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Customers arrive at the Canadian Tire store in North Vancouver, B.C. on February 10, 2011.Andy Clark/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.

Smart Real Estate Investment Trust (SRU.UN-T) has enjoyed a period of "exceptional relative outperformance," according to Desjardins Capital Markets analyst Michael Markidis.

However, he downgraded his rating for the stock to "hold" from "buy."

"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."

The REIT reported third-quarter funds from operations of 54 cents per unit, two cents ahead of the analyst's estimate and an increase of 12 per cent year over year. Mr. Markidis noted positive variances also occurred in net operating income and interest expense lines, and he added occupancy is holding steady while "modestly positive" organic growth is seen.

"SRU's portfolio has historically generated modest, yet highly predictable cash flow growth," he said. "SRU owns a high-quality portfolio composed primarily of Walmart-anchored centres, most of which were built within the last 20 years. High-quality locations, Walmart's presence and the emerging partnership with Penguin Pick-Up should continue to drive traffic at the properties and support cash flow stability going forward.

"Based on our revised estimates, FFO/unit [funds flow from operations per unit] should grow by 8 to 9 per cent in 2015. In addition to [approximately] 1 per cent same-property NOI [net operating income] growth, this year's earnings have been propelled by substantial savings on refinancing and the accretion of the $1.1-billion SmartCentres transaction completed earlier this year. These benefits will continue into 2016, but the impact on earnings growth should moderate (about 4 per cent), in our view."

Mr. Markidis increased his 2016 earnings and net asset value estimates by 3 to 4 per cent. He also increased his target price for the stock to $34.50 from $33 per unit. The analyst average, according to Bloomberg, is $33.89.

"In our view, SRU is a high-quality business that should be a core holding for investors," he said. "The stock has enjoyed a tremendous and prolonged period of outperformance relative to its peers, delivering a total return of 20 per cent year to date and 38 per cent cumulatively since the beginning of 2014. Based on relative return expectations to our upwardly revised target price, we are moving our rating."


A surge in the share price of Labrador Iron Ore Royalty Corp. (LIF-T) on Nov. 6 following the release of its third-quarter results has reduced the return on the stock's target for Raymond James analyst Alex Terentiew.

Accordingly, he downgraded his rating for it to "market perform" from "outperform."

The company reported adjusted operating cash flow of 28 cents per share, ahead of the analyst's 25-cent estimate due largely to higher-than-expected realized prices. Its total concentrate production level of 4.7 metric tons was also in-line with projections (4.8 Mt). Sales of 5.8 Mt beat the 4.8 Mt estimate after a 66-per-cent increase in concentrate sold.

"IOC's revenues have beat our estimates on realized price for the past couple of quarters, although LIF noted that the pellet premium has recently weakened as steel prices have declined, which could potentially impact the sales mix of pellets and concentrate going forward," said Mr. Terentiew. "We note that in 2009, pellet production was stopped for five weeks in order to rebalance production with demand."

He also noted that iron ore prices have increased in recent months alongside the contracting of global crude steel production. He has reduced his 2016 estimated iron ore forecast to $50 per ton from $55.

He also reduced his price target for the stock to $18 from $19. The analyst average, according to Bloomberg, is $18.58.

"LIORC has a high quality royalty on the Iron Ore Company of Canada, and recent significant operating cost improvements, combined with improved productivity, have substantially reduced the risk of IOC facing a shutdown or making an equity (cash) call on its shareholders, should iron ore prices decline materially," the analyst said. "Iron ore prices have rebounded from their lows, and by our estimates are now slightly above IOC's all-in costs, after taking into account product premiums received.

Mr. Terentiew said he considers the company's 25-cents-per-quarter dividend safe at the $45 per ton level until 2018.

He said: "With IOC's efforts to bring down cost to $30/t, 10 per cent below our long-term estimate of $33/t, we believe IOC could be in a position to pay a dividend in 2017E if iron ore prices stay at $50/t or higher, which could translate into a special dividend by LIF."


Canaccord Genuity analyst Derek Dley said he's "become more cautious" on the outlook for the retail division of Canadian Tire Corp. Ltd. (CTC.A-T) given the "unfavourable movement" of the exchange rate and "continued" weakness in Alberta.

Ahead of the release of its third-quarter results on Nov. 12, Mr. Dley downgraded his rating for the stock to "hold" from "buy."

"We are forecasting 1.0 per cent, 0.0 per cent and 4.0 per cent same-store sales growth at CTR, Mark's and FGL Sports, respectively," he said. We continue to expect Forzani sales to benefit from an increase in digital advertising spending, as recent digital spend test periods have generated double digit sales growth. Our forecast of flat [year-over-year] sales growth at Mark's, which is considerably lower than the banner's trailing 12 month average of 4.0 per cent, is founded on continued oil price-related economic weakness in Alberta, which we expect to negatively impact higher margin industrial wear. We note 17 per cent of Mark's locations are situated within the province of Alberta."

He said he is predicting the depreciation of the loonie and the weaker sales in Alberta to reduce the company's retail gross margin by 75 basis points, excluding fuel, year over year.

"We expect this trend of lower margins is likely to persist throughout the remainder of the year, and have slightly lowered our estimates to reflect this assumption," he said.

Mr. Dley said he expects the company to announce a new share buyback at the same time as the quarterly results.  It recently completed a 1.3-million share repurchase.

"However, we do not anticipate any near-term acquisition activity, given relatively high transaction multiple expectations by potential targets in Canadian Tire's legacy categories," he said. "Therefore, we do not view a major deployment of capital (outside of share repurchases and a dividend increase during the fourth quarter of 2015) as a potential near-term catalyst."

He reduced his target price for the stock to $129 from $147. The analyst consensus is $146, according to Thomson Reuters.

Following a third-quarter "margin surprise" in the midst of a "stronger macro environment," Canaccord Genuity analyst David Tyerman boosted his forecasts for New Flyer Industries Inc. (NFI-T).

He also increased his implied one-year investment return to 13.1 per cent, which he called "solid," and upgraded his rating for the stock to "buy" from "hold."

"We think NFI should generate solid 6.1 per cent EBITDA growth from 2015-17 from modest  bus production and margin expansion and low-mid single digit aftermarket sales growth and stable good aftermarket margins. There could be upside from improving macro environment conditions, NFI profit improvement initiatives and deployment of NFI excess cash resources."

The company reported adjusted EBITDA of $36.3-million, ahead of both Mr. Tyerman's estimate ($31.6-million) and the consensus mean ($31.4-million). He called bus margins "the big upside surprise" after they reached $34,600 per equivalent unit, ahead of his forecast of $28,000 and marking the second consecutive quarter and third of four of improvement.

"Bus margins are quite volatile, but it appears that NFI's profit improvement initiatives and better market conditions should result in sustained $30,000/equivalent unit EBITDA margins or better on a rolling 12-month basis," he said. "Aftermarket performance remains good, with much improved margins being sustained."

"We have assumed a much stronger bus manufacturing margin, reflecting commentary on the third quarter conference call. We have also modelled moderately stronger aftermarket sales and margins per recent trends and management outlook discussion. We boosted our 2015 EBITDA forecast by 6 per cent and our 2016-19 EBITDA forecasts by 5.5 to 7.5 per cent based on our new assumptions."

He increased his target price for the stock to $22 from $20. The analyst average is $23.60.


Though Parkland Fuel Corp. (PKI-T) recorded a  "solid" third quarter, CIBC World Markets analyst Kevin Chiang downgraded it  to "sector performer" from "sector outperform" on valuation.

He noted the share price has increased approximately 11 per cent since August, outperforming the TSX Energy Index by 4.5 per cent.

"Our price target – unchanged at $25 – infers a total return to target (including a $1.08 annual dividend) of [approximately] 13 per cent, more in line with a sector performer rating," he said. "Note, our downgrade does not reflect any degradation in our outlook for PKI or in its ability to execute on its growth strategy."

The company reported an adjusted EBITDA of $59-million, an increase of $24-million year over year and better than both Mr. Chiang's estimate ($52-million) and the consensus of $56-million. Total volumes also beat expectations and rose from 2014.

"[Third quarter] results reaffirmed our thesis of PKI's ability to leverage its diverse operations, market intelligence, and supply cost advantage to create a more defensive earnings stream even in this weak commodity price environment," Mr. Chiang said.

He added: "PKI's long-term growth targets are predicated on its ability to grow through acquisitions, which we do not believe has been impaired despite recent investor concerns over companies with roll-up strategies. We note that PKI's ability to extract synergies from its acquisitions is predicated on its supply cost advantage, which is lower risk versus revenue synergies or overhead cost reductions. PKI also has opportunities to grow organically in key segments even though it faces volume headwinds in Western Canada and North Dakota. Specifically, PKI noted that it is transforming the convenience store offering at the Pioneer locations, with recent conversions seeing a 25-per-cent increase in sales. By year-end, 75 Pioneer sites will have been updated. Similarly, in Wholesale, PKI saw strong organic growth and supply-side synergies, with EBITDA up [about] $8-million year over year as PKI leveraged its product portfolio to improve margins."

He also touted the company's balance portfolio which allows a more defensive earnings stream in the face of headwinds from its exposure to Alberta and North Dakota.

Mr. Chiang's target for the stock remained unchanged at $25, the same as the analyst consensus price.


In other analyst actions:

Enbridge Income Fund Holdings Inc. (ENF-T) was bumped to an "outperform" recommendation from a "sector perform" at National Bank Financia by equity analyst Patrick Kennyl. However, the price target was reduced to $41 from 42.

Rona Inc. (RON-T) was reduced to an "underweight" from an "equalweight" recommendation at Barclays. The analyst reduced his price target to $13 from $16.

Buffalo Wild Wings Inc (BWLD-Q) was raised to "overweight" from "sector weight" at KeyBanc by equity analyst Christopher O'cull. The 12-month target price is $175 (U.S.) per share.

Callidus Capital Corp (CBL-T) was downgraded to "hold" from "buy" at TD Securities by equity analyst Lemar Persaud. The 12-month target price is $12.50 (Canadian) per share.

Canadian Natural Resources Ltd (CNQ-T) was downgraded to "outperform" from "top pick" at FirstEnergy Capital by equity analyst Michael Dunn. The 12-month target price is $40 (Canadian) per share.

EOG Resources Inc (EOG-N) was downgraded to "market perform" from "outperform" at Raymond James by equity analyst Kevin Smith.

First Data Corp (FDC-N) was rated new "buy" at Evercore ISI by equity analyst David Togut. The 12-month target price is $20 (U.S.) per share. It was rated new "outperform" at Wells Fargo by equity analyst Timothy Willi. It was rated new "overweight" at Barclays by equity analyst Darrin Peller with a target price of $20 per share. The stock was also rated new "outperform" at Cowen by equity analyst George Mihalos with a $21 target.

Liquor Stores N.A. Ltd (LIQ-T) was downgraded to "Sector Perform" from "Outperform" at National Bank by equity analyst Trevor Johnson. The 12-month target price is $11.50 (Canadian) per share.

News Corp (NWSA-Q) was downgraded to "market perform" from "outperform" at Wells Fargo by equity analyst Eric Katz.

Papa John's International Inc (PZZA-Q) was raised to "overweight" from "sector weight" at KeyBanc by equity analyst Christopher O'cull. The 12-month target price is $70 (U.S.) per share.

RSP Permian Inc (RSPP-N) was raised to "buy" from "hold" at Canaccord Genuity by equity analyst Sam Burwell. The 12-month target price is $33 (U.S.) per share.

Turquoise Hill Resources Ltd (TRQ-T) was raised to "outperform" from "neutral" at Macquarie by equity analyst Daniel Greenspan. The 12-month target price is $5 (Canadian) per share.

ZS Pharma Inc (ZSPH-Q) was downgraded to "neutral" from "overweight" at JPMorgan by equity analyst Cory Kasimov. The 18-month target price is $90 (U.S.) per share.

With files from Bloomberg News