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Enter core earnings. Manulife said two weeks ago it will begin using that measure to better reflect the strength of its business, and bring the company more in line with its international peers. “We’ve listened to the analysts and investors and what they want to understand is the underlying earnings capacity of the organization,” said Manulife chief executive officer Donald Guloien. Manulife chief financial officer Steve Roder said, “I wouldn’t be surprised if others follow us, but we were prepared to take the leap.”MARK BLINCH/Reuters

Inside the Market's roundup of some of today's key analyst actions. This file will be updated often during the trading day so check back for new details.

Manulife Financial Corporation can expect some near-term bumps, but investors can look forward to longer-term growth potential, says Desjardins Capital Markets analyst Doug Young.

Mr. Young explains that Manulife reported fourth-quarter core earnings of $0.38 per share, below his $0.44 estimate. He believes lower interest rates could be a drag on core earnings near-term, but is encouraged by results from its overseas operations.

"We expect MFC to show a few more bumps in its results near-term relative to peers, specifically at its US insurance businesses and within its alternative investment portfolio, which we saw in 4Q14," he says. "That said, we like the longer-term growth potential and higher relative margins at its Asian franchise. The company remains very comfortably capitalized with a decent cushion should macro conditions deteriorate. We anticipate steady core EPS growth over the next few years, driven by moderately improving macro conditions, some benefits from the E&E initiatives, addition of Standard Life Canada, growth in wealth management and faster growth from Asia."

He maintains his "buy" rating and is cutting his target price by a dollar to $24 (Canadian). The analyst consensus price target is $24.64.


Auto parts distributor Uni-Select Inc. reported fourth-quarter results on Thursday that exceeded analysts' expectations for both revenues and profits.

The company's decision to sell its U.S. automotive segment make these results a "non-event," according to Desjardins Securities analyst Benoit Poirier, but the firm's growth prospects still appear to be bright.

"Looking forward, UNS believes that its 2014 organic sales growth of 9.6 per cent and 4 per cent for the paint, body and equipment and Canadian auto parts segments are sustainable for the foreseeable future," he said.

The analyst also thinks Uni-Select is in a position to pursue acquisitions and return cash to shareholders in light of its strengthened financial position.

Mr. Poirier downgraded the stock from "top pick" to "buy" in light of its recent rally, but increased his price target to $47 (Canadian) from $43.

The average analyst price target is $43.17.


Precision Drilling Corporation posted fourth-quarter earnings before interest, taxes, depreciation, and amortization that was in line with the consensus estimate and trimmed its capital budget by $26-million (Canadian) to $467-million for 2015.

Raymond James analyst Andrew Bradford believes the company is well-positioned to weather the rough patch in oil prices.

"PD has taken actions to lower costs wherever possible, including reducing head counts in the field, implementing freezes on wages, travel and hiring, as well as appealing to its vendors for pricing concessions," he said. "PD's swift and proactive approach to cost management should allow its cost base to fall more consistently with its revenues through the ensuing downturn and is a testament to management's market foresight."

However, after the stock's 14 per cent rally since the end of January, the name doesn't have much upside left, according to Mr. Bradford.

The analyst downgraded the stock to "market perform" from "outperform" while upping his price target to $7.50 (Canadian) from $7.25.

The average analyst price target is $8.85.


A jump in share price has resulted in a downgrade for Great-West Lifeco Inc.

CIBC World Markets analyst Robert Sedran explains that the insurer reported fourth-quarter earnings of $0.67 per share (excluding $6-million for Irish Life acquisition restructuring costs and $3-million for acquisition costs relating to the J.P. Morgan Retirement Plan Services acquisition), above Mr. Sedrans's estimate of $0.64 and consensus of $0.66. It also announced a 6 per cent dividend increase.

However, Great-West's share price has Mr. Sedran looking elsewhere for investing ideas.

"As of the close on 2/12/15, the shares traded at 12.9x our 2015 EPS estimate and 11.9x our 2016 EPS estimate," he says. "The peer average (on 2015) is 11.2x. On a P/B basis, the shares were trading at a multiple of 2.1x versus a peer average of 1.3x. We thought the results were fine, but after the response of the shares on reporting day (especially on a relative basis), we see better value elsewhere in our coverage universe."

He is downgrading the stock to "sector underperform" from "sector perform" and raising his target price to $35 from $34. The analyst consensus price target is $34.45.

Meanwhile, the stock was upgraded to "buy" from "hold" by TD Securities with a target price of $40 (Canadian) per share.


In other analyst actions

Bombardier Inc. was downgraded to "speculative buy" from "buy" by Cormark Securities. The 12-month target price is $3.25 per share.

Raymond James doubled its price target on WesternOne to $4 (Canadian) from $2 and maintained a "market perform" rating.

Cenovus Energy Inc. was downgraded to "neutral" from "outperform" by Macquarie. The 12-month target price is $26.00 per share.

Fairfax Financial Holdings Ltd. was upgraded to "buy" from "market perform" by Cormark Securities. The 12-month target price is $740.00 per share.

Mainstreet Equity Corp. was raised to "buy" from "hold" by TD Securities. The 12-month target price is $46.00 per share.

Merrill Lynch downgraded American Express to "underperform" from "buy" and cut its price target to $78 (U.S.) from $109. Several other brokers also cut their price targets.

Credit Suisse downgraded Gap to "underperform" from "neutral" and cut its price target to $37 (U.S.) from $40.

Mullen Group Ltd. was downgraded to "underperform" from "market pPerform" at FirstEnergy Capital. The 12-month target price is $19 (Canadian) per share.

Orbitz Worldwide Inc. was downgraded to "market perform" from "outperform" at Oppenheimer. The 12-month target price is $12 (U.S.) per share.

With files from Bloomberg News

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