive CV, it is perhaps no surprise that SNC is in the running on almost all of the major transit projects up for award next year."

"While investors have rushed into U.S. exposed names on the heels of President-elect Trump's infrastructure spending plan, we believe we have more visibility in Canada on new awards. Based on the capital cost of each project, the number of competing consortia, and our estimate of SNC's scope of each project we arrive at a risk-adjusted booking estimate of $2-billion. This is equivalent to 17 per cent of SNC's total backlog, potentially making 2017 a record new awards year for the company. Furthermore, we have compiled a long list of upcoming transit projects that could sustain high levels of Infrastructure & Construction (I&C) backlog through the end of the decade."

Mr. Lynk raised his target price for the stock to $67 from $53 due in part to a new valuation of its 16.8-per-cent stake in 407 International, which he said has "consistently exceeded" expectations. The analyst consensus price target is $61.91, according to Thomson Reuters.

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Desjardins Securities analyst Doug Young said he prefers Canadian lifecos to Canadian banks in 2017.

In a research note reviewing 2016 and previewing the new calendar year, Mr. Young pointed to five reasons for his position:

1. The anticipation of better core earnings per share growth momentum and room for return on equity expansion for lifecos. He said: "We are forecasting 10-per-cent core EPS growth on average for the lifecos (excludes mark-to-market noise) in 2017, which compares with 6-per-cent cash EPS growth on average for the banks in FY17."

2. He pointed a number of near-term headwinds for banks, including slower loan growth, margin pressure in Canada and pressure on ROEs.

3. Lifecos offer more exposure to increasing U.S. interest rates.

4. Regularity capital rules changes will have a bigger impact on banks.

5. The possibility of room for convergence in price-to-book value multiples.

"We expected the Canadian lifecos to outperform the banks in 2016," said Mr. Young. "However, in 2016 to date, the banks surged ahead with an average gain of 26.1 per cent versus 14.6 per cent for the lifecos. To be clear, the lifeco average was weighed down by Great-West (GWO), which increased only 3.5 per cent and is a stock we have been cautious on. The banks were able to battle through a choppy credit environment in the oil patch, and benefited as oil prices rebounded off the mid-January lows. The lifecos' performance got a shot in the arm from higher government bond yields post the U.S. elections. Otherwise, as we expected, the asset managers underperformed. The top-performing stock from our coverage universe has been National Bank."

Mr. Young said Desjardins' top picks for 2017 are:

- Banks: Bank of Nova Scotia (BNS-T, "buy" rating)

He said: "While Scotiabank (BNS) has been the second-best-performing Canadian bank stock in 2016 to date, the P/E multiple at which it trades is only a 0.2 times premium to its historical average vs 1.0x on average for its Big 5 peers. Beyond this, we see four potential catalysts in 2017. First, we expect further earnings growth momentum at its international banking franchise, specifically for operations in the Pacific Alliance countries (Peru, Colombia, Mexico and Chile). The drivers are organic growth (eg loan growth, NIM expansion from central bank rate increases), cost savings (via further integration of past acquisitions) and potentially further acquisitions. That said, recent weakness in the Mexican peso could temper growth in 2017. Second, BNS could benefit from further momentum at its Canadian P&C banking franchise. Third, management laid out very detailed cost-reduction targets that, if achieved, could provide a nice earnings tailwind. Management expects annual expense savings of $350-million by 2017, $550-million by 2018 and $750-million by 2019, of which "a large portion" should flow through to earnings net of investments made in its businesses (eg around technology). Fourth, with an 11.0-per-cent CET1 ratio, BNS is very comfortably capitalized and has a cushion if changes made by the Basel Committee turn out to be more cumbersome than we have anticipated."

- Lifecos: Manulife Financial Corp. (MFC-T, "buy")

He said: "There are four drivers behind our positive views on Manulife (MFC). First, we are forecasting 13-per-cent core EPS growth in 2017 versus 9 per cent on average for its Canadian peers, with the key drivers being momentum in Asia, return of investment gains, buildout of its wealth management franchise, and parts of efficiency and effectiveness (E&E) savings hitting earnings. Second, we are forecasting an 8-per-cent dividend increase in 2017, which implies a payout ratio of 39 per cent, close to the upper end of management's 30–40-per-cent medium-term payout target. Third, MFC stands to benefit the most from the increase in U.S. 10-year and 30-year government and corporate bond yields. Fourth, it trades at 10.9 times our 2018 EPS estimate, versus 11.8 times for Sun Life (SLF) and an average of 11.4 times for the Big 6 Canadian banks. To be clear, we still have our concerns with MFC's U.S. long-term care insurance (LTCI) business—we just do not believe this will be a 2017 issue."

- Asset managers: Fiera Capital Corp. (FSZ-T, "buy")

He said: "2016 was a busy year for the team as it executed on a few prominent acquisitions, including Apex Capital Management (a $7.1-billion (U.S.) U.S. growth equity manager with attractive EBITDA margins of 50-per-cent-plus), Charlemagne Capital (a UK-based emerging markets equity manager with $2.2-billion in AUM) and Centria Commerce (a $325-million Québec-based private investment manager which provides construction financing, real estate investment and short-term business financing). We believe these acquisitions will contribute meaningfully to Fiera's 2017 results. Our positive view on Fiera is based on several catalysts: (1) management has shown an ability to acquire accretively and integrate successfully (a key driver of its $200-billion AUM target); (2) it has grown revenue organically by 5–10 per cebt annually over the past three years; (3) we like its expansion into alternative assets; (4) we foresee margins expanding to 40 per cent over the next few years; (5) Fiera's business model is largely insulated from the regulatory concerns facing its peers; and (6) Fiera has a history of steady dividend increases."

In the report, he made target changes for several lifeco stocks (up 7 per cent on average) and all eight Canadian banks (up 4 per cent) "to reflect an improved macro environment.

The rating for Power Financial Corp. (PWF-T) was downgraded to "hold" from "buy" to reflect an appreciation in share price. The target price of $36 did not change. Consensus is $34.57.

The target price changes were:

- Manulife Financial Corp. (MFC-T, buy) to $27 from $25. Consensus is $24.53.

- Sun Life Financial Inc. (SLF-T, buy) to $56 from $52. Consensus: $52.21.

- Great-West Lifeco Inc. (GWO-T, hold) to $35 from $32. Consensus: $34.36.

- Bank of Nova Scotia (BNS-T, buy) to $81 from $80. Consensus: $78.87.

- Canadian Imperial Bank of Commerce (CM-T, buy) to $117 from $115. Consensus: $112.06.

- Royal Bank of Canada (RY-T, buy) to $94 from $92. Consensus: $90.86.

- Toronto-Dominion Bank (TD-T, hold) to $67 from $65. Consensus: $66.04.

- Canadian Western Bank (CWB-T, hold) to $31 from $30. Consensus: $29.37.

- Bank of Montreal (BMO-T, hold) to $96 from $94. Consensus: $95.87.

- National Bank of Canada (NA-T, hold) to $54 from $51. Consensus: $55.31.

- Laurentian Bank of Canada (LB-T, hold) to $58 from $56. Consensus: $56.73.

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In a 2017 outlook for the industrial sector, Desjardins Securities analyst Benoit Poirier downgraded WSP Global Inc. (WSP-T) due to share price appreciation and "modest" potential upside to his target

"Looking at Canadian engineering consultants, while we like STN [Stantec Inc.] and WSP for their US exposure (50 per cent for STN and 30 per cent for WSP), we see the risk/reward ratio for both stocks as unattractive given the rich valuation and uncertainty around the timing of potential U.S. infrastructure spending," he said. "Of note, we are downgrading WSP to Hold (from Buy) due to its recent share price performance (stock up 33 per cent from its 52-week low) and modest upside versus our $48 target price (3-per-cent potential return excluding dividend). That said, we continue to prefer WSP over STN."

The analyst consensus price target for WSP is $48.08.

On the sector as a whole, Mr. Poirier said: "Entering 2017, we favour the engineering & construction and aerospace & defence sub-sectors over transportation. SNC remains among our top picks, given its strong position in Canada, where sizeable infrastructure opportunities (worth over $50-billion) should be awarded in the next 2–3 years. The company also benefits from a strong balance sheet, which provides room for M&A and value-creation opportunities, and is well-positioned to benefit from the ongoing recovery in crude oil prices (45 per cent revenue exposure to oil & gas). We also like HRX as the company should benefit not only from the weak Canadian dollar but also from the U.S. election, as President-elect Trump has promised to boost defence spending by $500-billion U.S., which should result in stronger fundamentals for the sector (military represents 47 per cent of total revenues for HRX). Now that the risk associated with the B-777 production cut is behind it, we believe the company is well-positioned to gain business on further contracts, while its balance sheet should give it a competitive advantage for M&A opportunities. DOO is another name we recommend due to its solid industry fundamentals (recovery in U.S. economy and oil prices), attractive valuation (FCF yield of 6 per cent) and potential for introducing new compelling products that should drive market share. Lastly, we recommend HNZ due to the recent stabilization in global oil & gas and mining capex (key drivers for helicopter transportation demand) and its depressed valuation (currently trading at 0.7 times tangible book value)—translating into a compelling risk/reward ratio."

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The sell-off in bonds following the election of Donald Trump and "lacklustre" operating performances in the second and third quarter has "tempered" the enthusiasm of Desjardins Securities analyst Michael Markidis for the real estate sector in 2017.

"It has been a wild ride, the Canadian REIT sector has provided investors with solid performance in 2016. Specifically, the S&P/TSX Capped REIT Index has delivered a year-to-date total return of 13.8 per cent," said Mr. Markidis. "During the firs half of the year, the sector rode the dual wave of a declining rate environment and positive funds flow associated with the creation of a new real estate GICS, which was officially implemented at the end of August. In our view, the weaker performance during the 2H of the year (index total return of negative 8.2 per cent since the peak on July 12) has been a by-product of a strong reversal on the rate front, as well as a post-GICS 'hangover'.

"So what are we thinking on the eve of 2017? To begin with, we believe the risks at the long end of the yield curve are somewhat tilted to the upside, and therefore the market for interest rate – sensitive equities could be choppy. This is more a function of the upcoming inauguration of President-elect Trump and the possible newsflow emanating from the early days of what is expected to be a pro-growth/inflationary administration, and less to do with the recent action/commentary from the Federal Open Market Committee (FOMC). After all, it took the FOMC a full year to implement its second quarter-point hike to the Federal funds rate. Moreover, the median projection for the Federal funds rate at the end of 2017 is 1.25–1.50 per cent. This is exactly the same one-year-forward projection released in December of last year. Go figure."

In his year-end research report, he upgraded Pure Industrial Real Estate Trust (AAR.UN-T) to "buy" from "hold." He made the change "on account of its (1) industrial exposure, (2) low capital intensity, (3) well-capitalized financial position, and (4) reasonable valuation."

"Given our expectation for aboveaverage operating performance and continued capital recycling/portfolio upgrading efforts, we believe a premium valuation multiple is warranted," he said.

He raised his target price for the stock to $6 from $5.75. Consensus is $5.91.

Mr. Markidis downgraded Crombie Real Estate Investment Trust (CRR.UN-T)to "hold" from "buy." His target fell to $14.75 from $16. Consensus is $15.58.

"CRR has delivered middle-of-the-pack performance (year-to-date total return of 11.9 per cent) in 2016," he said. "While valuation (16.4 times forward 12 months EBITDA, 9-per-cent discount to our NAV, 11.1x our 2017 funds from operations estimate) is attractive relative to other retail peers, we believe recent operational challenges experienced by CRR's largest tenant, Sobeys (53 per cent of minimum revenue), will remain a headwind to multiple expansion through 2017. To be clear, we do not see significant near-term risk with regard to potential store closures, as the Sobeys leases have an average remaining term of 16 years. Rather, our concern is related to the recent ratings actions imposed by Standard & Poor's and DBRS on Sobeys' credit and the potential corporate actions that might be taken if operating performance at Canada's second-largest grocery retailer does not improve in the coming months."

Mr. Markidis also lowered Dream Office Real Estate Investment Trust (D.UN-T) to "hold" from "buy" following "a period of outperformance."

His target remains $21. Consensus is $18.36.

"Our Buy rating on D was a non-consensus call for most of this year," he said. "The year-to-date total return of 19.2 per cent compares favourably with the REIT index. More importantly, the degree of outperformance has widened materially over the past two months. The stock now trades at an 11-per-cent discount to our NAV [net asset value] and the implied value of the value-add segment has risen to $85/square foot (versus the 3Q16 carrying value of $169/sf). In our view, the market is pricing in the possibility of a sale of a significant portion of D's Alberta portfolio, which contributes 25 per cent of NOI currently. At current levels, we believe the risk/reward trade-offs are appropriately balanced."

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Desjardins Securities analyst Maher Yaghi thinks interest-rate movements will "significantly" affect returns for telecom and cable stocks in 2017.

"The recent rise in interest rates has impacted sector valuations, but the long-term trend has not shifted materially," he said. "For 2017, we expect higher interest rate volatility with greater risk on the upside, which could hurt telcos. For 2017, we forecast that industry revenue will expand by 2.6%, while EBITDA should increase by 3.4 per cent. For 2018, we expect revenue growth of 2.3 per cent and EBITDA growth of 2.6 per cent, below consensus EBITDA growth of 3.0 per cent. Our current 2017 estimates are very much unchanged vs our 2017 estimates at the beginning of 2016. We believe the industry's steady and predictable growth continues to be highly prized by investors looking to hedge the more volatile parts of their portfolio. While regulatory risks remain, we believe the government and the CRTC are not going to stray from the longstanding facilities-based model to create competition in Canada and, hence, we are not anticipating a major shift in competitive dynamics to occur in wireless or wireline over the coming year."

In his 2017 outlook, Mr. Yaghi upgraded his rating for BCE Inc. (BCE-T, BCE-N) to "buy" from "hold" and downgraded Shaw Communications Inc. (SJR.B-T) to "hold" from "buy" based on valuation.

His target price for BCE fell to $64.50 from $67.50. Consensus is $61.

"We are warming to the name again given the share price underperformance over the last six months (down 1.1 per cent versus up 2.7 per cent for the industry), combined with the sector's strongest dividend yield and a decent 5-per-cent expected dividend growth rate," said Mr. Yaghi. "Though the stock might not have the largest upside potential in the sector, we believe it is still very attractive for low-beta or income funds. We expect the release of 2017 guidance to be a non-event and to include an outlook similar to what the company was able to achieve in 2016, which should lead to steady share price performance. We also believe BCE is led by a strong management team that can invest in FTTH while maintaining a relatively low capex intensity of 17 per cent in 2017."

Mr. Yaghi's target for Shaw fell to $28 from $29.50. Consensus is $26.88.

"This is due to Shaw's return of 13.5 per cent in the last six months, which outperformed the average of 2.7 per cent for the sector, and the fact that the company now has the highest EV/FY2 EBITDA valuation in the sector despite lower-than-average EBITDA growth for 2017," he said. "Although we believe the wireless product will be an important asset to bundle with cable services in the future, we estimate wireless will make a modest contribution to EBITDA growth in FY17. Moreover, the company has the industry's largest exposure to TV, a service that we believe will decline over the next few years. We would revisit our recommendation on Shaw as we approach 2H17 if valuations at that time become more attractive."

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BMO Nesbitt Burns Richard Carlson said there's reason for near-term optimism for automotive stocks.

Initiating coverage of an "evolving" group he calls "Autos/Mobility Equipment & Technology," Mr. Carlson said: "Our focus is broadly around mobility (how humans will transport themselves on a daily basis over the next 100 years) and more specifically on the technologies that will be involved. We believe we are already at a crossroads in the automotive sector where some companies will be the "content" providers (those that that make mobility more efficient, more affordable, safer, and more enjoyable) and the hardware suppliers/parts assemblers (those with still an important but lower value contribution to the process). We believe many exciting investment opportunities lie in addressing the extensive problems today's cars create, considering the tremendous amount of wasted time people spend in automobiles today, the trillions in infrastructure costs for taxpayers, and the burning of a reckless amount of fossil fuels all while killing or seriously injuring thousands of people daily.

"While many of these opportunities are longer term, we do see reason to be excited nearer term, as well. Many stocks in our group are trading below their averages over the past five years – averages which we believe are a bit overly depressed owing to the overhang of the last downturn combined with uncertainty around the disruption now in the space – while both the broader market and industrial sector trade well above their averages since the global financial crisis (GFC). Meanwhile, many industry experts currently forecast global light vehicle sales to continue to grow annually through at least early next decade (albeit at a very modest pace), meaning volumes remain at very healthy levels to support strong profits in the sector – much of which is going towards investment in new technologies, M&A and share repo. We thus expect to see some rotation into our group in 2017."Ultimately, we lean quite positive on our group and note that we were highly selective when choosing the companies to include in our initial launch. Given our long-term focus on mobility and technology, we only wanted to add companies that are committed to developing the technologies that future car owners/users will demand and will be key players as we shift from "car 1.0" to "car 2.0" (and beyond). In regards to the suppliers, we believe many of the attributes that led to all of the companies included in our initial coverage list also make them attractive acquisition candidates. We have already seen quite a bit of industry consolidation and the majority of our group has indicated their interests in making acquisitions, as well. We would not be surprised to see one or more of our companies be acquired over the next 12-18 months.

Mr. Carlson said investors should be "very disciplined" when buying auto stocks, despite projecting several years of "very healthy" light vehicle volumes.

"We thus want to focus on those with a high level of geographic diversification, the ability to grow revenue and profits through content gains and new product/technology penetration with a (relatively) flexible cost structure," he said. "This leads us to favor the suppliers over OEMs [original equipment manufacturers."

"While the broader market - and especially the industrial sector in general - is now trading well above its averages since the end of the great financial crisis, our auto group remains well off its cycle highs, with several companies in our coverage trading closer to one standard deviation below their five year average. With our view that cyclical fears are overblown and many of our "content" providers are set to benefit from the disruptions facing global auto, we expect to see some rotation into our group and thus modest multiple expansion in 2017."

He initiated coverage of nine suppliers. They are:

- Delphi Automotive PLC (DLPH-N) with an "outperform" rating and $93 (U.S.) target. Consensus is: $80.67.

- BorgWarner Inc. (BWA-N) with an "outperform" rating and $50 target. Consensus: $39.41.

- Autoliv Inc. (ALV-N) with an "outperform" rating and $131 target. Consensus: $104.75.

- Gentex Corp. (GNTX-Q) with an "outperform" rating and $24 target. Consensus: $18.78.

- Gentherm Inc. (THRM-Q) with an "outperform" rating and $41 target. Consensus: $35.17.

- Mobileye NV (MBLY-N) with a "market perform" rating and $37 target. Consensus: $57.

- Visteon Corp. (VC-N) with a "market perform" rating and $85 target. Consensus: $88.22.

He initiated coverage of two OEMS and said: " While we believe both are much improved companies laser focused on providing the evolving mobility needs of their customers, their high EPS sensitivity to the North American light vehicle market at this advanced stage in the cycle leads us to believe there are better risk/reward opportunities."

- General Motors Co. (GM-N) with a "market perform" rating and $38 target. Consensus: $36.40.

- FordMotor Co. (F-N) with a "market perform" rating and $13 target. Consensus: $12.65.

"Ultimately, we lean quite positive on our group and note that we were highly selective when choosing the companies to include in our initial launch," said Mr. Young. "Given our long-term focus on mobility and technology, we only wanted to add companies that are committed to developing the technologies that future car owners/users will demand and will be key players as we shift from 'car 1.0' to 'car 2.0' (and beyond). In regards to the suppliers, we believe many of the attributes that led to all of the companies included in our initial coverage list also make them attractive acquisition candidates. We have already seen quite a bit of industry consolidation and the majority of our group has indicated their interests in making acquisitions, as well. We would not be surprised to see one or more of our companies be acquired over the next 12-18 months."

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Canaccord Genuity analyst Kevin Wright dropped his target for Amaya Inc. (AYA-T, AYA-Q) after coming off research restriction.

On Tuesday, its founder and former chief executive, David Baazov, announced he has withdrawn his $4.1-billion bid to take the Montreal-based online gambling company.

"Whether you like the stock or not, it is hard to argue against Amaya as one of the most interesting stocks to follow in the Canadian market, perhaps globally," said Mr. Wright. "The company pulled off a complex deal to acquire PokerStars, which few believed was possible before the transaction was completed, and has been in focus over the past year amid potential transactions between William Hill and an offer from its prior CEO David Baazov. The stock is roughly flat over the past 12 months on a year over year basis but has been as low as $13.71 and as high as $23.41 in the past 52 weeks. We believe that with the termination of the offer put forward by Mr. Baazov and his investors the market should refocus on the fundamentals of the business and what the management team, led by Mr. Rafi Ashkenazi can accomplish by leveraging the world-class PokerStars platform and marketing expertise housed within the company."

Maintaining a "buy" rating for the stock, Mr. Wright lowered his target to $28 from $42. The analyst average is xxx, according to Bloomberg.

"Strategically we view PokerStars as a market leading product that is unlikely to be displaced on more than 100 million registered users, a highly scalable software solution and brand recognition that rivals leading soft drink companies," the analyst said. "Though online poker's revenue profile is flat to arguably in decline in U.S. dollar terms we view it as a competitive moat that the company has developed as a valuable, low cost acquisition channel that can grow the online casino business which is a meaningful growth opportunity that is not dependent on new markets opening through regulation. The company has the opportunity to build an online sports book business as another means to fuel growth though this is a more difficult business to compete in as there are efficiencies in scale. We believe that PokerStars' experience in marketing to online gaming customers is a valuable internal resource that should benefit the company though the technology in the back-end is complicated by in-play betting which represents roughly 70 per cent of bets. In short we view the casino business as a growing opportunity with few barriers to success for PokerStars while sports book represents an opportunity that will take longer to take hold and may require additional integrations with third parties to develop a world class service in a short timeframe."

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Saying the stock now looks "fairly valued," CIBC World Markets analyst Dave Popowich raised his rating for Bonterra Energy Corp. (BNE-T) to "neutral" from "underperform"

"We believe it is increasingly difficult to justify our bearish stance on this name," he said. "While the stock does not look especially cheap at this point (8.3 times 2017 enterprise value/debt-adjusted cash flow), Bonterra's strong margin structure remains intact, and we are forecasting the company to generate decent debt-adjusted production growth next year. We believe the company still needs to reduce debt - either through an equity financing or M&A - to fully regain its premium multiple."

Mr. Popowich raised his target to $27.50 from $25. Consensus is $30.80.

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In other analyst actions:

Barrick Gold Corp. (ABX-N, ABX-T) was downgraded to "hold" from "buy" at TD Securities by analyst Greg Barnes. His target fell to $18 (U.S.) from $25. The average is $20.82.

Mr. Barnes raised Goldcorp Inc. (GG-N, G-T) to "buy" from "hold" and lowered his target to $18.50 (U.S.) from $20. The average is $18.23.

Bank of America Corp. (BAC-N) was raised to "overweight" from "neutral" at Atlantic Equities by  analyst Christopher Wheeler. His target rose to $25 (U.S.) from $15. The average is $22.40.

Mr. Wheeler also raised Citigroup Inc. (C-N) to "overweight" from "neutral" with a target of $70 (U.S.), up from $45. The average is $62.26.

Cardinal Energy Ltd. (CJ-T) was rated a new "buy" by Cormark Securities analyst Garett Ursu with a target of $12.25 per share. The average is $11.75.

Goldman Sachs Group Inc. (GS-N) was downgraded to "neutral" from "overweight" by Atlantic's Christopher Wheeler with a target of $240 (U.S.), up from $205. The average is $233.67.

He raised Morgan Stanley (MS-N) to "neutral" from "underweight" with a target of $44 (U.S.), up from $27. The average is $43.37.

TransForce Inc. (TFI-T) was downgraded to "hold" from "buy" at Desjardins Securities by analyst Benoit Poirier. His target rose to $36 from $34. The average is $33.42.