Thursday’s analyst upgrades and downgrades

Share

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.

TD Securities Inc. analyst Scott Treadwell is forecasting a cut to Trican Well Service Ltd.'s dividend. The analyst downgraded the stock to "speculative buy" from "buy" on the potentially negative outcome.

After revisiting the abilities of oil field services companies to pay current dividends, Mr. Treadwell forecast an 83-per-cent cut to Trican's dividend, dropping it to 5 cents from 30 cents annually.

The analyst said the company's trailing 12-month EBITDA-to-interest ratio will fall to roughly 2-times by the fourth-quarter of 2015. Mr. Treadwell thinks this will likely cause a covenant breach. "We believe that the company and its lenders will proactively manage the situation, but the cut in payout would be a prudent first step in managing the situation," he said.

Mr. Treadwell cut his target price to $5 from $6. Consensus is $6.41, according to Thomson Reuters.

======

After gleaning additional insight from Tricon Capital Group Inc.'s recent acquisition of a portfolio of single-family rentals in North Carolina, South Carolina and Texas, Canaccord Genuity analyst Jenny Ma has "further confidence in the quality and stability" of its single-family rental portfolio. The analyst maintained her "buy" rating and raised her target price.

As the homes are consistent with the company's current portfolio, management will be able to absorb the portfolio without the need to hire additional staff or run up additional costs, the analyst said. Ms. Ma also expects the portfolio to continue to grow.

The analyst raised her target price to $12.50 from $11. Consensus is $12.13, according to Thomson Reuters.

======

As a result of its recently announced joint venture with Kinder Morgan Inc. to construct a 4.8-million-barrel above-ground crude oil storage terminal in its Alberta EnviroFuels site, CIBC World Markets analyst David Noseworthy thinks Keyera Corp. has sufficient liquidity of $1.2-billion in 2015 to fund its capital projects.

Mr. Noseworthy estimates Keyera's 50-per-cent interest in the project, called the Base Line Terminal, will generate $54-million of run-rate EBITDA (starting in late 2016), and there is sufficient land to expand the facility based on future demand.

However, the analyst forecasts Keyera's debt-to-EBITDA ratio will reach 3.3x by the third quarter of 2015. It targets to maintain leverage below 3.5. Accordingly, Mr. Noseworthy expects Keyera to issue $175-million to $350-million of either preferred shares or common equity in the near-to-medium term to maintain its financial flexibility and allow the pursuit of further growth projects or acquisition.

He is maintaining his "sector outperformer" rating and raising his price target to $95.50 from $94. The consensus is $91.46.

======

Following the decision by Macerich Co. to reject a $95.50 cash-and-stock offer from Simon Property Group Inc., Credit Suisse analyst George Auerbach has upgraded Macerich to "neutral" from "underperform."

Mr. Auerbach is puzzled by the decision to reject the bid, which caused shares to fall over 6 per cent.

"While we do not understand why the MAC board would not at least sit down with SPG to further discuss their $95.50 final offer, the fact is MAC rejected the bid and Simon withdrew their offer," he said. "The MAC Board noted in its statement that they felt that SPG's offer undervalued the company and that they do not believe this is the right time to sell the company."

The analyst's previous rating was based on the belief that the stock was previously too expensive, but with the rejection of the offer, there is no longer an M&A premium.

The company now faces pressure to prove its plan to recognize shareholder value through improved operating margins and development in the coming years. It must now create value relative to Simon's offer, which was a 4.2-per-cent cap rate on Mr. Auerbach's estimates.

"We continue to view MAC as a high quality mall portfolio with significant development upside, but we think that is baked into our [price target]," he said.

He is maintaining his price target of $78. Consensus is $84.33.

======

Gildan Activewear Inc. should begin to realize material earning growth in the second half of the 2015 fiscal year, according to Canaccord Genuity Corp. analyst Derek Dley.

First-half earnings could be hurt by the decision to reduce pricing in the company's printwear division, but he expects Gildan to benefit from lower manufacturing costs, a decline in cotton costs, price increases in international markets (to offset the strength of the U.S. dollar), and an increase in volumes related to printwear changes.

"Gildan's status as the low-cost manufacturer should help the company achieve growth within both its branded and printwear operating segments," he said. "Also, potential acquisition opportunities, along with cost cutting initiatives and capacity expansion plans, will support earnings growth over our forecast period."

He is increasing his target price to $33 (U.S.) from $31. The consensus is $32.64.

======

In other analyst actions:

JPMorgan resumed coverage on Valeant Pharmaceuticals International Inc. with an "overweight" rating and price target of $240 (U.S.) per share.

Dick's Sporting Goods Inc. was raised to "positive" from "neutral" at Susquehanna. The 12-month target price is $68 (U.S.) per share.

Atlantic Power Corp. was downgraded to "underperform" from "sector perform" at National Bank. The 12-month target price is $2.75 (U.S.) per share.

Kopin Corp. was raised to "buy" from "hold" at Wunderlich. The 12-month target price is $4.50 (U.S.) per share.

Vertex Energy Inc. was downgraded to "hold" from "buy" at Craig-Hallum. The 12-month target price is $3 (U.S.) per share.

Bri-Chem Corp. was downgraded to "market perform" from "speculative buy" at Cormark Securities. The 12-month target price is 80 cents (Canadian) per share.

Cogeco Cable Inc. was raised to "outperform" from "neutral" at Macquarie. The 12-month target price is $76 (Canadian) per share.

Cameco Corp. was raised to "outperform" from "market perform" at BMO Capital Markets.  The 12-month target price is $24 (Canadian) per share.

Global Payments Inc. was rated new "hold" at Topeka Capital. The 12-month target price is $90 (U.S.) per share.

Liberty Interactive Corp. was rated new "buy" at Brean Capital. The 12-month target price is $34 (U.S.) per share.

Steven Madden Ltd. was raised to "overweight" from "neutral" at Piper Jaffray. The 12-month target price is $43 (U.S.) per share.

Synovus Financial Corp. was downgraded to "outperform" from "strong buy" at Raymond James. The 12-month target price is $29 (U.S.) per share.

Stryker Corp. was downgraded to "underweight" from "equal-weight" at Barclays. The target price is $92 (U.S.) per share.

Tuesday Morning Corp. was rated new "buy" at Janney Montgomery. The 12-month target price is $20 (U.S.) per share.

Webster Financial Corp. was downgraded to "neutral" from "outperform" at Boenning & Scattergood.

With files from Bloomberg News