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Air Canada jets sit by the gates at Toronto Pearson International Airport in Toronto on April 25 2013.Fred Lum/The Globe and Mail

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.

Wireless network revenue was a key positive in leading BCE Inc. (BCE-T;BCE-N) to better-than-expected third-quarter results, said Canaccord Genuity analyst Aravinda Galappatthige.

In reaction to the results, he raised his target price for the stock and, accordingly, upgraded his rating to "buy" from "hold."

BCE reported consolidated earnings before interest, taxes, depreciation and amortization of $2.187-billion, an increase of 3.4 per cent year over year and ahead of both Mr. Galappatthige's forecast ($2.166-billion) and the consensus estimate ($2.16-billion) on 2.9-per-cent revenue growth. Adjusted earnings per share of 93 cents also topped the estimate of Mr. Galappatthige and the Street of 83 cents.

The analyst pointed specifically to the wireless results for the beat, pointing out the segment's top-line grew 9.3 per cent year over year with services revenues rising an "impressive" 8.3 per cent.

"BCE's strong wireless blended average revenue per user growth was a highlight yet again at 6.1 per cent, by far the highest in the sector, compared to flat ARPU [average revenue per user] at [Rogers Communications Inc.] and 1.1-per-cent growth at TELUS," he said.

"Notwithstanding some top-line pressure, wireline margins continued to see improvement, thereby delivering BCE's fifth consecutive quarter of EBITDA growth."

Mr. Galappatthige said he believes BCE's dividend can continue to grow at 5 per cent. He based that on an expectation of a 3.3-per-cent compound annual growth rate in consolidated adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization] over the next five years, "driven by continued strength in wireless and the ongoing recovery in wireline. "

"Based on management commentary on longer-term capex [capital spending] intensity, we do not anticipate more than 1 to 2-per-cent inflation in capex," he said. "This combines to deliver a free cash flow CAGR [compound annual growth rate] outlook of 6.7 per cent, which we believe would help sustain dividend growth."

He raised his target price for the stock to $59 from $56. The average analyst target, according to Bloomberg, is $57.69.

Elsewhere, Macquarie's Greg MacDonald also upgraded the company, increasing his rating to "neutral" from "underperform" with his target rising to $57 from $55.


Cominar Real Estate Investment Trust (CUF.UN-T) has an "attractive" total return potential of close to 30 per cent, according to BMO Nesbitt Burns analyst Heather Kirk.

Noting the REIT's 10.4 times adjusted funds from operations multiple, 20-per-cent net asset value discount and 9.5-per-cent yield "provide value and downside protection as well as solid income," she upgraded her rating for the stock to "outperform" from "market perform."

"Cominar has historically traded at an average price-to-AFFO of 13.7x and a discount to NAV of [approximately] 1.5 per cent," she said. "We view the operating downside including retail vacancies and pressure in the office market as well priced in to the units and well discounted in our forecasts."

The company's funds from operations (FFO) per unit in the third quarter was 45 cents, a decline of 4.3 per cent year over year, due largely to a lower-than-expect net operating income. The result was below her 47-cent estimate and missed the consensus by a penny.

Ms. Kirk said she expects FFO to decline further in 2016 (to $1.75 per unit) based on anticipated vacancies and de-levering of the balance sheet. She also does not expect additional revenue from the Target lease-up and reduced expectations for the company's portfolio in Calgary,

"We expect FFO growth to pick up in 2017 as lease-up of the Target space hits the numbers and performance in the Ottawa office market stabilizes," the analyst said. "Cominar appears to be making good headway with the Target sites and additional revenues could come on stream earlier than 2017. We expect leverage to decline as asset sale proceeds are used to repay debt. We view a stronger balance sheet and disposing of lower growth assets as better positioning Cominar to deliver stronger FFO growth going forward. Available cash will also be invested in the buyback of units which currently yield 9.5 per cent."

She lowered her target to $18.25 from $19.50. The analyst average is $17.91.


CIBC World Markets analyst Jeremy Kaliel downgraded Penn West Petroleum Ltd. (PWT-T) despite third-quarter results that were in line with expectations.

He said the stock's recent strong performace has "outstripped" his valuation despite a lack of change in the company's fundamentals. In reaction, he moved his rating to "sector underperformer from "sector performer."

Penn West reported actual production for the quarter of 82,198 barrels of oil equivalent per day (boe/d). The result was in line with Mr. Kaliel's estimate of 82,500 boe/d and slightly below the consensus forecast of 84,355 boe/d. Funds flow per share of 9 cents was a cent less than his projection but met the consensus.

"PWT's balance sheet remains strained with an estimated 2016 [debt-to-cash flow] ratio of 8.7x under the forward strip (versus group at 3.3x)," he said. "Despite recent sales, we still see PWT coming uncomfortably close to breaching its Total Debt/EBITDA covenant of 5.0x in [the second half of 2016]."

After tweaking his risked net asset value estimate, Mr. Kaliel raised his price target for the stock to $1.15 from $1. The analyst average is 93 cents.

"While we see significant latent value in PWT's assets, we believe that unlocking of value is contingent on both the execution of key asset sales as well as continued improvements in capital efficiency," he said. "Meanwhile Penn West remains one of the more levered names in the [Dividend Corporations] group."


Paramount Resources Ltd. (POU-T) needs to improve the execution at its Montney asset, said Raymond James analyst Kurt Molnar.

Saying the company is "still struggling with translation," Mr. Molnar downgraded his rating to "outperform" from "strong buy."

"When we launched our coverage here at Raymond James Ltd., we chose to use the strong buy level of recommendation as an indicator of which stocks had the capture of the most upside potential in their inventory (scale of inventory and implied returns on invested capital) relative to their current stock market value," said Mr. Molnar. "In short, which stocks had the 'best engine' for superior value creation. Paramount's Kakwa Montney has lived up the expectation/driver of the Strong Buy moniker, but clearly the stock has been highly frustrating as something keeps effectively getting 'lost in translation.' The quality of the project has not yet manifested itself in the whole of the business at a financial and operating level.

"Oddly enough, the company's struggles to ramp up production to expected levels have only heighted the likelihood of some kind of transaction around its midstream assets to provide the liquidity needed to drive the next leg of growth for the business ... If or when such a transaction happens, it may also lead to a material short squeeze in the stock that could have this stock be the best performer in our group in the coming few months."

Mr. Molnar said third-quarter results largely met expectations and "provided ample evidence that the Kakwa Montney is a superior resource." He added: "The Paramount reported wells are strengthening, but guidance and growth at the corporate level need to see better correlation from here."

The analyst lowered his price target for the stock to $23 from $24. The analyst average is $18.17.

Meanwhile, two other analysts also downgraded the stock. Both Peters & Co. Ltd. analyst Dan Grager and Scotia Capital analyst William Lee moved their ratings to "sector perform" from "sector outperform." Mr. Grager's target fell to $14.50 from $16.50, while Mr. Lee's target dropped to $25 from $30.


The third-quarter results for Telus Corp. (T-T, TU-N) met expectations, however, according to Desjardins Securities analyst Maher Yaghi, they "lacked the usual superior quality of underlying subscriber metrics that has made the stock a safe haven for investors."

He added: "With that being said, Telus continues to deliver above-average free cash flow (FCF) and dividend growth, and is now trading at a small discount to both BCE and Rogers on an [enterprise value/EBITDA] basis. Coupled with a superior total expected return, we have enough ammunition to maintain our buy rating."

Telus reported FCF of $310-million during the quarter, rising from $219-million in the same period a year ago. Its FCF growth has increased 22 per cent year over year, due largely, according to Mr. Yaghi, to higher earnings and lower cash taxes.

He explained: "FCF is an important metric to track, in our view, as it provides Telus with the ammunition to undertake significant stock buybacks and dividend increases."

"In an unlikely outcome, Telus reported post-paid net adds that trailed both BCE and Rogers in the third quarter, pressured by a high level of subscriber recontracting volume from the double cohort and depressed economic activity in Alberta," he said. "The combination of these two events showed up in a consolidated EBITDA growth rate of 2.2 per cent, down from 5.2 per cent in the second quarter and 4.3 per cent last year.

"We believe the double-cohort pressure should resolve itself in the next two quarters, giving the the company more room to become more aggressive on customer acquisition. As it relates to the Alberta economic weakness, management has decided to implement an immediate cost-cutting initiative to reduce costs to offset potential downside."

Mr. Yaghi lowered his target price by a dollar to $47. The analyst average is $46.03.

"Telus offers, in our view, investors in the Canadian telecom space the greatest visibility on dividend growth and share buybacks," said Mr. Yaghi. "The return of cash to shareholders is supported by a strong balance sheet and sustainable cash flows, which should resonate with yieldseeking investors and continue to support the stock's valuation. We believe the recent share price underperformance, while understandable, does not reflect the growth potential of the business model, and hence we maintain our buy rating on the stock."


Smart Real Estate Investment Trust (SRU.UN-T) "is a high-quality business that should be a core holding for investors," said Desjardins Securities analyst Michael Markidis.

"The stock has enjoyed a tremendous and prolonged period of outperformance relative to its peers, delivering a total return of 20-per-cent [in the year to date] and 38 per cent cumulatively since the beginning of 2014," he said.

However, following a "period of exceptional relative outperformance," the analyst downgraded the stock to "hold" from "buy."

The REIT reported third-quarter funds from operations per unit of 54 cents, topping the analyst's projection by two cents. Based on that beat, he raised his 2016 earnings estimates and net asset value projections by 3 to 4 per cent. He also raised his target price for the stock to $34.50 from $33. The analyst average is $33.61.

"With its newly enhanced development capabilities, we believe that SRU will provide in the coming months a detailed analysis of the near-, medium- and long-term redevelopment and intensification opportunities inherent in the existing portfolio," said Mr. Markidis. "This should be positive for investor sentiment, but will not likely drive an immediate ramp in investment activity. And, given the recent stock performance, it will not likely result in further material multiple expansion, in our view."


In other analyst actions:

Air Canada (AC-T) was raised to "action list buy" from "buy" at TD Securities by equity analyst Timothy James. The 12-month target price is $23 (Canadian) per share.

American Capital Ltd (ACAS-Q) was raised to "buy" from "hold" at Cantor Fitzgerald by equity analyst David Chiaverini. The 12-month target price is $19 (U.S.) per share.

Bonavista Energy Corp (BNP-T) was downgraded to "Sector Perform" from "Outperform" at National Bank by equity analyst Kyle Preston. The 12-month target price is C$4.00 per share.

Continental Resources Inc (CLR-N) was raised to "buy" from "hold" at Wunderlich by equity analyst Jason Wangler. The 12-month target price is $45 (U.S.) per share.

Chipotle Mexican Grill Inc (CMG-N) was downgraded to "neutral" from "outperform" at Robert Baird by equity analyst David Tarantino. The 12-month target price is $675 (U.S.) per share.

Duke Energy Corp (DUK-N) was downgraded to "market perform" from "outperform" at BMO Capital Markets by equity analyst Michael Worms. The target price is $74 (U.S.) per share.

Home Capital Group Inc (HCG-T) was raised to "outperform" from "neutral" at Macquarie by equity analyst Jason Bilodeau. The 12-month target price is $40 (Canadian) per share.

Magna International Inc (MGA-N) was raised to "overweight" from "neutral" at JPMorgan by equity analyst Ryan Brinkman. The target price is $61 (U.S.) per share.

Men's Wearhouse Inc (MW-N) was downgraded to "hold" from "buy" at Jefferies by equity analyst Edward Plank. The 12-month target price is $32 (U.S.) per share. It was downgraded to "neutral" from "buy" at Mizuho Securities USA by equity analyst Betty Chen. The 12-month target price is $30 per share.

NVIDIA Corp (NVDA-Q) was raised to "buy" from "neutral" at MKM Partners by equity analyst Ian Ing. The 12-month target price is $36 (U.S.) per share.

PHX Energy Services Corp (PHX-T) was raised to "Hold" from "Sell" at Paradigm Capital by equity analyst Jason Tucker. The 12-month target price is $2.25 (Canadian) per share.

Qlik Technologies Inc (QLIK-Q) was raised to "outperform" from "market perform" at FBR Capital Markets by equity analyst Daniel Ives. The 12-month target price is $38 (U.S.) per share.

Repligen Corp (RGEN-Q) was downgraded to "hold" from "buy" at Jefferies by equity analyst Brandon Couillard. The 12-month target price is $30 (U.S.) per share. Inc (STMP-Q) was raised to "buy" from "neutral" at B. Riley by equity analyst Kevin Liu. The 12-month target price is $130 (U.S.) per share.

Time Inc (TIME-N) was downgraded to "market perform" from "outperform" at Wells Fargo by equity analyst Eric Katz.

Westar Energy Inc (WR-N) was raised to "neutral" from "underweight" at JPMorgan by equity analyst Christopher Turnure. The 9-month target price is $40 (U.S.) per share.

TMX Group Ltd (X-T) was raised to "sector perform" from "underperform" at National Bank by equity analyst Shubha Khan. The 12-month target price is $50 (Canadian) per share.

With files from Bloomberg News