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.
Lacking the prospects of a dividend increase in the near future, shares of Canadian Oil Sands Ltd. are unlikely to maintain their "great return" since lows earlier this year, said CIBC World Markets analyst Arthur Grayfer.
The company reported 2015 first-quarter cash flow per share of 16 cents, beating Mr. Grayfer's forecast of 9 cents and the consensus of 11 cents, due largely to a decline in operating costs stemming from lower gas and diesel prices as well as a variety of cost improvements. Capital expenditures were lower than expected after "successful" cost-saving initiatives.
With its recent update, the company has increased cost reduction estimates from $295-million to $330-million, targeting operating, development and capital expenses.
"While the cash outflows are still above inflows in 2015, next year looks better. The improved cost structure sets up a much more sustainable business," said Mr. Grayfer.
However, the analyst estimates Canadian Oil Sands will have a debt of $2.3-billion at the end of 2015, and, thus, he forecasts the chances of a "meaningful increase' in the dividend won't come until 2017 or later. Earlier this year, the company cut its dividend by 75 per cent to 5 cents.
Maintaining his "sector underperform" rating, he raised his price target to $12.50 from $11 (Canadian). The analyst consensus price is $9.61, according to Thomson Reuters.
Meanwhile, RBC Dominion Securities analyst Greg Pardy upgraded the stock to "sector performer" from "underperform" and raised his target to $13 from $11.
Raymond James analyst Phil Russo has "dampened enthusiasm for the sizeable dividend" of Goldcorp Inc., downgrading the stock from "strong buy" to "outperform" He thinks the company will be coming under increased pressure to cut the payout to shareholders.
On Thursday, Goldcorp announced a first-quarter net loss of $87-million (U.S.), or 11 cents a share, compared with net income of $98-million, or 12 cents, a year earlier. The results missed analyst forecasts as costs increased and gold prices dropped. Mr. Russo also pointed to higher taxes and depreciation than expected.
"Ongoing funding of the current dividend – given Q1 results and our view that production appears to be trending towards the bottom end of guidance – appears to be restricting the company's capacity to make meaningful inroads in replenishing the balance sheet and/or strengthening it further," said Mr. Russo.
He added: "We believe a change in dynamic for the company (such as an M&A event or the like) may provide the impetus to re-set the dividend and allocate surplus cash flows to the balance sheet, which does still remain in a relatively healthy position overall though its relative advantage has lessened over time. Nonetheless, at current levels, the risk/reward proposition in owning Goldcorp stock should remain appealing to investors given the recent sell-off, supporting our outperform rating."
Mr. Russo also lowered his price target to $27 from $28 (U.S.). The analyst consensus is $25.90.
Though he remains bullish on LinkedIn Corp. going forward, Canaccord Genuity analyst Michael Graham has lowered his target price from $300 to $250 (U.S.) in the wake of second quarter guidance that did not meet his - or pretty much anyone's - expectations.
The company slashed its second-quarter and full-year guidance for earnings before interest, taxes and amortization. But Mr. Graham said most of the factors impacting revenue, like foreign exchange and the Talent Solutions sales reshuffling, appear to be temporary, and he notes: "a display revenue headwind seems more secular."
The first-quarter results, announced Thursday, slightly beat Mr. Graham's expectations, and he points to strong membership growth and rapid page view growth (showing higher user engagement) as positives going forward.
"While the stock's expensive valuation leaves no room for speed bumps, we remain convinced of LinkedIn's long-term opportunity," said Mr. Graham, who maintained his "buy" rating for the stock. "We are encouraged by rapid growth in Sales Solutions, and believe any material weakness in the stock will likely provide a good long-term entry point."
Elsewhere, RBC Dominion Securities cut its price target on LinkedIn to $275 (U.S.) from $300 but maintained an "outperform" rating. Credit Suisse cut its price target to $307 and maintained an "outperform" rating.
The analyst consensus price is $290.28.
RBC Dominion Securities analyst Robert Kwan said the first-quarter results for Canadian Utilities Ltd. were not as bad as they appear.
The company reported normalized earnings per share of 49 cents, lower than Mr. Kwan's forecast of 54 cents. He discounted the consensus estimate of 67 cents as he does not think the impact of a regulatory decision in Alberta that consumers were overcharged in 2013 and 2014 was included in the consensus estimate.
"The greatest headwind in our view is the Alberta power market and specifically low Alberta power prices that are surprising to the downside … along with potential medium to longer-term risk if environmental regulations for carbon emissions become more stringent without offsetting compensation," said Mr. Kwan. "Other headwinds that are likely to pressure results this year and possibly into 2016 include low frac spreads and a weak global resource sector that has negative implications for projects and margins for the Structures & Logistics segment."
But, based on the quarter's results, he reduced his EPS estimates for 2015 to $2.04 from $2.18 and for 2016 to $2.45 from $2.55.
He also lowered his price target to $42 from $44 (Canadian). The analyst consensus price is $43.38.
Lundin Mining Corp. had an "outstanding quarter across the board," said Dundee Securities analyst David Charles.
On Thursday, the company reported first-quarter revenue of $532-million (consensus forecast was $478-million); earnings before interest, taxes, depreciation and amortization of $274-million ($180-million) and adjusted earnings per share of 8 cents (6 cents). Mr. Charles pointed to the lower costs at its Candelaria mine in Chile. The company also had record copper and nickel production along with record levels of operating cash flow.
Though Mr. Charles had expected "favourable" changes to the second-quarter guidance, Lundin kept it unchanged as it waits for a new Candelaria mine plan and remains cautious about its Eagle mine in Michigan given its operated at full run rate for only a quarter.
"Following a record quarter, we still believe LUN deserves a premium given its strong financial condition and its lower development risk compared to its peers, combined with the potential to introduce a dividend later this year at a time when most miners are cutting theirs" said Mr. Charles.
He maintained his "buy" rating and increased his target to $7.50 from $7 (Canadian). The analyst consensus price is $5.84.
In other analyst actions:
AltaGas Ltd. (ALA-T) was raised to "outperform" from "market perform" at FirstEnergy Capital. The 12-month target price is $47 (Canadian) per share.
Sprylogics International Corp. (SPY-X) was rated new "speculative buy" at Beacon Securities. The target price is $1 (Canadian) per share.
First Quantum Minerals Ltd. (FM-T) was raised to "buy" from "hold" at TD Securities. The 12-month target price is $24 (Canadian) per share.
Contagious Gaming Inc. (CNS-X) was rated new "buy" at Beacon Securities. The target price is 75 cents (Canadian) per share.
DraftTeam Daily Fantasy Sports Corp. (DTS-X) was rated new "buy" at Beacon Securities. The target price is 35 cents (Canadian) per share.
ARC Resources Ltd. (ARX-T) was downgraded to "market perform" from "outperform" at Raymond James. The 12-month target price is $27.50 (Canadian) per share.
Bonterra Energy Corp. (BNE-T) was raised to "buy" from "neutral" at Dundee Securities. The target price is $43.50 (Canadian) per share.
Choice Properties Real Estate Investment Trust (CHP.UN-T) was downgraded to "sector perform" from "outperform" at National Bank. The 12-month target price is $12 (Canadian) per share.
Chinook Energy Inc. (CKE-T) was downgraded to "neutral" from "buy" at Dundee. The target price is $1.45 (Canadian) per share.
Constellation Software Inc. (CSU-T) was downgraded to "underperform" from "sector perform" at National Bank. The 12-month target price is $450 (Canadian) per share.
Corning Inc. (GLW-N) was downgraded to "hold" from "overweight" at HSBC. The target price is $22 (U.S.) per share.
Great Prairie Energy Services Inc. (GPE-X) was downgraded to "hold" from "buy" at Beacon Securities. The 12-month target price is 15 cents (Canadian) per share.
GoldQuest Mining Corp. (GQC-X) was raised to "speculative buy" from "hold" at Clarus Securities. The 18-month target price is 35 cents (Canadian) per share.
Garmin Ltd. (GRMN-Q) was raised to "market perform" from "underperform" at Raymond James.
GrubHub Inc. (GRUB-N) was downgraded to "neutral" from "buy" at Monness Crespi.
Horizon North Logistics Inc. (HNL-T) was raised to "buy" from "hold" at Clarus Securities. The 12-month target price is $4 (Canadian) per share.
RDM Corp. (RC-T) was raised to "buy" from "neutral" at PI Financial. The 12-month target price is $4.50 (Canadian) per share.
RE/MAX Holdings Inc. (RMAX-N) was rated new "buy" at Compass Point. The 12-month target price is $40 (U.S.) per share.
Wesdome Gold Mines Ltd. (WDO-T) was rated new "buy" at M Partners. The 12-month target price is $1.65 (Canadian) per share.
With files from Bloomberg News