Buying opportunity seen in Bombardier

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Inside the Market's roundup of some of today's key analyst actions. This post will be updated with more analyst commentary during the trading day.

Bombardier Inc. shares are attractive at current levels and represent a good long-term buying opportunity, Desjardins Securities analyst Benoit Poirier said today as he raised his price forecast for the stock.

"Overall, we are confident in the company's ability to take  advantage of many near-term opportunities in transportation and aerospace (including substantive potential orders from AMR, Air Canada and Lion Air, among others)," he said in a research note.

Bombardier's total backlog of work stands at $65.5-billion, or about four years of production, he noted.

There hasn't been an influx of orders for its new C Series jet following the successful first test flight last month. But that's likely because many interested parties are awaiting performance results from further tests to confirm whether the specifications, such as a 20 per cent reduction in fuel burn, were met. "We believe this will take two to three months, with the most crucial testing  occurring over the first  five to six weeks," he said. Given that the engine performance is already known, he thinks the risk of not meeting specifications is low.

"Booking activity remains solid and there is a strong pipeline of opportunities in North America in 2013," he said.

Target: Mr. Poirier raised his price target to $7 (Canadian) from $6 while maintaining a "buy" rating. The average analyst price target is $5.75, according to Bloomberg data.

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Stella-Jones Inc.'s acquisition of wood-treating facilities in Oregon, Nevada and Arizona will bolster the company's footprint in the western U.S. and boost profits, said Desjardins Securities analyst Pierre Lacroix as he raised his price target on the stock.

The $57-million (U.S.) agreement to buy the assets from The Pacific Wood Preserving Companies should be immediately accretive to earnings by 10 cents to 15 cents a share, he said. "Stella-Jones could realize accretion above this range based on its track record for post-transaction synergies," he added.

Target: Mr. Lacroix raised his price target to $104 (Canadian) from $100 and maintained a "hold" rating. The average target is $113.75.

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Deutsche Bank analyst Paul Trussell modestly cut his price target on Costco Wholesale Corp. after the retailer's fourth-quarter results missed expectations, but he reiterated a "buy" rating and advised investors to buy into share price weakness.

"Costco continues to hold the traits we prefer in a retailer, including: (1) strong traffic, again showcased in Sept., (2) a long runway of store expansion, (3) well-managed margins, and (4) a solid balance sheet," StreetInsider.com quoted him as saying. "We recommend buying on any pullback as Costco's outlook, in our view, remains far brighter than the majority of retail in this volatile environment."

Target: Mr. Trussell cut his price target to $119 (U.S.) from $121. The average target is $118.62.

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Credit Suisse analyst Arun Jayaram upgraded EOG Resources Inc. to "outperform" from "neutral," as he boosted his net asset value and oil estimates for the stock.

He's encouraged by better-than-expected well performance in its key U.S. onshore liquids plays. "In particular, our analysis shows clear signs of an improving 'rate of change' in the Eagle Ford, Bakken and emerging Delaware Basin," he commented.

"Despite being a high expectation story that is well liked by the Street, we see several near and intermediate term catalysts that should support further outperformance, particularly as the shares trade at discounts to its large cap peers on our 2014 cash flow estimates and asset value," Mr. Jayaram said.

Target: Mr. Jayaram raised his price target to $210 (U.S.) from $175. The average target is $186.80.

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Allana Potash Corp. has announced that the Ethiopian Ministry of Mines has issued a mining licence for its Danakhil potash project.

"This event marks the achievement of another key milestone thereby further de-risking the project and paving the way to complete financing," commented Cantor Fitzgerald Canada analyst Peter Prattas.

Target: Mr. Prattas raised his price target to $1.15 (Canadian) from $1 and reiterated a "buy" recommendation. The average target is 90 cents.

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In other analyst actions today:

Canaccord Genuity raised its price target on Exfo to $5 (Canadian) from $4.50 and maintained a "hold" rating.

Euro Pacific Canada initiated coverage on Lucas Energy with a "buy" rating and $3 (U.S.) price target.

Euro Pacific Canada raised its price target on Tekmira Pharmaceuticals to $15.50 (Canadian) from $12.50 and maintained a "speculative buy" rating.

Piper Jaffray upgraded Michael Kors Holdings to "overweight" from "neutral" and raised its price target to $90 (U.S.) from $73.

Piper Jaffray downgraded Ralph Lauren to "neutral" from "overweight" and cut its price target to $170 (U.S.) from $200.

UBS cut its price target on Gannett to $25 (U.S.) from $27 and maintained a "neutral" rating.

Credit Suisse initiated coverage on Pfizer with an "outperform" rating and $34 (U.S.) price target.

Credit Suisse initiated coverage on Merck & Co. with a "neutral" rating and $49 (U.S.) price target.

Credit Suisse initiated coverage on Eli Lilly & Co. with a "neutral" rating and $52 (U.S.) price target.

Credit Suisse initiated coverage on Bristol Myers Squibb with an "outperform" rating and $55 (U.S.) price target.

Goldman Sachs cut its price target on J.C. Penney to $9 (U.S.) from $10 and maintained a "neutral" rating.

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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities