Shares of Paladin Energy Ltd. could start to glow again.
The stock of Australia’s second-largest uranium miner has been in the penalty box, losing 80 per cent of its value, following Japan’s nuclear disaster last year at its Fukushima plant. And now there is speculation that it could be an acquisition target.
“A widely circulated Bloomberg [news] article is suggesting that Paladin is a takeover target at these levels,” Dundee Securities analyst David Talbot said Thursday in a report.
Potential acquirers for the mid-tier uranium producer include Cameco Corp., Rio Tinto Ltd., Uranium One Inc. (51 per cent owned by unit of the Russian State Corp. for Nuclear Energy) or other senior miners looking to get into the uranium sector, he said.
“We believe the stock will move upwards on this news - it certainly did on the Australian Securities Exchange overnight, rising 9 per cent,” Mr. Talbot wrote.
But the analyst said that he expects Paladin will make the first move, and forge some strategic alliances before anything else happens.
Last week, the company said it may complete up to three mutually exclusive merger and acquisition transactions from August to October, Mr. Talbot said. “We believe this will help clean up its balance sheet and improve the stock price, hopefully before anyone takes a run at the stock.”
The types of deals could include a sale of assets (likely small exploration projects in Australia); joint ventures (possibly selling a minority position in its Mt. Isa project in Australia) and/or strategic alliances, he said.
Upside: He maintains a top pick “buy” rating on Paladin with a one-year target of $2.65 a share.
Cogeco Cable Inc.
Cogeco’s surprise deal to buy U.S. cable operator Atlantic Broadband for $1.36-billion (U.S) is “somewhat rich” given other recent deals, said CIBC World Markets analyst Robert Bek.
Downside: He cut his one-year target to $43 (Canadian) a share from $53, but maintains a “sector perform” rating.
Primaris Retail REIT
The mall operator has called for redemption of its 5.85 per cent convertible debentures. The impact “on leverage and interest rate coverage” should help it get an investment-grade debt rating for the first time, said TD Securities analyst Sam Damiani.
Upside: He has a “buy” rating, but raised his one-year target to $26 a share from $25.
Susser Holdings Corp.
The Stripes convenience store operator released preliminary second-quarter results that exceeded forecasts, said RBC Dominion Securities analyst Irene Nattel. She raised her 2012 earnings per share projection to $2.12 (U.S.).
Upside: She upgraded Susser to “outperform,” and raised her one-year target to $40 a share from $33.
The online auction company reported solid second-quarter results despite a weaker European backdrop, but guidance remains unchanged, said Canaccord Genuity analyst Michael Graham.
Upside: He maintains his “hold” rating, but raised his one-year target to $44 a share from $41.