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National Bank keeps lid on dividendCharla Jones/The Globe and Mail

These are some of the key analyst actions on Bay Street today.

National Bank of Canada
The Parti Québécois win has prompted a downgrade for National Bank of Canada over fears that the uncertain political environment in the province may wind up limiting upside potential in the stock.

National Bank's core market is in Quebec, which now faces months -- if not years -- of political and economic uncertainty, even though the minority status for the separatist party has tempered concerns somewhat.

BMO Capital Markets analyst John Reucassel downgraded National Bank to "market perform" from "outperform," becoming the second analyst this week to lower his rating.

"We believe that the market has largely discounted recent election results and as such we do not expect significant downside risk in the share price from current levels," Mr. Reucassel said in a statement. "However, an uncertain political environment limits the ability of NA shares to narrow the valuation discount with the rest of the bank group - this was a key aspect of our outperform rating on the shares.

"This development is unfortunate as National Bank's financial results have been amongst the best in the industry," he added.

Indeed, National Bank had no problem beating the Street consensus in reporting adjusted quarterly earnings per share last week of $1.98.

CIBC World Markets analyst Robert Sedran downgraded National Bank to "sector underperformer" and cut his price target to $78 on Tuesday. He linked the action to disappointing interest income and margins, but also cited the Quebec political situation as a potential concern.

"While we suspect that fears may be overblown as they relate to the bank, they may remain an overhang on the shares if no clear mandate emerges from the vote," Mr. Sedran wrote prior to the election results.

Shares in the bank are down 0.2 per cent near mid-day, underperforming the TSX financial index, which is up 0.06 per cent.

Downside: Mr. Reucassel, who made no changes to his earnings forecasts for the bank over the next two years, cut his price target to $76.50 from $81.

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Facebook Inc.
Jefferies & Co. analysts Brian Pitz and Brian Fitzgerald have initiated coverage on Facebook with a "buy" rating. "With a potent mix of unprecedented scale, high engagement, and social plus behavioural targeting, we think Facebook is must-buy media for marketers as they follow users online," they wrote in a note. While the stock could see further selling pressure as lockups expire through December, "expansion into other business areas also looks inevitable, and at the current price investors effectively receive this optionality for free," they said.

Upside: Jefferies set a $30 (U.S.) price target.

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Parex Resources Inc.
Raymond James analyst Kafi Khouri has upgraded Parex Resources to "outperform" from "market perform" because of the recent drop in its share price. Parex has fallen 8 per cent in the past month, compared to an 0.8 per cent gain in the TSX composite index. Mr. Khouri also expects the company to meet its year-end production targets as it increasingly diversifies its asset base.

Upside: Mr. Khouri maintained a $5 price target.

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Labrador Iron Mines Holdings Ltd.
Labrador Iron Mines Holdings announced this week a reduction in its capital spending program for the rest of the year amid a drop in the spot price for iron ore. Raymond James analyst Adam Low notes that the company is a low margin producer operating in a low political risk jurisdiction, but recommends investors wait for an improvement in iron ore pricing before accumulating shares.

Upside: Mr. Low cut his price target to $3 from $3.25 and reiterated a "market perform" rating.

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Twin Butte Energy Inc.
Twin Butte Energy has acquired Waseca Energy, a private heavy oil producer operating in the Lloydminster area along the Alberta-Saskatchewan border, for $127-million. It also boosted its annual dividend by nearly 7 per cent. "This acquisition is another example of the company's ability to add assets in its core area at attractive metrics," commented Raymond James analyst Luc Mageau.

Upside: Mr. Mageau raised his price target by 25 cents to $3.50 and reiterated a "strong buy" rating.

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