Altus Group Ltd.'s $1.20 dividend is at risk, Canaccord Genuity analyst Yuri Lynk said, after the real estate consulting firm's fourth-quarter earnings came in lower than expected.
"We admire Altus' dominant Canadian valuation, cost, and tax practices, the opportunity to leverage this platform globally to drive growth, and its emerging analytics and data attributes," he wrote in a research report.
"However, organic growth prospects in Canada are somewhat limited due to its 40 per cent market share in some segments, and most of the exciting growth opportunities such as U.S. property tax and capital planning do not move the needle in an appreciable way."
Mr. Lynk expects 10 per cent sales growth in each of the next two years and an improvement in gross margin. "A cut to the $1.20 dividend remains the biggest near-term risk," he said.
Downside: Mr. Lynk cut his price target to $12 from $14 and reiterated his "hold" rating on the stock.
Labopharm Inc.'s future remains troubling, after chief executive officer James Howard Trip stepped down and the company cut almost 30 per cent of its workforce, RBC Capital Markets Douglas Miehm said.
The moves "are a clear signal, in our view, that the impact of two (Tramadol and now Oleptro) disappointing product launches has necessitated a change in strategy," he wrote in a research report.
"Upcoming deals plus milestone payments will certainly help but we do not believe Oleptro growth will accelerate sufficiently to ensure that a sustainable stream of cash flow can be generated relative to the company's significant ongoing expenses. As a result, we believe a more significant restructuring and/or sale of the company is likely by year end."
Downside: Mr. Miehm cut his price target to 80 cents from $1.20 and has a "sector perform" rating on the stock.
MKS Inc.'s preliminary fourth-quarter revenue came in far ahead of expectations, proof that the software company's strong competitive position is translating into significant top-line growth, TD Newcrest analyst Scott Penner said.
"We believe the pipeline for additional multi-million dollar transactions remains strong, and the large reference contract reported yesterday is likely to open up new opportunities," he said.
Revenues appeared to be driven by a single large license transaction with a strategic customer. "We believe that deals of this magnitude act as reference contracts which can open the door for future new business. Even after this deal, we believe that MKS' pipeline remains strong," he wrote.
"We believe MKS is a rare combination of high-quality double-digit organic growth, seemingly an increasing competitive position, and with the discipline to return excess cash to shareholders."
Upside: Mr. Penner raised his target price to $22 from $20 and has a "buy" rating on the stock.
Teck Resources Ltd.'s second negative revision to sales guidance in a week should weigh on near-term investor sentiment, CIBC World Markets analyst Alec Kodatsky said.
Teck revised 2011 coal sales guidance down 4 per cent due to ongoing labour disruption and bad weather. Average unit operating costs for 2011 were guided higher by about 6 per cent, Mr. Kodatsky noted. The miner also revised down copper sales by about 4 per cent.
"We have revised down our 2011 earnings per share and cash flow per share (estimates)," he said. "However, these short term issues only have a nominal impact on our valuation of the company."
Upside: He has a $70 price target and a "sector outperform" rating on the stock.
The success of Bombardier Inc.'s agreement with the Commercial Aircraft Corporation of China Ltd. (COMAC) on commercial aircraft will depend on the amount of orders it receives, said Desjardins Securities analyst Benoît Poirier.
The agreement pits Bombardier and COMAC against the Airbus/Boeing duopoly and against a possible partnership between Brazil's Embraer and Europe's EADS, Mr. Poirier wrote.
"We believe the agreement provides Bombardier with better positioning in the China market," he said. "Boeing forecasts that the Chinese market will represent 14 per cent of global deliveries in the 2010-29 timeframe."
Upside: Mr. Poirier expects a positive impact on the stock. He rates Bombardier "buy," with an $8 target price.
|AIF-T Altus Group||18.65||
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|TCK.B-T Teck Resources||23.80||
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|BBD.B-T Bombardier Inc.||3.77||
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